Running head: NIKE CASE STUDY 1

Nike Case Study

Student’s Name

Institutional Affiliation
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Nike Case Study

Introduction

Nike is an American corporation that is the world's largest manufacturer and supplier

of sportswear such as athletic shoes, apparel and other sports equipment used for specific-

sport or leisure. It serves a global market with its headquarters in Beaverton, Oregon. It was

founded on 25th January 1964 as "Blue Ribbon Sport" and officially became Nike

Incorporation on 30th May 1971. In addition to manufacturing sportswear and equipment, it

has retail stores under its name. According to Brohi (2016), Nike has maintained traditional

and non-traditional product distribution channels worldwide. Nike has had great success by

working with high-profile athletes such as Michael Jordan, Ronaldinho, Tiger Woods, and

Kobe Bryant.

Nike has captured a far greater market share, therefore, staying on top of its rivals

such as Puma, Under Armour and Adidas thanks to its network organization structure. While

most shoes and apparel companies manufacture their products, Nike has outsourced its

manufacturing to other companies. This outsourcing has not affected the quality of their

product. It has, instead, allowed them to focus on different aspects of the corporation, such as

marketing, Research, and product design, which are the organization's core competencies.

Nike prides itself in being socially conscious and customer-focused, therefore, gaining brand

recognition.

Question 1

Nike has stuck with its strategy of a decentralized and networked organization

structure. The company has outsourced its most crucial operation, which is manufacturing. It

has also outsourced non-executive and back-office jobs. For decades, this has worked to their

benefit. Factors as to why they stick with this structure include:

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 Focus on brand recognition. The company's mission is to "bring inspiration and

innovation to every athlete". Nike embodies a love of sport, discipline, ambition,

practice and other athletic traits (Gopez, 2017). The company understands that they are

selling athletic shoes and apparel and, most importantly, inspiring people to be better

athletes. In this spirit, Nike has also sponsored several sports teams and athletes across

the globe.

 Nike has been able to get high-quality products from reliable subcontractors. Nike has

reserved the job of product design while its subcontractors do the manufacturing.

Despite not manufacturing its products, Nike has had great success with the quality of its

products. Nikes website has a list of its subcontractors and their corporate responsibilities

and labour situations for transparency to its consumers.

Question 2

Over the years, some of Nikes manufacturing facilities have attracted bad publicity,

especially in complying with labour standards. While this damages Nikes reputation, taking

over manufacturing might not be a good move for the organization. However, Nike might put

policies and strategies for their manufacturing facilities to follow and ensure they are

implemented. Some of these policies may include:

 It should establish monitoring programs, including independent bodies such as non-

governmental organizations, educational institutions and foundations. The finding

reports could also be made public for transparency.

 Nike should also adopt the United States Occupational Safety and Health Administration

(OSHA) quality standards for their manufacturing facilities.

 Ensuring the minimum age of factory workers is 18 years old and keeping a database of

all the factory workers ensuring they are above the age limit.

 It should improve safety and health conditions for the workers.

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This policy will show Nike's commitment to responding to consumers' concerns and help

the public move past Nike's bad reputation.

Question 3

Top
Management

Human
Manufacturing Sales Finance
Resource

manufacturing Human
Sales Unit Finance Unit
Unit Resource Unit

An organization structure defines task delegation and line authority establishment

within a particular organization. A matrix structure is most suitable for Nike. A matrix

structure combines both divisional and functional systems. In a matrix structure, authority

passes both vertically and horizontally. Nike uses divisional and functional structures :

 Geographical divisional structure: This structure allows Nike to facilitate customers in

different areas. Products are designed to meet the needs in a particular geographical

setting.

 Product divisional structure: This is to ensure that innovation and development keep

happening in all Nikes products.

 Functional structure: The regional divisions in Nike are given autonomy in decision

making in their regions. There is, however, a limitation to this autonomy and the

functional structure ensures this limitation is not violated.

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The divisional structure makes lack of coordination to be highly likely. One

department might not know what the other department is involved in, which can ultimately

prove fatal for the organization. The structure can be improved to allow better

communication among the departments. This communication will enhance work efficiency

without losing its performance edge.

Question 4

Competition in athletic wear has increased over the past few years. Nikes competitors

including Adidas, Puma, Reebok, are fast catching up with Nike. However, the company has

the edge over its competitors due to great product quality, product and process innovation,

and unique designs. Despite the competition, its financial performance has kept growing, and

it has remained top in the sportswear industry.

There are new sports apparel companies such as Karma Athletics, Lou and Grey, and

Koral. These companies have brought to market new and sleek apparels. Even though they

have a consumer base, they are nowhere near Nike's success in the business. Nike's structure

allows them to be far ahead of its rivals because of a well-established research department.

Nike has therefore been able to keep up with trends, for example, when they developed an

environmentally sustainable shoe.

Over the past decades of operation, Nike has had extremely strong supply chain

relations. It has subcontracted its manufacturing operations to hundreds of companies

overseas, which has been beneficial to the organization due to low production and lower

wages. The cost-effective strategy has generated more profit for Nike. It has been able to

manage its subcontractors by ensuring monitoring visits to the manufacturing companies.

They have also established policies that the companies ought to follow in regards to labour

laws. By using these strategies, Nike has been able to keep control of their supply chain,

reducing the problems have been facing over the years. For example, according to Kim
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(2020), they have set the minimum age for factory workers to be 18 and provided training to

the subcontractors. Nike's organizational structure has proved fruitful and a point of strength

contributing to its success in the sportswear industry. There would not be a need to change

the system but rather improve it to be more efficient.

Overall, Nike has had great success thanks to its organizational structure. It has been

able to cut cost by outsourcing the manufacturing process and consequently focusing on core

competencies. This strategy has set them apart from their competitors, enabling them to lead

in the athletics industry. It will continue to attain great success if it maintains the current

structure.
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References

Brohi, H., Prithiani, J., Abbas, Z., Bhutto, A., & Chawla, S. (2016). Strategic marketing plan

of Nike.

Gopez, K., Navarro, A., Sok, A., & Thompson, C. Nike Crisis Communications Plan.

Kim, M. (2020). How Phil Knight made Nike a leader in the sport industry: examining the

success factors. Sport in Society, 23(9), 1512-1523.