Managing Reebok History Term Paper

Pages: 10 (3405 words)  ·  Bibliography Sources: 0  ·  File: .docx  ·  Level: College Senior  ·  Topic: Business

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This makes it imperative that the leading companies situated in the United States have to ensure that all human beings are treated properly. It is the responsibility of a leader. The competition in this industry seems to be very acute, and there seems to be a desperate effort to cut costs and maintain leadership, basically by outsourcing production at very low rates. To an extent this is happening because these companies have had a very short period of existence, and probably an even shorter period of prosperity. It is difficult for the management of these companies to devise methods to maintain their prosperity through changes of methods, rather than oppressing the already oppressed.

If you were the CEO for Reebok what would be your strategy for leading this firm? Why?

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It is clear that nobody else will ever be the CEO of Reebok apart from Mr. Paul Fireman and at a later date, may be his nominee. He is also engaged in buying up the outside share holding of the company. However the hypothetical and improbable question has been asked and has to be answered. The strategy for leading such a firm is to understand that this is a fashion-based product that the company is making. The shoes which are in style today will not be in style tomorrow, and the advanced countries will not be using them as also the 'sophisticated' customers. Yet, all shoes are essentially made with the same material, and there are still customers who would not be able to pay the first line prices, but would still like to get good shoes. That is why you get imitations of such products in the Far East. It would be better if the newest designs are made by the manufacturers for some time, may be one season. Then they may be given the design and they may be permitted to make them and sell the shoes in the backward countries. They would be able to make their money from that, and Reebok should concentrate on making their money from the first class markets. This may require the brands to be marked in some way with the year of manufacture.

If you were the CEO for Reebok how will you increase profits?

Term Paper on Managing Reebok History of Reebok Assignment

The only way of increasing profits is through the difference between the cost of manufacture and the price from sales. The price from sales can be increased to a certain extent as the consumer is paying for an image that he hopes to get through the use of Reebok, and not for any intrinsic value. The price of such products depends on the fashion ability of their products as seen by the promoters. It is clear that Reebok footwear products are designed for use of specific types of consumers, image and fashion conscious athletes, sports and fitness enthusiasts and casual athletic shoe buyers. The company has already realigned the creators of the products to meet these aims and also focus on the consumers and distribution channels to reach these customers. The company has tried to help the sales of cross-training cleated baseball and football shoes during 2001 through sponsorship arrangements with the NFL Pro-Bowl players Edgerrin James and Jevon Kearse; as well as the baseball stars in the major league Andy Petite, Kevin Brown and Roger Clemens; and the college football programs at Boston College and the Air Force Academy.

They have also sponsored many individuals and teams for soccer and they include Julie Foudy of the U.S. national team, Ryan Giggs from the English team of Manchester United, Iker Castillas who is the goalkeeper with real Madrid and Spain, Liverpool FC, Bolton Wanderers along with renaming their stadium as the Reebok stadium and the Colombian national team. For the promotion of the running and tennis products there are agreements with runners Abel Anton and Christine Arron and professional tennis players Patrick Rafter and Andy Roddick. It is the Image of these stars that help the sale of Reebok products, and the only problem is with the popularity of the star during certain periods after they are sponsored. As a major promoter, I am sure that the company has sought the required advice and expertise of the best possible people.

What do you project of the future of the company?

Fashion is like the sands of time and it passes without most people realizing that it is moving, and Reebok has trained all its guns on fashion. Even the newest division is only trying to sell fashionable clothes. It is probably better for the company to diversify into other types of products which do not depend on fashion. Items of this nature should not be apparels or clothes. One of the other trends is now food, and they may think in terms of special foods for occupational problems that are connected with the information technology industry. The industry is growing and along with it is growing certain types of problems. Specialized food may be able to help these problems and Reebok may concentrate on that. The problems arise mainly due to lack of exercise, and thus the link with Reebok should not be difficult to build up.

What are the industries and Reebok's financial strategies and trends for the last two years?

The financial strategy for generation of money cannot be understood from balance sheets, but one thing is clear, and that is none of the big companies in the industry are making much money. They are even cutting down the 'research' they do or are shifting it to low cost centers. The greatest expenditure by them is on sponsorships. There is Michael Jordan, Tiger woods and Mia Hamm for Nike; Allen Iverson for Reebok and Kobe Bryant for Adidas. The total expenditure from these athletic footwear manufacturers on advertising and endorsement by celebrities has been more than $5.9 billion during 2001. Yet the greatest amount of brand loyalty has not come to any of them, but gone to a New England company called 'New Balance' and this had no sponsorships. This brand has now got the greatest number of loyal customers and replaced Nike in that regard. Does this mean that the consumer does not believe the celebrity announcements any more, or is it being over done?

What are Reebok's and the industry's strategies for ROA/ROI/ROE?

As per the books of accounts, the company has profits, but a lot of it is being spent to buy back shares. There are no dividends being issued and thus the entire concept of return is probably a misnomer as the shareholder can only trade his share at the price of the share. The face value of each share is a very low 1 cent, while the fair market value is $26.50 per share, and due to this, probably the objective cannot be to get a dividend. It is thus not an investment for returns, but probably more of a speculative investment. Since there are no balance sheets for other companies, it is difficult to judge their strategies.

What are Reebok's and the industry's merger strategies?

The strategy of growth of Reebok has been around line extensions and acquisitions. In 1986 it had acquired the Rockport Company for $118.5 million cash, and in 1987 it had bought all the outstanding shares of Avia group for cash $181 million and 194,000 common shares of Reebok. It has acquired ESE Sports for $18 million cash and John A. Frye Co. For $10 million. Ellesse USA with cash of $25 million as also Boston Whaler were purchased in 1988 and 1989, which were later sold out in 1993. This purchasing trend has stopped in Reebok, but continues in Nike which has bought North Face for $240 million in 2001. This sort of purchases has made it difficult for outside talent to prosper in the companies.

What are Reebok's and the industry's strategies for retained earnings?

The retained earnings have been used by Reebok to buy up their own shares as this helps them in pushing up the prices of the shares. This is clear from the purchase of roughly 39 million shares for 660 million dollars in 2001 and 38.7 million shares in 2000 at 653 million dollars by the company as reflected in the balance sheet. The balance sheets of the other companies are not available and one cannot comment about them.

What are the industries and Reebok's marketing strategies and trends for the last two years?

The trend of the market has changed after the events of 2001, and other international crisis. In general, the market shares of all companies have dropped, and that includes the leader of the market Nike. Even the sales have dropped for the other companies of Reebok which are selling under different brand names. The increase in dollar sales has only taken place for Reebok and New… [END OF PREVIEW] . . . READ MORE

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