Case Study – Nike: Spreading Out to Stay Together

Case Study Amazon Nike Spreading Out to Stay Together Nike, Inc. is an Americanmultinational corporationthat is diligent in the design, development and worldwide marketing and selling of footwear, apparel, equipment, accessories and services. The company is headquartered nearBeaverton, Oregon, in thePortland metropolitan area. It is the worlds leading supplier ofathletic shoesandappareland a major manufacturer ofsports equipment, with revenue in excess of US$24. 1billion in its fiscal year 2012 (ending May 31, 2012). As of 2012, it employed to a greater extent than 44,000 people worldwide. The snitch alone is valued at $10. Billion making it the most valuable brand among sports businesses. Nike andPrecision Castpartsare the onlyFortune euchrecompanies headquartered in the state of Oregon, according toThe Oregonian. The company was founded on January 25, 1964 asBlue Ribbon SportsbyBill BowermanandPhil Knight,and officially became Nike, Inc. on May 30, 1978. The company takes its hold fromNikethe Greek goddess of victory. Nike markets its products under its own brand, as well as Nike Golf, Nike Pro,Nike+,Air Jordan,Nike Skateboarding, and subsidiaries includingCole Haan,Hurley International,UmbroandConverse.Nike also owned Bauer Hockey (later renamedNike Bauer) between 1995 and 2008. In addition to manufacturing athletic wear and equipment, the company operates retail stores under the Niketown name. Nike sponsors many anformer(a)(prenominal) high-profile athletes and sports teams around the world, with the highly recognized trademarks of Just Do It and theSwooshlogo. Discussion Questions 1. When Nike CEO Phil Knight stepped down and handed his put-on to Bill Perez, he stayed on as chairman of the board. In what ways could Knights continued presence on the board have created an internal structure that prevented Perez from achieving full and complete leadership of Nike?Answer Informal structures are the shadow organization that represents the actual workin g and communication relationships that may not match the formal organisational chart. When knight remained on the board, old communication relationships may have survived his departure from the CEO position, cutting Perez off from valuable information. Knights access to the informal communication network may have worked to spread rumors to Knight and back down the communication chain. These rumors may have contained inaccurate information, caused tube to change and distracted members from their work.This may have reinforced Perezs position as an outsider. 2. How can Nike utilize both traditional and newer organization structures to support the unanimouss heavy strategic commitment to outsourcing? Answer Network structures use information technology (IT) to link with networks of outside suppliers and service contractors. This outlines Nikes efforts to outsource many nonexecutive responsibilities to reduce overhead. In addition to outsourcing deed, the research and marketing busin ess centers listed in the case could be part of a network structure. other(a) functions may include design, advertising, licensing, deference sports and entertainment marketing. 3. Given the problems Nike has had with sweatshop labour being used in some of its foreign contractors, are there subsystems of the firm that need to be run with a mechanistic rather than organic design? Give examples to support your answer. Answers Mechanistic designs are highly centralized and bureaucratic with an emphasis on command and control. This magnate suggest that mechanistic designs are appropriate for manufacturing in foreign countries.Organic designs are adaptive, decentralized and tend to respond to change more quickly. This would probably be a good fit for an organization that has far flung operations in different countries with different cultures that try to respond to rapidly changing technology, fashion, customer demands and economic conditions. Nikes manufacturing subsystem should be run with mechanistic rather than organic so as to protect the image brand and its original designs. The design should be utmost grotesque and further differentiated, not conforming to culture.Design is could be one competitive advantage so it is important that the manufacturing of the products are conformed to the original ideas of the maker, un temptd by any other factors involved in its manufacturing process. Example of this idea is the use of differentiation strategy of companies to gain competitive advantage. 4. Further ResearchGather information on Nikes recent moves and accomplishments, and those of its rival Adidas. Are both firms following the same strategies and using the same structures to support them? Or, is one doing something quite different from the other?Based on what you learn, what do you predict for the future? Will Nike stay on top, or is Adidas the next industry leader? The advertising strategy differs from company to company. Generally, Nike believes in expendit ure 5-7% of its revenues in advertising and endorsement. Nike has planned to spend $4. 2 Billion until 2014 for endorsements alone. With the huge size of Nike, it is tough for other companies to allocate a big amount for their marketing expenses. Moreover, Nike has always an edge when it comes to advertising and marketing. The table below shows the advertising strategy for the major players in the industry.Company Strategy Nike * Endorsing Athletes * Sponsoring Sports events * City based advertisements * Banners Billboards * Themes on bringing ambition and innovation to every athlete in world Adidas, Reebok * Sponsoring Sports events * Endorsing Athletes * Themes on improving performance of every athlete in the world Puma * Mixing influence of sports, lifestyle fashion * Puma concept retail stores * Puma fashion shows * New stuff advertising campaigns * Building seasonal momentum during holiday seasons Other companies * Minimal or less advertising based on storesNike has investe d a lot so far in developing a premium brand that implies high quality and care for the customer. Nike has a wide range of products ranging from athletics to life style and also in different price ranges. Therefore, it is always a challenge to fight against brand dilution within Nike. The following gives an idea of the customers perception of the brands. Company Branding message and strategy Nike Athletic, Influential, Outgoing, Aggressive, hi tech, futuristic, ex post facto cool American way of living Associated with Athletes at top of their sportTo bring inspiration and innovation to every athlete in world Adidas, Reebok Clear, orderly, Practical, hi tech, Sophisticated, straightforward Conservative European style To improve performance of every athlete in the world Associated with elite soccer players/teams, NBA stars, Hip hop artists Puma Elegant, colorful, fresh, spontaneous, individual, metropolitan, external Mixing influence of sports, lifestyle fashion Fashion brand, perfo rmance casual footwear, fringe, extreme sports Other companies Based on their product lines. Generally not a strong brand messageIn general, Nikes shoes are associated to be of high quality and stylish. Reeboks are comfortable and casual, and the Adidas brand boasts A-one performance and is perceived as a professional, technically orientated brand with strong European roots. Nike fields some of the best in class expert practices and has a few patents to its credit. Nike emphasizes on these and has developed a lot of new products with use of high technology and sophistication. An example of that is the microprocessor shoe to give great get word and comfort to the customer.However, Adidas is also working on high tech innovations to provide high quality shoes. Lately, Adidas and Nike have been doing entertainment based marketing campaign by forming alliances with technology/entertainment companies. Nike had an alliance with Apple to sell Nike shoes with Apple iPods while Adidas tie d up with Microsoft to sell Adidas goods with Microsoft Xbox gaming systems. So far the supremacy of these alliances is yet to be quantified. Nike follows a 100% outsourcing strategy. Most competitors follow the outsourcing strategy.Exceptions to this are New Balance and other smaller players. New Balance claims that 75% of its production is from the US and other small companies produce in the US as well. In general, Nike might still be the industry leader if it compensates its weaknesses in organizational structures with different strategies such as focusing on innovation and development, following differentiation and pricing-based strategies, and investing on sustainability research. References http//www. nike. com/ph http//en. wikipedia. org/wiki/Nike,_Inc. http//www. scribd. com/doc/91701683/Case-Study