The Nike environment
Nike is an organization working towards developing products that help athletes of every level of ability reach their potential. In its mission statement, Nike expresses that it wants to bring inspiration and innovation to every athlete in the world. Nike is a formal organization with a clear beginning and a specific goal which is to develop products that athlete reach their potential. A formal organization has been defined by Schein as the planned coordination of the activities of a number of people for the achievement of some common, explicit purpose or goal, through division of labor and function, and through a hierarchy of authority and responsibility.
The business Nike used to be heavily engaged in is footwear products but it grew and diversifies from a footwear distributor to a global marketer of athletic footwear, apparel and equipment. Along the way, Nike has established a strong Brand Portfolio with several wholly-owned subsidiaries including Cole Haan, Converse Inc., Hurley International LLC, NIKE Golf, and Umbro Ltd. Nike is a very competitive organisation, Phil Knight (Founder and CEO) is often quoted as saying that ‘Business is war without bullets.’ Nike has a healthy dislike of its competitors. With rivals such as Adidas, Reebok, Puma, and others, competing to be the number one sports brand in the world, Nike is operating in an extremely competitive environment.
The Nike environment is a two-way, matrix organization, where team members often report into two areas such as geography and a global function. In the Nike brand, teams work across footwear, apparel, and equipment product engines. Being a prospector, Nike is continuously searching for new products and markets to exploit. As Nike is a formal organization, it has adopted a matrix structure for its organization.
Nike adopted the matrix structure because it operates in two areas; the geographical environment and global functions in six geographies-North America, Western Europe, Eastern/Central Europe, China, Japan, and emerging markets. In every continent, the functions vary differently (eg. footwear sizes for Asian market are different from the US market) as such the global function is taken into consideration.
From the Nike Matrix structure in Figure 1.1, employees have two managers-functional department manager and a respective team manager. It breaks the unity of command concept, the understanding that low-level employees should have only one superior to whom they should report to. Instead of the unity of command concept, the matrix structure has a dual chain of command-the concept that low-level employees have to report to several superiors. For example, an employee in global function from the team product apparel has to report to the functional manager in global function as well as to the team manager.
The strength of a matrix structure is it facilitates the laboursaving distribution of specialists as the specialists are shared among the different departments in the organization. It also helps to create specialists because employees who keep doing the same job day in day out for a long period of time will be skilled in the particular job. For example, from the Nike Matrix structure in Figure 1.1, a particular specialist in the research and development department can offer his specialization to the product apparel department. Another advantage is, it fosters participation within the different departments, for example in the Nike matrix structure, employees work for two bosses, and a lot of consultation is needed within the two departments as such, the unequivocal and recurrent contact concerning diverse specialties in the matrix structure can add up to enhance interaction and additional elasticity.
The movement of information on a particular project will be controlled and secured. There will be supplementary openings for staff advancement in the matrix structure; employees will get the chance for promotion. Furthermore, the matrix structure reduces the propensities of departmental members to become so focus on their own goals that the organisation’s overall goals are being overlooked. It helps the teams in Nike organisation to focus on the organisation’s goals instead of the respective team goals.
The major weakness of a matrix structure is it compromises the unity of command concept by having a dual chain of command where employees have to report to more than one superior, causing difficulties of coordination, creating role conflicts and uncertainty under imprecise expectations. It can also cause stress to the employee. For example, from the Nike Matrix structure in Figure 1.1, an employee in the product apparel department who neglected his duties in his original department (Apparel Department) was probed by his team manager, and the employee can accuse the functional manager (Geographic Division) of giving him other duties to perform that clashes with his original duties given by the team manager, this, in turn, can generate tension between the two managers or the employee gets confused so as to which duties he must prioritize.
This can also cause the employees to skive during working hours and become irresponsible as they know they can blame it on either their team manager or functional manager. Confusion and power imbalance will arise. Problems of the extent of authority that the team managers have over employees from other departments and whether the team managers will get the support of other functional managers will surface. Overlapped managerial responsibilities will cause both functional and team managers to avoid responsibilities over an incident.
The matrix structure will also bring out the ‘more talk than action’. Employees may have to attend more meetings which can hinder their duties as they have to attend separate meetings held by the functional and team managers and productive time is wasted. That is why my proposed structure for Nike will be to use the Divisional structure. The division will be created according to the type of products. Using divisional structure, creates smaller, manageable parts of an organization and develops a business-level strategy to compete.
