"Case 22: Adidas-Salomon"
Table of Contents
Executive Summary 3
1 Adidas-Salomon Strategy Overview 4
2 Strategic Fit of adidas-Salomon Businesses 4
2.1 adidas 4
2.2 Salomon 5
2.3 Taylor-Made 5
3 Financial Analysis 6
4 Issues Facing Management & Recommendations 7
5 Exhibits 9
Executive Summary
Since its inception in 1949, adidas have been a leader in innovation; which is also their main competitive advantage in the market place. Along with innovation, the company differentiates itself in the market place with its strong brand equity, supported by a strong global marketing and advertising program.
With their 1998 acquisition of Salomon, the company became adidas-Salomon, and the number 2 sporting goods company in the world. Although there were good strategic fits between adidas' and Salomon's core competencies, its obvious that the divisions failed to uncover these synergies. The future performance of Salomon have lagged behind expectations and It failed to provide much anticipated growth. Even more so, it dragged down the growth rates for adidas-Salomon overall.
To recover the ground it lost, adidas-Salomon needs to go back to its core business which is the footwear and apparel, and exploit opportunities in this division; namely the heritage and sports style footwear and apparel lines which expect 40% growth. The company also needs to increase its market share in North America to be able to substantially increase its growth rates and profitability.
The debt used to acquire Salomon has been an important issue for the finances of the company. Although financially storng and unlikely to default, the company needs to look into reducing its debt to increase its profitability.
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