[Get Answer ]-Compensation Decision Making

Question Description

From Yahoo: http://news.yahoo.com/on Robin Williams’ Death: Why No One is Immune to Depression,
create a 1-page analysis including the following sections:

  1. Author – List who wrote the article
  2. Title – List the title of the article
  3. Source – List the name of the article’s source as well as the date of the publication (e.g. New York Times, Aug. 3, 2005)
  4. Summary – This is a brief summary (1 paragraph) of the article
  5. Key Points – List at least 3 points that reflect how this article relates to the topic for the week.
  6. Reaction – This is a 1-2 paragraph analysis of what you learned from reading the article.


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Author: MarkLandler of the New York Times

Title: Adidas toBuy Reebok for 3.8 Billion, Challenging Nike

Source: The New York Times, August 3, 2005.

Summary: Thisarticle is about the rivalry between the three major shoe companies. Adidas’schief executive Hubert Hainer and Reebok’s chairman Paul B. Fireman struck adeal to merge their companies to compete with Nike’s dominance in theathletic-shoe market. The merger between Adidas and Reebok caused both of theirstocks to rise dramatically, which confused many financial analysts. Theseanalysts claim that even though Adidas and Reebok will catch up to Nike in theathletic-shoe market, the sales generated because of the merger will be meek.Mr. Hainer sees the merger more as two companies complementing each other, notfor the sole purpose of money but for growth.

Key Points:

  1. Thedeal for Adidas to buy Reebok was worth $3.8 billion. For the first timein over a decade, Nike will now have real competition in the athletic-shoemarket. Before the deal, media analysts compared Nike to its competitorsas “Snow White and the three dwarves.” Mr. Hainer and Mr. Fireman bothhope those kinds of comparison are over.
  2. Mr.Fireman will personally earn $650 million from the merger. He will remainthe chairman of Reebok and own 17% of the newly formed company. Althoughthe companies did merge, they will both still run as separate businesses.They will both keep their names and both stay in their current locations.Both companies stock soared aftr the deal was announced. Reeboks went up29.5%, and Adidas went up 6.9%, confusing many financial analysts.
  3. Mr.Hainer hopes that the merger between Adidas and Reebok will have adramatic effect on the global athletic-shoe market. Adidas, which hopesits sales in China by the year 2010 will exceed $1.2 billion, is countingon Reebok’s most popular Chinese’s basketball player, Yoa Ming, togenerated millions in revenue. Adidas and Reebok both have their eye onthe United States shoe market as well, which accounts for 50% of theglobal market.
  4. Adidasand Reebok believe that their marketing strategies will be vital for thesuccess of their merger. They believe that icons such as Jay-Z, AllenIverson, and 50 Cent, will help them compete with Nike’s present daydominance of the athletic-shoe market. Marketing makes or breaks shoecompanies nowadays.

Reaction: I feltthis article was very insightful and educational as a person who wants to be amanager of a company. I enjoyed how two competitors in the business worldjoined forces to compete with the leader in their particular market. Bothmanagers of Adidas and Reebok saw that the only way to compete with Nike was tomerge and become one. I believe to make the merger successful, Mr. Fireman andMr. Hainer had to do careful planning before and after the merger finally wentinto effect. Without careful planning and decision making, the merger wouldhave never taken place or been as successful. I also liked how Adidasrecognized that there was a profit to be made in the global athletic-shoe market.They recognized the profitability of selling their product in China and havetaken the necessary steps to sell their product in that countries market.

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