What factors drive Nike’s decision to stick with some form of network

organizational structure rather than own its manufacturing operations?

A company’s organizational structure is a structured approach that defines how it

operates and performs in its business environment. The network structure, which is one of the
contemporary organizational structure is considered to be more decentralized, flexible and less
hierarchical than other popular structures. For this reason, Nike has maintained a network-like
organization structure in its operations that allows the company’s managers to coordinate and
control both internal and external firm relations.
Outsourcing. Outsourcing is a business strategy and a factor that drives Nike towards
maintaining the network structure. To maintain its position, Nike puts more effort towards the
development of its area of specialization in which it has a competitive advantage (Schermerhorn
Jr. &Bachrach, 2016). The company is interested in the design of its brand products and never
wants to get more involved in manufacturing. In this case, they outsource private manufacturers
with the capacity and resources to produce while the core company concentrates on designing
and financial tracking (Kish, 2014).
Balancing the firm’s size and pressure. In an attempt to stay successful in the market,
Nike has been able to leverage the network and decentralized organization structure. This means
that each business can focus on their area of expertise without having to worry about the
expansion in the company operations (Schermerhorn Jr. &Bachrach, 2016). Additionally, the
company has been able to meet the demand and needs of its vast market by positioning itself as a
brand that not only acts as a sneaker company but that which ability to design different products.
Ability to beat rival companies. In a decentralized network structure, communication at
the company can flow freely creating more opportunities for innovation. Additionally, Nike has
been able to automate its manufacturing processes which have increased sales. Nike wins by
focusing on consumer needs and by the promotion of bottom-up flow of ideas and decisions.

Assess why Nike’s choice of a decentralized and networked organization structure

worked well for them.

Centralization is a type of organization structure where decision making takes place at the
top level of the organization. The few people in the top management dictate what happens in the
company in terms of the operations and policies. On the other hand, a decentralized structure
allows the employees and other staff at all levels to contribute to decision making which makes
them feel productive. In a big company like Nike, centralization would not work as it would be
impossible to keep a grip at all the business centers which confuse employees and make them
less productive.
A decentralized and networked structure has promoted success in Nike given that
decision making takes place in a faster and all-inclusive way that motivates the employees
increasing productivity in the company. The structure at Nike has also fostered learning,
creativity, empowerment, and freedom among the employees allowing them to grow and
innovate for their benefit and that of the company.
Nike’s local managers have been able to get faster information of issues of concern and
make faster decisions which help the company to alleviate the sources of constraint giving the
central managers time to deal with matters of high importance to the company. Additionally, the
lower-level managers get more experience in decision making and management skills which
adds value to the company improving performance. Department centers in the company
including production, design research, and marketing are also able to focus on their specialty.
Success can be seen by the fact that Nike has always been ranked first in revenues generation.

Summarize the current state of competition in this industry. Assess if Nike

continuing to pull away from rivals, or if they are catching up.

The footwear industry is fully developed and mature with main players including
companies like Nike, Adidas, Puma, and Reebok among others. This means that rivalry between
these companies is intense with high competition. In this regard, Nike is facing non-priced
competition from big companies like Adidas and Puma. The driving force in this industry is
mainly performance based keeping in mind the sense of fashion. Competition Nike faces from
the other companies is also based on aspects such as technology, marketing, product branding,
and pricing. However, Nike has managed to withstand the competition and hold the leading
position in revenues and market penetration.
The fact that the firm is ranked the first among other competitors does not mean that Nike
is not faced by competitive pressure. For instance, in the past decade, Nike dominated the
women’s market, and every shopper was likely to end up with a Nike product. However, Nike is
struggling in current times to hold the pressure given that it lost its market share to other
competitor companies such as Reebok. The company is also competing with new companies in
the market that have come up with trendy designer bras, tights and yoga pants (Green, 2016).
Companies like Under Armour and Adidas are also making progress showing an increased
growth rate with a large presence in the market. On the other hand, Adidas made a move and
passed Under Armour taking the second position among the sportswear companies which is a big
success given that the company had been struggling to develop and maintain its market share.
In its attempt to pull away from the competitors, Nike’s New leadership is concerned
with making new products to meet the needs in the market (Segran, 2017). The company has a
competitive advantage in technology as it can develop advanced products that meet the specific
demands of the female athletes.

Assess whether Nike’s organizational structure is still a major strength that

contributes to its success, or if it is creating problems that will call for organizational design
changes in the future.
 The company’s organizational structure has contributed to the largest share of Nike's
success. The company has chosen characteristics from different types of organization structures
that suit the business making Nike structure the best in the industry. It has an organizational
structure that promotes the regionalization of the business. This kind of structure helps in
ensuring customers’ demands and environmental needs are meet in a given region
(Schermerhorn Jr. &Bachrach, 2016). It also promotes flexibility where customers can meet their
preferences across the different regional markets. In this case, the company does not have to
make standard products for all people in the world. The most significant success has been the
ability to face competition from other companies like Adidas, Reebok, and Puma.
The organization structure used by the firm is geographical divisional structure. The
structure is based on the diversity and uniqueness in the market. The company also follows a
divisional structure that ensures that innovation takes place happens in all products manufactured
in the firm. The organization structure also has a global corporate leadership department that
includes the company leadership that implements company policies in all relevant divisions
(Thompson, 2019). The Functional structures under this leadership include administrative
structure, the finance, product, and merchandising, and operations among other departments led
by the president.
Nikes organizational structure has helped in increasing company sales, as well as
enhancing the brand reputation in the international market. Regional divisions have also made
marketing and promotion of products easier. This is enough proof that Nike’s organizational
structure has been the success factor for the company.
Determine whether a matrix structure could improve performance for Nike.

A matrix structure is an organization design that integrates the product and functional
structures. The functional structure is a traditional approach, and it is combined with the product
approach to share the benefits of the two structure characteristics. This structure would improve
Nike’s performance given that the company is flexible and utilizes different organizational
structures to improve its business strategy.
In this structure, the employees report to two managers including the department and the
product manager. The department manager deals with issues relating to firm policies while the
product managers are involved in matters related to the product. The reason why the matrix
structure would lead to success is by improving the flow of information which promotes faster
responses to employees and consumers. The structure also promotes the independence of the
managers which encourages learning and experience. The matrix structure is also useful as it
allows specialization which creates a competitive advantage due to increased knowledge of a
given sector.
 References
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competitor — here's who's likely to win. Retrieved from

https://www.businessinsider.com/adidas-and-under-armour-are-fighting-to-be-nikes-top-

us-competitor-2016-11?IR=T

Kish, M. (2014). Consolidation of Nike's manufacturing operations continues. Portland Business

Journal. Retrieved from

https://www.bizjournals.com/portland/blog/threads_and_laces/2014/05/nike-sheds-100-

000-factory-workers-125-factories.html

Thompson, A. (2019). Nike Inc. Organizational Structure Characteristics (Analysis). Panmore

Institute. Retrieved from http://panmore.com/nike-inc-organizational-structure-

characteristics-analysis

Schermerhorn Jr., J.R., Bachrach, D.G. (2016) Nike: Spreading Out to Win the Race. In

Exploring Management.

Segran, E. (2017). How Nike Plans to Fight Off the Competition: “Knowing Female Athletes

Better Than Anyone.” FastCompany. Retrieved from

https://www.fastcompany.com/40439729/inside-nikes-plan-to-hold-down-its-turf-with-

women