Create a report of 2,500 excluding references, tables and charts. Using the case study below, and external references critically examine and explore the organisational structure within Nike. The leadership style, and the organisational culture that contributes to the strong external positioning of the Nike Brand Internationally.
Student ID: 16086158
Tiff Eden
BSc Business and Sport Management
Principles of Sport Management
2017-18
Module Code: 4WBS0019-0609
Sem C module : Coursework 2 – Case Study Report
Module Leader: Charlotte Dennis
Word Count: 1,433
Introduction
Nike is a sports equipment producer, producing footwear, clothing, underwear and socks, swimwear, compression garments, hats, bags and backpacks (Nike, Inc. 2018a). Nike was founded in 1964 in Oregon, United States. Phil Knight, an athlete at Oregon University, and Bill Bowerman, his athletics coach, believed they could make superior products to what was already on the market. During his spare time Bill Bowerman produced shoes for his athletes (Nike case study, 2001). Using Phil Knights entrepenurial skills together they founded blue ribbon sports which later turned into Nike as we know it today. Today Statista (2018) reports there are 1142 Nike retail stores spanned over 170 different countries. With 74,000 employees across the globe (Lifschutz, 2018). According to Forbes (2018a) Nike is the number 1 most valuable sports brand valued at a huge $15.9 Billion, Adidas being their closest competitor worth under a third of Nikes value. Nike is a public company whose shares can be traded on the stock market (Toftoy, 1998).
Leadership and Organisation structure
Thompson (2017) believes that Nikes use of a geographical organisational structure supports growth and stability. Due to the scale of Nike they have both regional and global markets to meet, and this structure suits those requirements. It is the role of the board of directors to monitor the performance of the senior management team, ensuring that the Nike code of conduct is met and the organisations various sub-groups are moving in the same direction. The board is made up of of 10-14 directors. Nike believe that this number of board numbers allows for individual accountability of members with a diverse range of experience without compromising effective discussions at board meetings. Also with 10-14 members the flexibility allows nike to refrain from immediately appointing a new member once a former member has left, giving them time to make the correct appointment decision.
Nike are very open in displaying the credentials of the board of directors. Nike, Inc. (2018b) reveal Philip Knight, is currently Chairman Emeritus of the Board of Directors. With Mark Parker the Chairman of the Board of Directors whose role is to set the agenda at the five annual board meetings. Other board members include Andy Champion, Cheif financial officer, who is responsible for all areas of financial management. Elliot Hill, president of consumer and marketplace. He is responsible for Nikes four geographic operating regions 1. North America 2. Europe, Middle East and Africa 3. Greater China 4. Asia Pacific and Latin America. Hilary Krane’s role is chief administrative officer and general counsel. Krane must keep a close eye on corporate law and protect the Nike brand through copyright laws, and deal with governments is the 170 countries Nike operates in. Monique Matheson, a stalwart for 19 years at Nike, is in charge of global human resources, predominantly employed to manage the people working within Nike. John Slusher is in charge of global sports marketing and oversee’s all of Nikes relationships with top athletes as athlete endorsement of Nike products is a huge part of Nikes marketing campaigns. Michael Spillane is president of categories and products. All Nike footwear, apparel and equipment during development require strategies developed by Spillane. He also takes the merchandising of all product to global markets. Eric Sprunk chief operating officer is responsible for sourcing, manufacturing, aquisition of sources, technology and demand and supply management. Ann Miller, Nitesh Sharan and Chris Abston make up the 12 members who are currently on the board of directors today.
Tichy and Cohen (2002) state that effective leadership requires proven leaders do the teaching, the leaders to be eager learners, and leaders tend to hold, values, ideas, energy, emotions and edge. It is evident by looking at the list of Nikes executives that they have an abundance of these key qualities. Demonstrated by the continual innovation of Nike who are producing today what there was no market for when the company initially started up (Nike Case Study, 2001).
Culture
Nike are determined to help athletes succeed. Phil Knight was passionate about victory for his athletes, and based the companies principles accordingly. Tichy and Cohen (2002) believe that it is Knight’s ideas that are the foundations for all Nikes operations. It is evident through their mission statement. “Bring inspiration and innovation to every athlete in the world.. If you have a body you’re an athlete” (Nike, Inc., 2018c). This statement highlights the scale of the market that they are trying to reach.
Nike have a number of Maxims which outline the direction of the company. Number 8 states “8. ‘Do the right thing.’ Nike thinks of itself as a responsible global citizen, embracing the stakeholder view of corporate social responsibility. It encourages its people to be honest and transparent and to promote diversity and sustainability.” This has been shown through ‘Nike code of conduct’ (Doorey, 2011). This was brought out in response to claims by Jeff Ballinger who exposed poor working conditions and low pay for workers in Nikes supply chain in 1991. In 1996 when questioned about
Fig. 1: Nikes running shoe criteria (Peter and Olson, 2015) the conditions of the workers producing her clothing line Kathy Lee Gifford famously broke down in tears while apologising profusely. Nike now, as a result of pressure from customers since 2005, produces regular corporate social responsibility reports, displaying their commitment to meet desired moral standards.
Oregon locals have challenged Maxim 8 claiming that land is being taken from them and given for use by Nike factory workers only. Miller (2012) reports how the local public in Oregon, Portland area are concerned as facilities and woodland areas are being taken over and they are being ristricted access. Tensions between Nike and locals have risen as a result and then announcement of futher Nike expansion plans have not helped the situation (Brettman, 2016).
In order to engage with customers Nikes marketeers use the marketing mix, also known as the 4 P’s highlight as Product, Price, Place and Promotion, as seen in figure 2 (Kotler and Armstrong, 2018).
Nikes pricing strategie is a value based pricing strategie. This strategy is based upon the customers perception on value rather than the sellers costs (Kotler and Armstrong, 2018). Cannon and Morgan (1990) state that value pricing is optimal for profit maximisation. While Hinterhuber (2008) believes this strategy leads to repeat custom. This directly affects the external image of the company in the eyes of the customers as product
Figure 2. (Kotler & Armstrong, 2018) satisfaction levels are much higher.
Cohen and Bromell (2013) list the Nike ‘Swoosh’ as the most iconic brand logo of all time. This is a huge benefit to Nike as the swoosh can be recognised in their elaborate marketing campaigns. Taylor, Celuch and Goodwin (2004) reveal a strong logo gives the customer something to relate to. Resulting in a rise in customer loyalty, due to the universal appeal associated with an
Figure 3. Nike ‘Swoosh’ (Nike. Inc, 2018a) effective brand logo (Pittard, Ewing & Jevons, 2007).
A major player in Nikes success is the use of high profile athletes to demonstrate the success of their products to consumers. Tiger Woods, global Golf superstar, signed a $105 million deal with Nike (Carbasho, 2010). Nike sponsor 54 of the top 100 highest paid athletes. Adidas, Nikes closest rivals, sponsor 21 of these athletes (Badenhausen, 2018). Badenhausen (2018b) also reveals the annual earnings for the top paid endorsements sports stars recieved in 2017. All 4 hold sponsorship deals with Nike.
Fig. 4 Highest endorsed athletes 2017 (Forbes, 2018b)
Conclusion
In conclusion as a result of the successful innovative strategies initiated by Phil Knight Nike has become an extremely successful super-brand. Proven by the effective swoosh logo that is considered the most iconic brand logo of all time. It has to be concluded that the leadership who are responsible for the culture, policies and maxims have set them in good stead as they have been able to exploit new avenue that were not possibility when they first set out. As a result the image of the company today is seen positive light by consumers putting it in its place as the number 1 most valuable sports brand. It is evident from the Nike code of conduct that Nike is taking every step possible in order to maintain a positive reputation. The strong leadership, culture and choice of the organisational structure appears to be working effectively and as long as they remain innovative and keep up to date with new opportunities, as they have done thus far, it should see them remain a global super-brand for many decades to come.
References
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Brettman, A. 2016. Nike drawings offer peek at World Headquarters expansion, Oregon business news [Online], [20th August 2018].
Cannon, H. and Morgan, F. 1990, A strategic pricing framework, Journal of Service Marketing, Vol. 4, pp. 19‐30.
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