Michigan

1) Key Facts

a) Players

i) Jim and Anne Davis- Owners of New Balance Athletic Shoe, Inc.

ii) Competitors- Reebok, Adidas, Nike, Puma, and Asics. Also soon-to-be company, AdidasReebok

iii) Partners?

b) Financial Performances

i) Worldwide- In 2004 New balanced received a Worldwide Sales of $1.5 million and U.S

Athletic Footwear Sales of $1.02 million with the total number of employees in the company

reaching 2,600

c) Timeline of the Case

i) 2005-Adidas was to buy Reebok; 2003- Nike acquired Converse; 2005- Stride Rite

announced intention to acquire $170 million manufacturer, Saucony; 2004- Nike spent $213

million in measured media; 2004- Adidas spent $89 million in measured media; 2004Reebok spent $42 million in measured media; 2004- Americans purchased $2.2 million in

shoes and boots; 2005- Sneaker market was divided into several discrete retail channels;

1906- New Balance was founded; 1972- Jim Davis bought New Balance; 1978- New Balance

established first international sales office and first European manufacturing facility; 1982New Balance reached $62 million in sales; 1992- Endorsed By No One campaign; 2005- For

Love or Money campaign unveiled;

2) Issues

a) Central Problem

i) The problem in the case is the Adidas is going to merge with Reebok increasing Adidas’s

share to roughly 20% of the US footwear market. By merging the new company, AdidasReebok, it would create a firm that would be able to rival Nike, who already accounts for

43% of the total global market for athletic shoes and apparel. Another problem that was

mentioned in the case, but not as a problem to their company, could be that since they are

a private company, meaning there could be no shareholders telling them where to set up

manufacturing plants, New Balance is the only company that does not have manufacturing

plants overseas. They probably have to pay their workers 3-4 times as much as the workers

across seas get paid. This could make a company’s labor costs...