Case Study – Nike: Spreading Out to Stay Together

Case Study virago Nike Spreading Out to Stay Together Nike, Inc. is an Americanmultinational conjunctionthat is engaged in the design, development and worldwide merchandising and covering of footwear, apparel, equipment, accessories and services. The society is headquartered nearBeaverton, Oregon, in thePortland metropolitan area. It is the worlds leading supplier ofathletic positionandappareland a major manufacturer ofsports equipment, with revenue in unembellished of US$24. 1billion in its fiscal year 2012 (ending whitethorn 31, 2012). As of 2012, it employed to a keener extent than 44,000 people worldwide. The tick alone is cherished at $10. mensurationion making it the most valuable stigmatise among sports businesses. Nike and clearcutness Castpartsare the onlyFortune 500companies headquartered in the state of Oregon, fit toThe Oregonian. The confederacy was founded on January 25, 1964 asBlue Ribbon SportsbyBill BowermanandPhil Knight,and onwardicially became Nike, I nc. on May 30, 1978. The play along takes its name fromNikethe Greek goddess of victory. Nike markets its products chthonic its own shuffle, as well as Nike Golf, Nike Pro,Nike+,Air Jordan,Nike Skateboarding, and subsidiaries includingCole Haan,Hurley International,UmbroandConverse.Nike in any cuticle owned Bauer Hockey (later renamedNike Bauer) between 1995 and 2008. In addition to manufacturing sportswear and equipment, the company operates retail stores under the Niketown name. Nike sponsors many proud-profile athletic supporters and sports teams around the world, with the highly recognized trademarks of plainly Do It and theSwooshlogo. Discussion Questions 1. When Nike CEO Phil Knight stepped down and handed his telephone line to Bill Perez, he stayed on as chairman of the board. In what ways could Knights continued presence on the board start out created an informal structure that prevented Perez from achieving full and complete leadership of Nike?Answer internal st ructures are the shadow organization that represents the actual working and converse relationships that whitethorn non resemble the formal organizational chart. When knight remained on the board, mature communication relationships may have survived his departure from the CEO position, cutting Perez off from valuable information. Knights access to the informal communication interlocking may have worked to spread rumors to Knight and back down the communication chain. These rumors may have contained inaccurate information, caused resistance to change and distracted members from their work.This may have reinforced Perezs position as an outsider. 2. How can Nike use both traditional and impertinentlyer organization structures to champion the firms baleful strategic commitment to outsourcing? Answer Network structures use information engineering (IT) to link with networks of outside suppliers and service contractors. This outlines Nikes efforts to outsource many nonexecutive res ponsibilities to shorten overhead. In addition to outsourcing production, the research and marketing business centers listed in the case could be part of a network structure.Other functions may include design, advertising, licensing, shape sports and entertainment marketing. 3. Given the problems Nike has had with sweatshop labour being used in whatever of its foreign contractors, are there subsystems of the firm that need to be arc with a mechanical 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 might 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 cold flung operations in different countries with different cultures that try to respond to promptly changing technical schoolnology, forge, 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 unique and further differentiated, not conforming to culture.Design is could be one competitive advantage so it is cardinal that the manufacturing of the products are conformed to the original bases of the maker, uninfluenced by any other factors twisting in its manufacturing process. Example of this idea is the use of differentiation schema of companies to urinate 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 victimization the same structures to support them? Or, is one doing something quite different from the other? ground 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 spending 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 incessantly an edge when it comes to advertising and marketing. The panel below shows the advertising strategy for the major players in the industry.Company Strategy Nike * Endorsing Athletes * Sponsoring Sports events * urban center based advertisements * Banners Billboards * Themes on bringing inspiration and innovation to every suspensor in world Adidas, Reebok * Sponsoring Sports events * Endorsing Athletes * Themes on improving surgical process of every athlete in the world Puma * Mixing influence of sports, life style fashion * Puma concept retail stores * Puma fashion shows * New pig out advertising campaigns * Building seasonal momentum during holiday seasons Other companies * token(prenominal) or less advertising based on storesNike has invested a corporation 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 variation 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, retro 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, Sincere Conservative European style To remediate performance of every athlete in the world Associated with elite association football players /teams, NBA stars, Hip hop artists Puma Elegant, colorful, fresh, spontaneous, individual, metropolitan, international Mixing influence of sports, lifestyle fashion Fashion brand, performance casual footwear, fringe, extreme sports Other companies found on their product lines. Generally not a bulletproof brand messageIn general, Nikes shoes are associated to be of high quality and stylish. Reeboks are comfortable and casual, and the Adidas brand boasts superior performance and is perceived as a professional, technically orientated brand with strong European roots. Nike fields some of the best in class technological 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 experience and comfort to the customer.However, Adidas is also working on high tech innovations to provide high quality shoes. Lately, Adidas and Nik e 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 tied up with Microsoft to sell Adidas goods with Microsoft Xbox period of play systems. So far the success of these alliances is yet to be quantified. Nike follows a speed of light% outsourcing strategy. Most competitors follow the outsourcing strategy.Exceptions to this are New Balance and other secondary 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 button up be the industry leader if it compensates its weaknesses in organizational structures with different strategies such(prenominal) as focusing on innovation and development, following differentiation and pricing-based strategies, and spend on sustainability research. References http//www. nike. com/ph http//en. wikipedia. org/wi ki/Nike,_Inc. http//www. scribd. com/doc/91701683/Case-Study