5. How do centralization, standardization and horizontal differentiation affect the shape of the organization? With centralization there is little need for managers to supervise. Nike Inc. is quite centralized as the responsibility and authority lies with a few. With standardization the managers gain control over the employees by making them follow SOPs and making their actions predictable.
It was about time for Nike to respond to this. They created a code of conduct and changed the agreement with their subcontractors by imposing some rules like wage, working conditions and although these rules were basic it showed interest from Nike to improve the problems created by its suppliers. It also created a department of control in order that environmental, ethical or labor issues are in compliance with the regulation and agreement made. Nike reviewed all agreements with its companies around the globe and made mandatory to have a healthy working space. It created a grading system for its suppliers to monitor and determine these demands.
Nike and their Just Do it slogan is one that is very known throughout the world. Nike is a fortune 500 company. Nike is a major company in sporting products and has put a lot of time in developing the company reputation in reliable and good quality. Nike is very smart in marketing their products to the general public. They use all types of methods to get the company to attract consumers.
Nike adopted the policy to produce in undeveloped and cheaper country purely for economic reasons: to sell a price-competitive product in prospering market, production had to be the cheaper possible. Positive effect of Nike strategy Nike’s evolution brought many negative effects, but it created also numerous positive effects. To start, by importing cheaper product, Nike could count on a cheap price. This had two advantages: Nike’s product was affordable, and this helped grew the company’s market all over the world. The other advantage is the profitability: with this lower price, Nike was extremely lucrative, since they had a large profit margin to play with.
(Locke, R. 2002) Nike felt the positive impacts of their business strategy, expanding their footwear product range and market share dramatically through the 1980’s. Adding various other apparel to their product line beyond footwear to sports clothing and equipment, and of course growing financially from a modest company to a $10 Billion annual revenue global powerhouse. Nike also expanded their market beyond US borders to become a true global player. This exponential growth and massive success could not have been accomplished without the same business strategy that soon would leave the developed world in shock. The negative impacts began.
Due to high number of products it has to be efficient in its operation. They need to make sure that manufacturing is in sync with the demand. Efficient operation process would remove errors and save up a lot on energy and cost for the company. Outbound logistic is also important part of Nike’s value chain. It is important to make sure that transportation and delivery of the final products is efficient.
Nike’s core competency is strong marketing strategy. Nike has designed their product according seasons(spring, autumn, summer, and winter) and festival(new year and christmas), with these numerous design, Nike able to attract many customer in the market. Furthermore, through Nike’s website, customers is able to design the apparent of the shoes by ownself. Nike has unique competence, specifically in buyer consciousness and brand power. Furthermore, Nike applied endorsement effect, which invite famous athletes to involve in advertising campaigns.
Nike sponsors many high-profile athletes as well as sports teams around the world. Their swoosh logo and "just do it" slogan are highly recognized among the public. Innovation is the key aspect to Nike's competitive advantage. According to an article posted in Chicago Now, Nike President Charlie Denson said, "Our ability to be authentic, stay connected, and remain distinctive through innovating across all areas of our business is a definitive competitive advantage." The Nike Corporation prides itself in being a leader in their industry because of their innovation, and protecting these ideas with patents.
Understanding The Impacts, Risks and Opportunities The journey to integrate sustainability deep into NIKE has required them to show how it supports their company strategy, creates value for stakeholders, mitigates risk and makes their business more resilient. To do this Nike must understand their business and its impacts, so they can make informed decisions that will bring about the greatest change. Nike also must consider the connectivity across all areas, as a decision in one area may have unintended consequences or enhancements in another. They take a broad view, as they recognize the impacts from their directly controlled operations are a small part of the total system. An important factor is Nike 's outsourced manufacturing model, which
The CEO promised to develop initiatives that would improve the conditions of work in the company and adhere to the human rights instruments provisions. Training of Managers Nike educated its managers on fair trading practices and the codes of conduct in the working environment (Harrison & Scorse, 2010). Most of the managers were accused of