Analysis of Organizational Structure of Nike

Organizational structure refers to the system that indicates the process in which certain activities of the organization are directed to achieve its goals. Nike maintains a flat organizational structure which is also known as the matrix structure. It mainly produces equipment, clothes, footwear, and accessories and is renowned as the largest athlete shoes and apparel supplier in the world. Nike is an American-based international company that operates in almost 170 countries around the world. Therefore, it follows a geographic divisional structure in its organization to maintain its operations in different regions. This organizational structure is also followed by several companies around the globe and is considered as one of the most effective structures for maintaining the international operations of the organization.

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Figure 1: Nike's revenue worldwide from 2017 to 2021, by region (in million U.S. dollars)

(Source: Statista)

The mission of Nike is to expand human potential and creating numerous sport innovations. It runs its business operations in different regions and maintains worldwide communication as well. The organizational structure of the company is maintained and directed in such a way so that the missions of the company can be achieved successfully. According to Statista, Nike has employed almost 75000 people around the globe and operates in more than a thousand retail stores. The international operations of Nike indicate differences in the preference and choice of the customers from various regions. Therefore, Nike maintains an adjustable organizational structure to deal with the differences among the market of different regions. The organizational structure of Nike highlights the importance of enabling better and effective regionalization strategies to run the business operations successfully. The organizational structure of Nike also addresses the importance of delegating tasks and establishing line authority within the organization. Therefore, it can be stated that the organizational structure of Nike is very effective and successful and leaves a significant impact on the strategies of different companies.

Features of Nike’s structure

Nike generally follows the matrix structure to maintain and manage its operations and this structure is made of different structures such as functional and divisional organizational structure. However, the features of the structure of Nike are summarised as follows:

Global leadership

While maintaining the overall operations throughout the Globe, Nike chose to implement global corporate leaders. All the operations of Nike are maintained by its managers who operate from the headquarter in the USA. All operational and marketing decisions are taken by them and are circulated throughout the other countries where Nike operates. The departments of Nike such as; Administration & Legal, Global Human Resources, Finance, Global Sports Marketing, and operations are headed by the president, chief officer, or the executive vice president of the company. Therefore, it can be considered as an exceptional characteristic of the geographic divisional structure of Nike.

Semi-autonomous division

The market of the company has been divided into several segments based on geographic locations. It is one of the most important characteristics of organizational structure of Nike. The company has incorporated managers for optimizing the company's operations in different regions. North America, Japan, Central & Eastern Europe, China, and Western Europe are the regional divisions of Nike. The managers of each region are solely responsible for running its operations in different markets of that region such as: equipment, sports shoes, and apparel market. This indicates a centralized structure of the organization and also reduces the chances of errors in the business operation.

Global divisions

The organizational structure of Nike has two major global divisions for the Converse and brand licensing respectively. The first division is responsible for the effective management of the worldwide operations of Converse which is a major subsidiary of Nike. The responsibility of the other division is concerned with licensing the Nike brand. This is one of the most important characteristics of Nike's organizational structure.

Apart from the unique characteristics of the organizational structure of Nike, the ability of the company to enhance its stability and growth, and to increase flexibility in its operations are the most remarkable characteristics of Nike’s structure.

Merits and demerits of Nike's structure

The aforementioned discussion highlights the structure of Nike and also indicates the efficacy of the structure which is why many other companies follow the same to improve their business operations. However, there exists some advantages and shortcomings in the structure of Nike and the merits of this structure are mentioned as follows:

Increased revenue

The divisional structure of Nike helps in providing different goods and services in different regions as per the tastes and preferences of the customers. The product of Nike are offered to the ┬ácustomers of different countries which is why a greater variety in its production can be noticed. As per Statista, this structure had a significant positive impact on boosting the revenue of the company. Offering a large variety of products also enhances the company’s brand image, which is one of the main Nike’s purpose. Therefore, this contribution of the divisional structure may be referred to as a remarkable advantage of the organizational structure of Nike.

Boosting the efficiency of the workforce

The matrix structure believes in using the utmost potentiality of the human resources of the company very effectively to achieve the organizational targets successfully. Following the structure, Nike employs one person for serving more than one purpose. This strategy helps the employees in enhancing their earnings and boosting their experiences in different fields as well.

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Figure 2: Nike's revenue worldwide from 2005 to 2020(in million U.S. dollars)

(Source: Statista)

Enhances promotion

Regional divisions in different locations deal with introducing different goods and services as per the demands and necessities of the citizens. Employees of the regions, therefore, focus on producing those particular products which are why the output becomes unique and attracts more customers in the market. On the other side, offering a large variety of goods and services in various regions subsequently promotes the brand in the absence of appropriate promotional measures of the company.

Despite of the many key advantages of the organizational structure of Nike, it also possesses some demerits, which are as follows:

Internal conflict

The matrix structure of Nike indicates that a single person is answerable to multiple bosses when he is working on multiple jobs are a time. This creates crucial confusion and conflicts within the organization which further generates disagreement and conflict. Such internal conflict is very harmful to organizational development and may create difficulties in boosting the company's goodwill in the market. Therefore, the company should monitor the activities of its employees effectively to resolve internal conflicts for avoiding its consequences.

Wastage of resources

The divisional structure duplication of duties which is a major drawback of organizational structure of Nike. If more than one division of a company engages themselves in performing the same tasks, it leads to wastage of resources and money of the company. Wastage of money and resources may make the company face losses as well which is why it is considered as one of the most important disadvantages of the company’s structure.

Lack of coordination

The matrix structure of Nike is characterized by lack of coordination is a common demerit and may harm the company’s operations to a larger extent. The various departments collectively work for the company under this structure but one department will not be completely aware of the decisions taken by the other departments. Such differences and gaps create significant problems within the organization. Therefore, while following the structure Nike should implement some strategies to make a better connection among the employees which will initiate collaboration among the departments and will further boost the company's performance as well.

Ask our Experts to Know more about Nike

The organizational structure of Nike plays a crucial role in its seamless operations across a wide spectrum market space. However, it is merely one of the many vital success factors of the company which has pushed it to become one of the top industry leaders. So, if you need some indepth information about the company for your college essay please feel free to contact us and our team of experts will definitely help you out. At EduHelpHub, we provide academic support to college and university students across a wide range of subject domains and paper types, making us the one-stop solution for all of your study needs. So, if you are struggling with your papers, just talk to us and we will take it from there.

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