Nike Case Study

Background

As the environment that affects organizations behaviors is ever-changing, it is crucial for the organizations to continuous change the operation from time to time, in order to promote efficiency and create more value to the stakeholders, then gain success.

In the late 1990s, customers force(failed to satisfy customers’ continuous change taste in design) and competitors forces(New competitors entered the market to offer alternative kinds of sports shoes) increased the threats in the sport wear industry--high environment complexity, increase environment dynamism, and low environment richness. Moreover, Nike’s old structure slowed down its pace to find new opportunities to enter niche market. All the reasons above led to Nike’s market share shrank and margin declined in 2000s.

1.  How did Nike change the way it make decisions and introduce new products?

1. To achieve the organizational development goal through decision-making change, new forces from outside are needed. CEO Phil Knight brought outside managers into Nike to change the decision-making way it used to be.And efficient strategy was made-- purchased the small specialized companies to quickly broaden Nike’s product line, enabled Nike to enter the market segments which it failed before, e.g.skateboarders, soccer players, etc.
2. From the structure level, Nike decentralized its decision making. The decision-making unit changed from one large design department to separate specialized teams. Functional changes  enabled each team could focus on their fields and decision-making was more precise. Which promoted decision-making efficiency and met the customers needs.
3. Cultural level, in terms of the wrong decision-making was partly due to inappropriate culture(old company mindset). Nike started to establish the diversity in thinking.

1. In what ways could Nike use the change techniques discussed in this chapter to find ways to improve its effectiveness and competitive advantage?

Nike promoted its effectiveness and competitive advantage through changing the organizational structure at four levels: human resources, functional resources, technological capabilities and organizational capabilities  

1. Human Resources:

1. Changing the composition of the top-management team to improve organizational learning and decision making, Nike brought in outside managers to change the decision-making way it used before, and a new executive suggested to buy small specialize companies to broaden Nike’s market.
2. Socializing employees into the organizational culture so they learn new routines on which organizational performance depends. Nike tried to change the old wrong mind-set in the company to avoid wrong decision-making like before, made organizational change through trying to bring new culture into the company.

2)  Functional Resources: Change from a functional to a product team structure to speed the new product development, enable to promote efficiency and deliver more value to stakeholders. Nike split design department into independent teams, and each team’s designers and marketing experts are professionals in the specific field.