MGT230 V6 Nike Case Study Analysis
Mgt230 V6nike Case Study Analysismgt230 V6page 2 Of 2nike Case Study
Describe the factors that drive Nike’s decision to stick with some form of network organizational structure rather than own its manufacturing operations. Click here to enter text. Assess why Nike’s choice of a decentralized and networked organization structure worked well for them. Click here to enter text. Summarize the current state of competition in this industry. Assess if Nike continuing to pull away from rivals, or if they are catching up. Click here to enter text. 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. Click here to enter text. Determine whether a matrix structure could improve performance for Nike. Click here to enter text.
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Factors Driving Nike’s Network Organizational Structure
Nike Inc., headquartered in Portland, Oregon, has established an organizational strategy rooted in a predominantly network or decentralized structure, largely driven by several strategic, operational, and ethical factors. This approach has allowed Nike to maintain its innovativeness and agility while managing a complex global supply chain. The primary driver behind Nike’s decision to adopt a network organizational structure is its reliance on core competencies, specifically in product design and marketing, while outsourcing manufacturing to a broad network of contract manufacturers. This strategic division enables Nike to concentrate on creating innovative and high-quality designs while leveraging external suppliers’ manufacturing capabilities, which reduces costs and enhances flexibility (Schermerhorn et al., 2016).
Another significant factor is the geographic dispersal of its supply chain, which necessitates a decentralized organizational approach. Nike’s extensive global operations involving hundreds of factories require a structure that facilitates local responsiveness, cultural sensitivity, and efficient management across diverse regions. By decentralizing decision-making, Nike empowers local managers and manufacturers, promoting swift adaptation to market demands and local regulations (Ghemawat, 2001). This networked approach is essential to navigating the complexities of international trade, labor laws, and environmental standards, especially considering the public scrutiny Nike faces regarding labor practices in its supply chain.
Additionally, ethical concerns and corporate social responsibility considerations have influenced Nike’s organizational choices. The company’s commitment to transparency about factory conditions and environmental impact reflects a desire to maintain a positive brand image and stakeholder trust. A decentralized network allows Nike to monitor, influence, and improve factory practices more effectively by engaging directly with local suppliers and implementing decentralized oversight mechanisms (Chung & Kim, 2018). This approach also aids in rapid response to ethical challenges, aiding Nike in managing social responsibility risks associated with outsourced manufacturing.
Furthermore, technological advancements and globalization have contributed to Nike’s network organizational structure. The rise of digital communication tools facilitates coordination across dispersed locations, enabling Nike to synchronize product development, marketing efforts, and supply chain management despite geographical distances. This technological infrastructure supports flexible and responsive operations, which are critical for maintaining competitive advantage in the fast-paced athletic apparel industry.
In conclusion, Nike’s decision to adopt a network organizational structure stems from strategic focus on core competencies, geographic and operational dispersal, ethical considerations, and technological support. This structural choice empowers Nike to innovate, respond quickly to market changes, and address social responsibility challenges, which collectively contribute to its sustained success as a market leader.
References
- Chung, H., & Kim, M. (2018). Corporate social responsibility and supply chain transparency: Examining the case of Nike. Journal of Business Ethics, 148(2), 341-359.
- Ghemawat, P. (2001). Distance still matters: The hard reality of global expansion. Harvard Business Review, 79(8), 137-147.
- Schermerhorn Jr., J.R., Bachrach, D.G. (2016). Nike: Spreading Out to Win the Race. In Exploring Management (Cases for Critical Thinking). John Wiley & Sons.