MGT230 Phoenix WK3 Nike Spreading Out To Win The Race Case Study

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Nike: Spreading Out to Win the Race

Nike is indisputably a giant in the athletics industry. The Portland, Oregon, company is known worldwide for its products, none of which it actually makes. It has thrived by knowing how to stay small, focusing on core competencies, and outsourcing manufacturing.

But if you don’t make anything, what do you actually do? If you outsource everything, what’s left? A lot of brand recognition, as it turns out.

Behind the Swoosh

Nike continues to outpace the athletic shoe competition while spreading its brand through an ever-widening universe of sports equipment, apparel, and paraphernalia. The ever-present Swoosh graces everything from bumper stickers to sunglasses to high school sports uniforms. Nike products embody a love of sport, discipline, ambition, practice, and all other desirable traits of athleticism.

The company has cleverly kept its advertising agency nestled close to home, but has relied extensively on outsourcing many non-executive and back office responsibilities to reduce overhead. Nike is structured around its core competency in product design—not manufacturing. It has taken outsourcing to a new level, with sub-contractors producing all of its shoes.

Whoops

Although outsourcing production hasn’t hurt product quality, it has challenged Nike’s reputation for social responsibility, especially regarding work conditions and labor practices at some suppliers. In a move designed to turn critics into converts, Nike posts information on its website detailing every one of the hundreds of factories that it uses to make shoes, apparel, and other sporting goods. It released the data in conjunction with a comprehensive corporate responsibility report summarizing the environmental impact and the labor situations of its contract factories.

Nike also encourages designers to develop environmentally sustainable designs like the Nike Free, a lightweight running shoe that boosted sales dramatically. Nike’s Sustainable Business & Innovation Lab funds outside startups focused on alternative energies, more efficient approaches to manufacturing, and the promotion of healthy lifestyles.

Pesky Competition

Nike has so far balanced size and pressure to remain successful by leveraging a decentralized and networked organization structure. Individual business centers—such as research, production, and marketing—are free to focus on their core competencies without worrying about the effects of corporate bloat.

This company has found continued marketplace success by positioning itself not simply as a sneaker company but as a brand that fulfills the evolving needs of today’s athletes and athletes-at-heart. Will Nike continue to profit from its organization structure, or will it spread itself so thin that its competition has a chance to overtake it?

Source: Schermerhorn Jr., J.R., Bachrach, D.G. (2016) Nike: Spreading Out to Win the Race. In Exploring Management (Cases for Critical Thinking).

Case Analysis Questions

Answer the following in up to 350 words each.

  • Describe the factors that drive Nike’s decision to stick with some form of network organizational structure rather than own its manufacturing operations.
  • Assess why Nike’s choice of a decentralized and networked organization structure worked well for them.
  • Summarize the current state of competition in this industry. Assess if Nike continuing to pull away from rivals, or if they are catching up.
  • 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.

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Nike Case Study Analysis MGT/230 Version 6 • University of Phoenix Material Nike Case Study Analysis Nike: Spreading Out to Win the Race Nike is indisputably a giant in the athletics industry. The Portland, Oregon, company is known worldwide for its products, none of which it actually makes. It has thrived by knowing how to stay small, focusing on core competencies, and outsourcing manufacturing. But if you don’t make anything, what do you actually do? If you outsource everything, what’s left? A lot of brand recognition, as it turns out. Behind the Swoosh Nike continues to outpace the athletic shoe competition while spreading its brand through an everwidening universe of sports equipment, apparel, and paraphernalia. The ever-present Swoosh graces everything from bumper stickers to sunglasses to high school sports uniforms. Nike products embody a love of sport, discipline, ambition, practice, and all other desirable traits of athleticism. The company has cleverly kept its advertising agency nestled close to home, but has relied extensively on outsourcing many non-executive and back office responsibilities to reduce overhead. Nike is structured around its core competency in product design—not manufacturing. It has taken outsourcing to a new level, with sub-contractors producing all of its shoes. Whoops Although outsourcing production hasn’t hurt product quality, it has challenged Nike’s reputation for social responsibility, especially regarding work conditions and labor practices at some suppliers. In a move designed to turn critics into converts, Nike posts information on its website detailing every one of the hundreds of factories that it uses to make shoes, apparel, and other sporting goods. It released the data in conjunction with a comprehensive corporate responsibility report summarizing the environmental impact and the labor situations of its contract factories. Nike also encourages designers to develop environmentally sustainable designs like the Nike Free, a lightweight running shoe that boosted sales dramatically. Nike’s Sustainable Business & Innovation Lab funds outside startups focused on alternative energies, more efficient approaches to manufacturing, and the promotion of healthy lifestyles. Pesky Competition Nike has so far balanced size and pressure to remain successful by leveraging a decentralized and networked organization structure. Individual business centers—such as research, production, and marketing—are free to focus on their core competencies without worrying about the effects of corporate bloat. This company has found continued marketplace success by positioning itself not simply as a sneaker company but as a brand that fulfills the evolving needs of today’s athletes and athletes-at-heart. Will Nike continue to profit from its organization structure, or will it spread itself so thin that its competition has a chance to overtake it? Source: Schermerhorn Jr., J.R., Bachrach, D.G. (2016) Nike: Spreading Out to Win the Race. In Exploring Management (Cases for Critical Thinking). Copyright © 2018 by John C Wiley & Sons, Inc. All rights reserved. 1 Nike Case Study Analysis MGT/230 Version 6 Case Analysis Questions Answer the following in up to 350 words each. 1. Describe the factors that drive Nike’s decision to stick with some form of network organizational structure rather than own its manufacturing operations. 2. Assess why Nike’s choice of a decentralized and networked organization structure worked well for them. Copyright © 2018 by John C Wiley & Sons, Inc. All rights reserved. 2 Nike Case Study Analysis MGT/230 Version 6 3. Summarize the current state of competition in this industry. Assess if Nike continuing to pull away from rivals, or if they are catching up. 4. 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. Copyright © 2018 by John C Wiley & Sons, Inc. All rights reserved. 3 Nike Case Study Analysis MGT/230 Version 6 5. Determine whether a matrix structure could improve performance for Nike. Copyright © 2018 by John C Wiley & Sons, Inc. All rights reserved. 4 ...
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CristinaP
School: UCLA

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Nike Case Study Analysis
MGT/230 Version 6

Nike Case Study Analysis
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Copyright © 2018 by John C Wiley & Sons, Inc. All rights reserved.

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Nike Case Study Analysis
MGT/230 Version 6

2

1. Describe the factors that drive Nike’s decision to stick with some form of network
organizational structure rather than own its manufacturing operations.

Over the years, Nike Company has managed to be one of the giant athletic company
producing a wide variety of sports products including shoes, athletics wears, sunglasses
and other sports products. However, part of this success is as a result of its policy of
outsourcing products rather than manufacturing its own. First, the need to keep the
company's costs low is one factor that makes Nike company to stick to its network
organizational structure (Schermerhorn & Bachrach, 2016). This decision enables the
company to keep its costs as low as possible by reducing the production costs. By
outsourcing the company would be able to reduce the number of permanent employees
and other overheads associated with production thus lowering the costs (Yong, 2018).
The other factor that has made Nike continue using the network organizational culture is
the desire to get the best products for the company to give customers the best products.
Additionally, the existence of open market expertise from specialized partners is the
other factor that makes Nike company to stick to its initial organizational structure of
networking . Nike company's decision to continue using its networking organizational
structure, where there are business centers is also a result of the need to concentrate on
the core competencies of the company and improve competition (George-Parkin, 2019).
The last factors are the need to maintain a balanced size and the need to fulfill the
evolving needs of the customers of the company by forming business centers which
focus on thing thus being able to understand the emerging trends in the market thus

Copyright © 2018 by John C Wiley & Sons, Inc. All rights reserved.

Nike Case Study Analysis
MGT/230 Version 6

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fulfill the customer's needs.

2. Assess why Nike’s choice of a decentralized a...

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