Business Ethics Case Study: Nike Inc.

What is the name of the organization? Give a short account of the history of the company.

The organization that we have selected is Nike.

Originally known as Blue Ribbon Sports, Nike was started University of Oregon track athlete, Philip Knight and his coach Bill Bowerman in January 1964. The company initially operated as a distributor for Japanese shoe maker Onitsuka Tiger (now ASICS), making most sales at track meets out of Knight 's automobile. In 1964, in its first year in business, BRS sold 1,300 pairs of Japanese running shoes grossing $8,000. By 1965 the fledgling company had acquired a full-time employee, and sales had reached $20,000. In 1966, BRS opened its first retail store. By 1971, the relationship between BRS and Onitsuka Tiger

How many people does the organization employ?

Till the end of FY13, Nike Inc. employed 43,700 employees across the globe in various functions ranging from designers and marketers to compliance monitors and accountants, to retail employees. Nike Inc. also contracts other manufacturers, which in turn employ more than 800,000 people.

2. How many levels are there in the organisation’s hierarchy?

Nike Inc. contains 3 levels in its organisational hierarchy. At the topmost level we have the CEO and the Board of Directors. Under the CEO we have different positions such as COO, CFO, CIO etc. and different functions such as Admin & Legal, Human Resources, Sport Marketing, Geographies & Sales etc. Again, under these domains we have functions such as Finance & IR, Design etc. , different geographies such as Europe, North America, Brazil etc. and product categories such as Basketball, Global Football, Men’s Training etc.

3. Is the organisation tall or flat? Does the organisation experience any of the problems associated with tall hierarchies? Which ones?

Considering that Nike Inc. employs around 43,700 employees (till FY13) globally, it has only got a three level hierarchy which is considerably low. Hence, Nike has got a flat

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. Horizontal differentiation leads to the emergence of specialized subunits, functions or divisions. Nike Inc. is a much differentiated firm as can be seen from the structure. It has specialized divisions for each of its brands also for each functions.

6. Do you think that your organization does a good or a poor job in managing its hierarchy of authority? Give reasons for your answer.

Nike Inc. has a flat organizational structure. Along with that it is highly horizontally differentiated. This leads to the smooth functioning of the units that result from the differentiation. For example there are clear cut divisions between the Jordan brand and the Nike brand, all of whom report to the CEO which leads to smooth information flow to the top levels of management allowing them to function