New Balance Athletic Shoe, Inc. (HBS 610-072) In August 2005, Adidas-Salomon AG, the world's second-largest athletic footwear company, announced it pending acquisition of Reebok International, Ltd., the industry's third-largest firm. This case examines whether New Balance Athletic Shoe, Inc. - the fifth-largest firm in the market - needed to alter its unique operations strategy in response to this transaction. 1. Assume it costs New Balance $50MM to maintain 25% of its manufacturing domestically. What is your assessment of this decision (think in terms of branding, manufacturing capabilities, ability to respond to retailers, goodwill, etc.)? 2. How should the Davis' react to Adidas' planned acquisition of Reebok? What aspects of New Balance's operations strategy they should keep or change (think in terms of NB2E, supplier relationships, independent sales force, marketing, etc.)