Nikes Global Women's Fitness Business - Case Study Example

Nike’s Global Womens Fitness Business Problem ment To find out the best options and recommendations fit for: The new general manager of the global women’s fitness business that would help him/her to improve and sustain the level of integration already achieved in that division of the company. Darcy Winslow in her new responsibility of implementing a category driven organizational model. The recommendations may include ways to quickly orchestrate changes on a larger scale; and the expected barriers and trade-offs in other businesses. Key issues Reorganize Nike to support the new business strategy, stimulate cross-business collaboration, and sustain innovation. Improve the integration levels within particular divisions. Goal “To take a more consumer-oriented approach to the market, optimizing the company’s activities to give customers holistic collection of everything they want and need in a particular sports category.” Analysis Structure Currently, Nike uses the matrix organizational structure. This type of structure groups employees according to their functions and by product type that they are involved in production. In this type of structure, there is a horizontal flow of information and skills. The following components are distinctively identified with the matrix structure of organization: there is a top manager who is in charge of the entire matrix and is charged with the responsibility of balancing the two chains of command. Then there are two matrix managers who are in charge of their respective sub-groups. One of them is the product manager and the other is the functional manager. Pros: there is coordination to meet dual customer demands. It is suited for complex decisions. The structure is also suited for an organization with multiple products, like Nike. Cons: there are frustrations brought about by dual authority. This type of structure is time-consuming in decision making and conflict resolution. People This is a highly populated organization with more than 26,000 employees. There is specialized expertise in the organization with employees only working in their areas of specialization; such as footwear, equipment and apparel. Nike’s senior executives are supportive of the employee’s activities. For example, the executives offered support to the Change the Game team when the team made its presentation on the strategy to approach the women’s market. Most people in Nike, especially those who have been there for a long time like Darcy Winslow, know a large percentage of the community. The company, in its effort to move to a consumer-based organization from the current product-based, appointed team captains who would set-up and run different categories of sport. These captains were responsible for bringing together the right people to spearhead a business plan for the particular sport category that they are in charge of. People were also supportive of the company’s ideas and it is clear that they wanted these ideas to succeed. They attended meetings with enthusiasm and commitment. Pros and Cons The support that the executive gives to the other employees boosts their morale and working spirit. The employees are motivated and the quality of their output is bound to improve. Knowing a big percentage of the community helps the company to get the necessary feedback on their products and services. The people can also give recommendations about a particular type of product. Using team captains and a group of specialists guarantees the company of quality results. There was resistance from retailers who were not willing to allocate more space to Nike. These retailers did not want to change their traditional practices. Incentives Nike worked out an incentive methodology that was aimed at motivating the performance of the employees. Most members were measured according to the results that they achieved, for example, selling shoes. In areas where there were added responsibilities, incentives were also increased to match up to the work. Cash bonuses were also offered for additional motivation of the employees. Pros and Cons Bonuses motivated employees to achieve better and consistent results. The employee’s additional efforts were rewarded. The women’s team was not passionate about the idea of using incentives for motivation. Leadership The leadership of the company is spread over the different business units available. Every unit has its own management. There is, however, an executive authority that oversees all the operations of the company. Most managerial duties are delegated to the regional managers who have the power and independence to make decisions regarding their particular regional branch of the company. Currently introduced are the separate male and female lines of production which have been put under their respective leadership authorities. Darcy, for example, has earned respect and credibility in the company for her leadership skills in the company over the years. She has a success record in the company. Pros and Cons There is independence of decision making among managers in their departments of specialization. There is improved relationship between management of the company and the employees. There is no direct authority of the top management of the company over key decisions either in regional offices or in different business units. The top executive has little or no influence on the making and implementation of such decisions. Culture Male products have been dominantly produced in the company. Success in women’s products was seen as likely to erode the men’s business that has so far done well in the company. To address the needs of female consumer, Nike organized a female team but was careful not to interfere with the normal male-dominated system. It was like making the usual male products but painting them pink. Limitations: there was resistance to change from the normal male products to female products. Pushing the women’s business through the company faced a lot of barriers. Retailers too were reluctant to change their traditional merchandising practices. Supportive Activities: The Company supports studies and research activities that are aimed at improving the output quality. There are no alarming issues in regard to supporting activities. The company had to use someone who had been around for a long time to influence change from the prevalent tradition to designing of female products. Alternative 1- Matrix Organization Strategy This organizational structure involves a top manager or president of the firm. This manager is in charge of all operations in the firm. Then there are departmental vice-presidents in charge of different operations in the company such as design, manufacturing and finance. The director of product operations manager oversees the operations of all the divisions of the company. The operations manager, like the vice presidents, reports to the top manager. Pros: this structure will offer accessibility and free flow of specialist ideas in the operations of Nike. There is sharing of knowledge across product lines. Nike can interchange specialist services between products. This gives them a variety of teams and there is career growth among the employees. Cons: matrix structure brings about ambiguity in authority because of the dual lines of reporting. This can create confusion within the structure. Management of the structure is also hard because of complexities in coordination. Alternative 2- Divisional Structure This alternative calls for the re-alignment of divisions in the company. If the current divisions are re-aligned then there would be better communication and coordination as well as increased efficiency within the company’s structure. In this alternative, there would be no dual-reporting relationship after the structure is aligned afresh. A new divisional structure will have to be adopted, and will bring in some new organizational divisions, phase out others and merge or split those divisions with too much loads of responsibilities. The regional units should be further sub-divided into smaller production units. For example, there should be an independent manager in each country or state where Nike has a production line. The management of the business units will have the authority to solely oversee the operations of their respective units without the ambiguity of dual authority. Advantages: the new structure is going to bring about clear accountability along the product lines. Better coordination is likely to develop between different product-divisions in the company because the teams will be mutually benefiting from each others collaboration. Since each unit and division will be self-reliant, they will be better paced to respond to environmental changes. Disadvantages: the career growth of technical specialists is inhibited by the divisional structure. Resources that can be shared across departments end up being duplicated. Specialists cannot be shared across units or regions. Employees of Nike will eventually feel more affiliated to their individual departments than the entire company. Recommendation Alternative 2 is better among the two because of various reasons. This is the alternative is the easier to maintain. This is because it is less complex. There is, however, high morale within the staff and the company at large when this alternative is brought into operation because some of the employees would like to work in a new structure away from the monotony that they are used to at their working stations. This alternative was also chosen because it is less complex than the first one. It disrupts the complexity found in the company’s operation to bring in a more aligned structure. The alternative has a higher advantage of offering sustainability because it introduces a competitive edge into the firm and, consequently, adds value to the operations and output of the company. Implementation The current structure of Nike will have to be disrupted so that the recommended one can be implemented. Independent unit and regional managers will have to be appointed and charged with the responsibility of executing major decisions in those areas. The management that Nike should hire to spearhead these implementations should include some of the top employees who have been in the company for a long time. This is because these employees have the necessary experience and knowledge of the operations of the company. They would, therefore, know the best strategies to implement, and the perfect time for those implementations. Since they have been at the company for a long time, they are better placed to influence these proposed changes. The rest of the employees will easily accept these changes because they can relate to the credibility and achievements of the management pushing for the implementation. Nike will have to train and sensitize their employees on the importance, necessity and advantage of these new implementations. They may also need to do some awareness and sensitization programs to the retailers of Nike products so that they can influence change in the prevalent culture in accordance with the new implementations. In the long term, Nike should make policies that govern the operations of these introduced implementations. In order for Nike to realize a smooth transition from their current structure to the proposed structure, they will have to form an interim management system based on a balanced scorecard framework. All the managers in the company will use the tools in the framework to drive transitions in their divisions. For the midterm transition period, managers will have to breakdown the transition strategies into smaller milestone targets. During this time, the management will seek to set in line all objectives and desired initiatives of the transition. For the long term period, the company will have to ensure that all the necessary logistical and managerial requirements are put in place to ensure the successful implementation of the proposed changes. People For the short-term, people should be trained so that they can learn and adapt to the new changes which will be introduced in the company. Long-term: outsource. Nike should check the effects of outsourcing by administering strict quality-check measures. Incentives Short-term: give commissions to employees with quality and outstanding output. Mid-term: a reward scheme should be structured so that every one is rewarded for their efforts. This will go a long way in motivating and raising the morale of the employees. Long term: Nike should measure its reward scheme and improve it to incorporate all employees. Leadership: Leadership that works for better communication should be put in place so that there is free flow of information within departments and business units. Since Darcy Winslow had done a great job as the general manager of Nike’s global women’s fitness, her great leadership qualities are expected to be reflected on her new appointment. The new general manager of global women’s fitness should also emulate the key qualities possessed by the outgoing manager. Structure: The structure of the company should be changed from the complex matrix structure that it is, to a more re-aligned structure. This would ensure that the ambiguity that comes with the matrix structure is done away with so that there is free flow of information throughout the departments and business units of the company. Challenges: 1- Loss of in-depth specializing and innovation. 2- Loss of economies of scale. 3- Poor coordination and cooperation. The lack of specialization should be addressed by training more employees to be specialists in the fields that they handle in the company. Nike should also support innovative and idea-generating programs to promote innovation in the company. The loss of economies of scale can be handled by increasing the efficiency of production in the company. Coordination and cooperation in the company can be improved by inter-divisional exchange of information and resources, holding team-building meetings and other get-together activities. Culture The prevalent culture should be changed to be in line with the new changes. New structural changes should be adopted and the resistance should be lowered by educating the employees and retailers of the advantages that come with the changes. Nike needs a dynamic culture where new changes can be adopted and integrated easily for the smooth operation of the company. Reference Burgelman, R., Christensen, C., & Wheelwright, S. (2008). Strategic Management of Technology and Innovation. 1221 Avenue of the Americas: McGraw-Hill Irwin. Read More