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Nike’s Organizational Structure: Pros & Cons

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This post was most recently updated on December 18th, 2018

Nike’s organizational structure is worthy of study due to the fact that it has been a successful organization since its inception. Nike is an American multinational company producing equipment, footwear, clothes, and accessories. It is the world’s largest supplier of athletic shoes and apparel.

The company has gone through several controversies including the child labor allegations in 1990, strike in Yue Yuen Industrial Holdings Dongguan shoe factory (China) in 2014, and so on. Despite the problems, the firm has been thriving over the years and has no plans of going down anytime soon. Consequently, the firm’s tactic of employing creative and innovative ways to market their products is commendable.

From visiting public places to getting famous sports stars in their advertisements and holding shows with those sports stars to gain people’s attention. Nike’s all-time popular slogan, “Just Do It,” is also featured in our best slogans list.

Nike’s Organizational Structure

A major part of Nike’s success is due to Nike’s organizational structure. The firm has chosen, from different types of organizational structures, the one that suits them the most. Nike’s organizational structure is one of the best organizational structure examples in the world.

An organizational structure defines task delegation, and line authority establishment within an organization. Nike’s organizational structure is a matrix structure.

The Matrix Structure and Nike

A matrix structure is made up of different types of organizational structures. In a matrix structure, the authority passes vertically as well as horizontally. Nike follows geographical divisional structure to facilitate customers in different areas.

The product design is done specifically for their needs. There is no manufacturing of standard products for the entire world’s population.

Divisional structure

On the other hand, it follows a divisional structure on the product basis.  This is to make sure that the development and innovation keep happening in all products that Nike manufactures.

Moreover, there are functional departments under the Global corporate leadership, and there is also a team structure in the organization. The global corporate leadership at Nike which involves corporate leaders makes sure to implement policies throughout the company that is, in all divisions.

Under this leadership comes a functional structure that divides finance, global human resources, product & merchandising, administration &legal, global sports marketing, and operations departments.

Functional Structure

All the departments of a functional structure come under the president. North America, Western Europe, Central & Eastern Europe, Greater China, Japan and Emerging markets are the regional divisions of Nike structure. The operations of each division are separate from each other.

The regional divisions are given autonomy in taking decisions in their regions. But there is a limitation to that autonomy. A close check is kept on these divisions. Hence, this prevents them from doing any unethical or inappropriate thing that might harm the entire firm’s image.

Other divisions within Nike organizational structure are the subsidiaries’ and Nike licensing divisions. The Converse is another footwear brand that Nike owns and management in its division controls its operations.

Other brands that Nike owns are Bauer, Hurley, and Exeter which also have the same structural characteristics as Converse. On the other hand, the Nike licensing division, as its name suggests, controls the licensing of the Nike brand name.

Advantages of Nike’s Organizational Structure

The matrix organizational structure of Nike accumulates advantages of all different types of organizational structures within it.

First, the regional divisional structure allows Nike to provide different goods in different regions in relation to the preferences of people in those regions. This is the reason why you can find different variety of Nike products in your country in comparison to another country. This not only increases Nike’s sales, but it also helps it to enforce its brand image all across the world by not letting the competitors settle in.

Moreover, setting regional divisions at different places helps in promotion too. The firm gets to know about the culture of people living there and it markets its products according to their culture’s liking. The divisions according to products help the firm in developing its products as the employees in each division focus on their product only. This allows them to become specialists in their particular field, makes them best for the job.

Adding to this, the functional structure helps in enhancing the best form the workforce. People have specialization and perfect skill sets and their placement is with similar people in a group. This means that the tasks of each functional group are done quickly. It not only brings about efficiency but also reduces the chances of error.

The matrix structure, as a whole, uses the scarce human resources of the firm very efficiently by employing a single person for more than one jobs. This not only increases their incomes but also motivates them to do even better.

Disadvantages of Nike’s Organizational Structure

The matrix structure of Nike also accumulates the disadvantages of all different types of organizational structures in it.

First, when a single person is working on more than one jobs, he is answerable to more than one bosses. This leads to confusion and conflicts, as to whose work should be given priority. The unnecessary grudges and conflicts arising from this can be detrimental for the firm as well as the employees.

Secondly, the divisional structure leads to a duplication of duties within the firm. Two divisions will have different departments for the same function, no matter how small the divisions are. This leads to wastage of money and other resources of the firm.

Moreover, lack of coordination, which is highly likely, can prove to be fatal for the organization. This is because one department will not be aware of the plans of the other departments. For example, the research and development department may be planning to conduct research on a new kind of product, but at the same time finance department feels that there is too much idle money and it invests the money somewhere.

The research plan may face postponement due to low funds. Adding to this, the teams within the organization might start having unhealthy competition amongst them to win over each other.

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