Managing Activities to Achieve Results at NIKE Inc - Case Study Example

? Managing Activities to Achieve Results: NIKE Inc s: MANAGING ACTIVITIES TO ACHIEVE RESULTS: NIKE INC Introduction NIKE is the shoe and apparel company in the world. The company is involved in designing, developing, as well as selling, products and services to aid athletes in training and active sport. NIKE is also involved in the marketing of products that are sports inspired for kids, as well as various recreational and competitive activities like walking, tennis, and golf. The company sells its products through over 800 retail outlets globally, in conjunction with being an e-commerce site, and to thousands of independent distributors, retail accounts, and licensees. NIKE’s mission statement is “to bring inspiration and inspiration to all athletes in the world, if you have a body, you are an athlete” (Epstein et al, 2012: p341). NIKE has a preference for using Environmentally Preferred materials, or EPM, which have a lower environmental impact on waste or water, energy, and chemistry. They contend that sustainable products can only be achieved via addressing the product materials, which they do by forging closer relationships with suppliers to ensure they deliver against their needs, for instance, sustainability. One way that NIKE optimizes material use is through the continuous assessment and reduction of overall numbers utilized in production. The focus also aids in management of complexities and cost in the supply chain and design phase. The shift from traditional materials to EPMs requires comprehension of the material characteristics and their availability. The structure of NIKE An organizational structure activities like supervision, coordination, and task allocation that are directed to achieving the aims and objectives of a company. Organizations are, basically, clustered entities with variations. Depending on objectives, the company can be structured in various ways, which determines its operative and performance mode (Daft et al, 2010: p34). It allows for the allocation of responsibilities with regards to various processes and functions to entities such as the individual, workgroup, department, and branch. It also affects the action of the organization by the provision of the foundation for standard procedures of operation and routine, as well as determination of the individuals who participate in decision making and shape the actions of the company (Daft et al, 2010: p35). NIKE has a matrix organizational structure, also known as the flat organizational structure (Epstein et al, 2012: p342). In the flat organization at NIKE, the employees report to the product or project teams that are led by product managers and to the department manager. Every brand possesses a department with this department making independent decisions. The departments also have sub-departments that are responsible for mini-tasks in the department. The product team and managers are involved in decision making with regards to production and specifications with the managers at the department level involved, primarily, in issues to do with policy, for instance, sustainability (Epstein et al, 2012: p342). The production team is able to react and take decisions faster than traditional department heads as these are removed from the line of production. NIKE’s Vision A vision statement is definitive of what an organization will perform in the future, as well as why it will be in existence tomorrow with defined goals with set dates of accomplishment (Daft et al, 2010: p45). Vision statements involve the organization’s current status and acts as a direction on the path the organization wishes to take. It can also be useful as a marketing tool since it acts to announce the organization’s purpose and goals to the media, vendors, clients, suppliers, and employees. NIKE has a clear vision that entails decoupling growth of profits from resource constraints (Epstein et al, 2012: p345). The vision is one that views the world in transition to a sustainable economy from an industrial one with renewable energy sources and waste as an asset. This future will benefit citizens, communities, economies, and business. However, NIKE accepts that vision is a long term and needs goals and a plan. They have come up with milestones that incorporate the manner in which they take social and environmental targets seriously. NIKE’s business strategies and targets have their basis on the predicted, the owned, the real, and the planned, where they work towards development of targets, which drive their performance, organize their efforts, and aid them in accounting for managing their sustainability program (Epstein et al, 2012: p345). Vision and organizational culture of NIKE Organizational culture can be defined as the collective behavior of employees in an organization, as well as meanings attached to actions (Daft et al, 2010: p56). It is inclusive of habits, systems, norms, beliefs, working language, vision, and values inherent in an organization. It also involves collective assumptions and behavior patterns that new employees are expected to learn in perception, feeling, and thinking. It affects the manner in which employees interact with stakeholders, clients, and other employees. It can also be defined as shared assumptions guiding action and interpretation in the organization through defining what various situations require in terms of behavior (Daft et al, 2010: p54). One of NIKE’s most fundamental aspects in maintaining its reputation is a committed workforce. The employees preach the values of the company and they are all aware of the organization’s history with NIKE working to ensure that they are all conscious of this. For instance, a Winnebago acts as a conference room in the midst of the innovation room since its founder is reputed to have sold the first shoes from a vehicle like it (Epstein et al, 2012: p343). They also keep in the museum a waffle that iron that its co-founder cracked in his attempt to make a rubber sole. This aids in embedding a sense of shared culture, history, and value in employee activity, which also gives the operations emphatic mystery and secrecy. While secrecy and mystery could negatively affect corporate culture by causing leaks and resentment, NIKE uses it to its advantage by making the exclusivity and secrecy around a project an internal story, contending that the project’s value is worth its being kept secret. The attitude around innovation and secrecy at NIKE is a prominent feature on NIKE’s public and marketing image. Its culture is best when little disconnects exists between public expectations and reality (Epstein et al, 2012: p343). In this way, the employees deliver what the public has come to associate with NIKE. Sharing the vision and values Organizations require a purpose or vision so as to give employees direction and for effective decision making and resource allocation. This can be conveyed thorough vision that expresses value addition. Vision will aid in the direction of resources to profitable market needs and point the way towards the organization’s strategy and objectives (Daft et al, 2010: p21). Vision is only useful if it can trigger action, which explains why organizations concentrate their vision into one memorable purpose. This vision is designed to inspire and energize the employees, with the shared sense of purpose provides the organization with the basis to design key objectives. The objective is a destination or goal that the organization wants to achieve. This objective can also be broken into functional objectives. If functional objectives are coordinated properly, they enable the organization to achieve its corporate objective (Daft et al, 2010: p21). NIKE has made an evaluation of its value chain and their impact, accounted for progress vs. past performance, as well as worked to set objectives that they embed into their operations (Epstein et al, 2012: p347). They deliver on their vision via setting objectives to account for their impact, to redefine their performance, and to redesign the future through innovation, sustainability, and sustainability challenge solution. From objectives to strategy and operational plans NIKE’s market segmentation is done via demographic variables like education, occupation, income, sex, and age. NIKE specifically targets both male and female athletes from the age of fifteen to thirty five. The market that they target accounts for active people with t penchant for sporting goods of high quality, especially shoes. They focus on the creation of premium experience for the customer via innovation, elevated retail presence, and brand leadership (Epstein et al, 2012: p341). Through the use of disciplined operating management, NIKE targets more expansion geographically, seeking to further its market penetration to all regions. This is enabled by its brand awareness that ensures that people already know about it before they get to them. NIKE aims to drive collaboration, innovation, and advocacy for public policy so as to deliver carbon reductions in the value chain. To do this, they have set a target to achieve a reduction of 20% in carbon dioxide emissions from 2012 to 2015. Through recognition of recommendations that seek to reduce GHG emissions by 80% by 2050, NIKE has committed itself to reduce CO2 emission across their value chain (Epstein et al, 2012: p365). Their largest effort involved the elimination of SF6 used in their airbags. They had completely eliminated its use by 2006 that led to a decrease of 80% in their CO­2 footprint. The remaining CO2 footprint is to be found in manufacturing (64%), and inbound transportation (29%). Since they do not own any of these processes, they seek to partner and carefully select their suppliers (Epstein et al, 2012: p365). When NIKE considers emission for every unit of product and growth, they have set a reduction target of 20%. This means that they are scaling efficiency of energy use across an extended, vast, and fragmented supply chain. This means that that they are seeking available renewable energy across the supply chain at cost parity (Epstein et al, 2012: p365). This also means that they are building renewable energy into distribution and retail centers, while also designing buildings to standards of LEED, as well as pursuing new warehousing concepts. They are also looking into new technology that can reduce CO2 ­dramatically through innovation. In order to achieve this, NIKE has made several commitments. One of this is an increase in the participation of contracted manufacturers in their carbon and energy continuous program of improvement (Epstein et al, 2012: p367). Key measures for this include the total number of factories that they will enroll in the carbon and energy program, as well as per unit reductions for all contracted manufacturers. Another commitment is the expansion of renewable energy use in their environment, including all newly built retail outlets (Epstein et al, 2012: p367). The key measures for this commitment will be the total percentage that renewable energy makes up across the entire supply chain and the percentage of retail stores with an 80% minimum for renewable energy. The third commitment is designing of new buildings to Leadership in Energy and Environmental Design standards, which will be measured through the percentage, of new buildings, which adhere to LEED certification (Epstein et al, 2012: p368). Finally, they are committed to the assessment and reporting of CO2 energy footprint. Measures for these operations include progressive improvement in capturing and reporting of data, as well as measuring carbon emissions and energy use across the value chain where possible. NIKE also aims to reduce wastage by buying and using less to reduce value chain impact (Epstein et al, 2012: p369). Their objective target for this strategy is the achievement of waste reduction by 10% in manufacturing across the supply chain, for example, by reducing wastage from footwear manufacture and shoebox weight to gain 35% savings for each pair between 2012 and 2022. Their first commitment in the reduction of waste from their manufacturing plants is through working with manufacturers of their finished goods (Epstein et al, 2012: p369). They help them to optimize the processes, target reductions in waste materials that are high volume, measure waste volumes and types, and segregation of waste at the source. They key measure here is the average gram for every unit of solid waste. The second commitment involves the improvement of packaging via reduction of box contents with alternatives being developed that improve performance and recyclability (Epstein et al, 2012: p370). The packaging is now 100% recyclable. The key measure for this commitment is the average weight of packaging boxes. Finally, NIKE is also committed to increasing compost, repurpose, reuse, and recycling of waste material. In 2011, NIKE produced 48.7 million kg of waste from contract footwear, of which 85% was diverted to down-cycling, closed-loop recycling, and in-house recycling (Epstein et al, 2012: p370). The key measure for this commitment is percentage diverted from incineration and landfills, as well as total solid waste produced. Another strategy for NIKE is sustainable sourcing and manufacturing, whose aim is to drive improvement in sustainability performance via implementation o sourcing systems (Epstein et al, 2012: p372). Their target objective is to source products with bronze achievement in manufacturing and sourcing sustainability index by the year 2020. Their first commitment is to ensure all products are sourced from factories possessing bronze certification in the manufacturing and sourcing sustainability index. This will be measured via the SMSI instrument. This instrument measures environmental performance, lean manufacturing, as well as labor, safety, and health management factors (Epstein et al, 2012: p372). The second commitment is the incorporation of factory environmental and labor criteria of performance into evaluation and selection of product vendors. This will be measured via the Risk and SMSI indices based on the % of new process sources. Finally, they are also committed to expansion and optimization of environmental sustainability capabilities, which will be measured via the number of trained factories and the % of represented volume (Epstein et al, 2012: p373). Suggestions for improvement Strengths NIKE has huge brand awareness around the world that enables it to be a leader in sustainability measures NIKE has an employee base of over 30,000 worldwide that increases its base for sustainability innovation ideas Its premium brand is utilized in promotion and manufacture of a wide variety of products for activities related to sport and leisure NIKE manages the premier training program, also known as SPARQ NIKE applies fly-wire material and lunar-lite materials in the reduction of manufactured show weight Weaknesses Their unwillingness to give information pertaining partnering companies led to harsh criticism from watch groups Contract factories in Asia have been accused of labor and environmental crimes Poor working conditions for cheap overseas workforce Positioning as a subject of permanent criticism from anti-globalization activists Application of forced labor in partner apparel factories that involve forced labor Opportunities The production of sports goods using waste from manufacturing The extension of projects that are eco-friendly, such as the “Re-use a shoe” program Increased corporate marketing strategy emphasis via the promotion of sponsorship agreements and corporate brands. Threats Adverse effects of the textile industry on the environment, which sees NIKE continuously aim to maintain a reputation of being eco-friendly The recent financial crisis could lead to job loss in a number of subsidiary plants Negative feedback due to extensive mass media advertising, which also involves its efforts at sustainability Recommendations NIKE should strive to increase innovation using their earlier experience in order to design apparel and footwear using a fully closed loop where the products only use the least possible materials in production. Innovation should be done continuously through design, manufacturing, and selling to recapture, reuse, or recycle. NIKE should also strive to increase integration of corporate responsibility into their plans For instance, in their procurement function; they should develop a rating system for suppliers and their performance in sustainability. Finally, they should mobilize, especially because through considering complexity, scope, and size of systems, it becomes clear that collaboration will be vital to future success. They should consider their efforts in the improvement of working conditions in their chain of supply. References Daft, Richard. Murphy, Jonathan. & Willmott, Hugh. (2010). Organization theory and design. Andover : South-Western Cengage Learning. Epstein, Marc. Buhovac, Adriana. & Yuthas, Kristi. (2012). Why Nike kicks butt in sustainability. Organizational Dynamics , 340-389. Read More