Theory Nike Case Study

In a hyper competitive market, the ability of an organization to respond and adapt to changes i.e. threats from competing firms, they have to spread the decision making power throughout the organization. The disadvantage of this type of decentralized structure is that at some points there might be contradictory decisions being made which would cause conflict within the organization and the success of any unit would depend on the capability of the head, on the other hand, it would be advantageous in the sense that in addition to enabling organizations to respond faster to changes in the market, it also builds confidence of employees and therefore is a means of

It is the degree to which decision making is concentrated at a single point in the organization. In a centralized organization, top management makes the key decisions with little or no input from lower-level personnel. Centralization builds consistency in the procedures and techniques that representatives use in performing errands. Along these lines, it advances work environment amicability among laborers and diminishes the expense of creation. Centralization is typically useful when an association is in emergency and/or faces the danger of disappointment. The advantage of having centralisation is it helps to create consistency and making quick decision and make uniform actions as decisions are made by only top level people. In small companies where the level of competition is low, centralized system is used. Various levels of administrations are needed in centralized system. This system is basically used in companies with tall arrangements (Kenneth J. and John B. 2003).

Nike is considered to be a leading athletic footwear manufacturer, which makes up over 30 percent and 50 percent of global and US market share respectively. In order to reach customers’ demands and get profits, Nike has executed/implemented a number of marketing strategies. This essay will examine Nike’s key strategies from1962 to 2009. The most essential marketing strategy called “Pyramid of influence” was expressed by Product, Place and Promotion strategies throughout targeting on athletes, sportsmen and sports loving consumers.

The second advantage is the shared risks associated with outsourcing. If there are five different companies each producing one piece of an object or item to make a whole item, if something happens to one of the firms like filing for bankruptcy, the entire operation doesn’t suffer, only that one piece of the whole product. An example is a financial profile. I have in the Army what is called the Thrift Savings Program, like a civilian 401k. There are five different investment options and I elected to put 30% of my contributions into one fund, 30% in another, and then 40% in yet another. If one of those funds start going south, it is my hope that the other two compensate the first one.

One of the themes in Thomas McCraw’s book American Business Since 1920: How It Worked is mastering centralized control through decentralized management. As the business world rapidly expanded competition for market share between the larger companies increased. More task management was necessary in order to delegate within the businesses as they expanded. The market was also changing and as an answer to that some companies implemented a revised version of traditional management; decentralized management (McCraw, 2009).

In addition, it is essential to generate detailed divisions for merchandise progress and industrial can have an effect on the company’s administrative structure known as product evolution. Centralized management retains all major decisions with one detailed decision-making group, whereas decentralized management lets company managers to have more ‘say’ in the executive process. Next, corporations that participate in the mass production of products may not exert as

Speedup time to market. Because there are more people involved the process of innovation is faster

Rational Organization increases efficiency and control and also brings down costs because the tasks are minimized to the core that they require almost no training for

When a company has a tall hierarchy, they can either be decentralized or centralized. Decentralized authority allows lower levels of management the

This could be a good thing because the flexibility is there and there are expertise and efficiency present. The sad thing is there could be conflicts between departments and units, too much administrative overhead, and there is a slow response to situations. Mainly, this type of structure is used for environmental uncertainty and by companies operating all over the world.

There are numerous favorable circumstances to a decentralized system. It diminishes the force of the administration and improves the force of people. It likewise makes it less demanding for people to take an interest in the administration and help to give it fitting headings. In the event that the administration still settles on a destructive choice, less individuals get hurt in a decentralized

Decentralization has several advantages. Staffs are encouraged to develop decision-making skills, which help them advance in their careers. The autonomy afforded by this style of operation also increases job satisfaction and motivation. For example, if maintenance staff receives a complaint on a fault by a customer, in a decentralized organization the maintenance staff has the power to fix the problem without getting the approval from the administration. If that same front maintenance staff determines that a customer has been

Other common terms for the idea of organizational decentralization include: team self-management, self-management, shared control, distributed leadership (Lambe, Webb, & Ishida, 2009) and holacracy (Robertson, 2007). While these terms may have small differences they all describe the common theme of distributing power across organizations. Several concepts help to explain why decentralization and the encouragement of teamwork throughout an organization are often superior to traditional management structure.

Nike‘s vertical structure includes CEO Mark Parker and a board of directors chaired by co-founder Phil Knight. Although Nike has functional divisions and divisions based on specific products it is not a matrix organization. In a matrix organization, employees report to a functional and divisional manage. At Nike, employees report to the divisional manager and the president of each division reports directly to the CEO. Nike’s continued product innovation and successful marketing are due to the combination of functional and divisional organization using an operations department to insure communication between divisions. There is division of labor but it is not clearly identified. With a more pronounced division of labor and levels of direct supervision Nike can improve its

2.  Beneficial economies of scale.  If you will be larger, will you truly be better?  Some larger companies cannot respond as quickly to market changes due to their size and the challenge coordinating new directions to employees.  Economies of scale are not always beneficial, so make sure you can quantify that having more of one direction is what you want.