Introduction
Mergers and acquisitions (M&A) are important events that affect a company’s viability. International M&A agreements elevate corporate growth and present new business opportunities (RodrĂguez-Sánchez et al., 2018). Nevertheless, almost half of M&A cases do not meet the expected results for various reasons, including financial and legal aspects (RodrĂguez-Sánchez et al., 2018). However, human resources management can contribute to a triumphant M&A (RodrĂguez-Sánchez et al., 2018). Since many studies exist on previous M&A cases, one should consider other international companies’ potential to join forces. Companies like Adidas and Patagonia can create a successful merger due to similarities in goals and human resources practices.
The Adidas and Patagonia Merger
Adidas and Patagonia have the potential for a prosperous merger because of their international strategies. In 2021, Adidas presented a growth strategy to increase worldwide sales and profitability by 2025 (“About,” n.d.). One of the corporation’s objectives is sustainability, and the retailer intends to use only recycled polyester from 2024, producing nine out of ten items from sustainable materials (“About,” n.d.). On the other hand, Patagonia is a brand that aims to reduce human impact on the environment by creating recyclable and long-lasting products (“Business unusual,” n.d.). The company recognizes that its business activity is part of the problem but strives to improve (“Business unusual,” n.d.). Adidas and Patagonia could be fiscally successful if they united to produce sustainable sportswear. Adidas could access Patagonia’s recyclable materials, suppliers, and technologies, whereas Patagonia could receive financial and labor support from the major corporation. For example, while Adidas needs more experience in recycling, Patagonia wishes to have more control over the factories that make its products to secure the workers’ well-being (“About,” n.d.; “Business unusual,” n.d.). The two companies could work together towards a common goal, ensuring sustainability for the business and the environment.
If Patagonia and Adidas considered a merger, several factors would contribute. The two companies have similar cultures as they put people first, both customers and employees. To produce high-quality products for clients, Adidas has created a culture where people can thrive and feel that they belong, whereas Patagonia has built a team of employees who regard themselves as customers (“About,” n.d.; “Business unusual,” n.d.). Patagonia appreciates that its employees work outdoors, and Adidas has several sports facilities and activities at the workplace (“About,” n.d.; “Business unusual,” n.d.). Together, the companies could bring diversity into each others’ customs while working for clients’ benefit. Patagonia and Adidas can enhance their diversity based on Hofstede’s cultural dimensions. Since Patagonia originated in the USA and Adidas was established in Germany, their dimensions counter (“About,” n.d.; “Business unusual,” n.d.; LeonaviÄŤienÄ— & BurinskienÄ—, 2021). However, LeonaviÄŤienÄ— and BurinskienÄ— (2021) suggest that companies should understand cultural differences for better international business results. For instance, while Patagonia could guide Adidas to work better in a team, Adidas could advise Patagonia on how to be long-term oriented (LeonaviÄŤienÄ— & BurinskienÄ—, 2021). Although the two companies’ original countries have distinctions, they have similar business priorities and company cultures.
Several more factors would be important in the potential merger. Firstly, a company’s economic success is crucial in uniting businesses, and Adidas increased its operating profit by the end of last year’s third quarter compared to the previous year (“About,” n.d.). Although Patagonia does not share its monetary state as the company puts people and the planet over profit, it continuously donates millions of dollars, indicating financial stability (“Business unusual,” n.d.). Secondly, the two companies have many international locations. Adidas has headquarters and key centers in 8 countries, including Germany, UAE, and Switzerland, and owns multiple shops worldwide (“About,” n.d.). Patagonia operates offices in 7 countries, such as the USA, South Korea, and Australia, and has 70 stores globally (“Business unusual,” n.d.). Thirdly, human resources practices play a vital role in business. Adidas focuses on leadership, training, and performance, emphasizing diversity and inclusion (“About,” n.d.). Patagonia values collaboration and training and prioritizes a sport-loving personality over a degree (“Business unusual,” n.d.). A merger between Patagonia and Adidas could give them access to new markets and bring diversity to the workplace without major expenses.
Furthermore, certain human resource practices could enhance the possible merger. Concerning human talent, companies need to prepare tactical practices that would minimize any negative consequences, like a power struggle or voluntary resignations (RodrĂguez-Sánchez et al., 2018). RodrĂguez-Sánchez et al. (2018) propose that during the M&A process, human resource (HR) management would be involved in consolidating leadership, provision and evaluation, control, and assessment of the strategy and culture. For example, HRM can encourage talented personnel to support a positive mentality and working environment by developing their leadership skills (RodrĂguez-Sánchez et al., 2018). The tactical practices should predict obstacles and determine how employees can enhance joining businesses.
Companies considering a merger or acquisition can focus on two human resources practices: ongoing training and cultural assimilation. For example, Patagonia and Adidas value the development of their employees, and education activities can improve confidence and involvement (RodrĂguez-Sánchez et al., 2018). Training can contribute to the consolidation of leadership and serve as a basis for cultural change (RodrĂguez-Sánchez et al., 2018). Although it may take employees several years to feel integrated into the new organization, cultural assimilation can assist in the process (RodrĂguez-Sánchez et al., 2018). RodrĂguez-Sánchez et al. (2018) suggest that the new culture should align with the new strategy and concentrate on cost-saving, managerial flexibility, and engagement of human resources. Therefore, companies can implement training to engage employees as a team, encouraging them to accept a culture that would lead to success.
Conclusion
To summarize, Adidas and Patagonia could create a prosperous merger because they have common objectives. The two companies seem to be economically successful, but while Adidas wants to access new markets and offer more sustainable products, Patagonia wishes for the world to use only recyclable items. Therefore, they could unite to provide customers with sustainable sportswear and assemble a unique culture that would prioritize training, diversity, and performance. Patagonia and Adidas could overcome their differences by learning more about each other and focusing on one purpose.
References
About. (n.d.). Adidas Group. Web.
Business unusual. (n.d.). Patagonia. Web.
LeonaviÄŤienÄ—, E., & BurinskienÄ—, A. (2021). Research on the reflection of cultural dimensions in international business. Insights into Regional Development, 3(4), 101-114. Web.
RodrĂguez-Sánchez, J. L., Mora-ValentĂn, E. M., & Ortiz-de-Urbina-Criado, M. (2018). Successful human resources management factors in international mergers and acquisitions. Administrative Sciences, 8(45), 1-15. Web.