Evaluate the success of Nike’s global network structure in terms of centralizati

Question

Evaluate the success of Nike’s global network structure in terms of centralization of authority and horizontal differentiation. Next, analyze the fundamental manner in which the company’s outsourcing strategy facilitates both resource sharing and the leveraging of its competencies around the world. Evaluate the appropriateness of the type or types of basic strategies that Nike implements in order to expand globally. Next, analyze the most important manner in which Nike’s organizational structure, control systems, and culture influence its international strategy. Provide a rationale to support your response.

Explanation / Answer

Nike's organizational structure is geographic divisional. The comapny has its gobal needs and regional markets. This sructure provides the global corporate leadership, global division for converse and brand licensing and semi-autonomous geographic division. The advantages of this type of structure is to avail the flexibility in satisfying the regional-market specific needs of the customers. However the disadvantage is the limited approach to managing the operations of converse.

Decreasing overhead through outsourcing is a valuable resource for Nike. Cutting costs by employing workers at a reduced rate or paying less for plant operation allows Nike to invest the additional profits into other areas of the business such as advertising, thereby increasing the potential for company growth. In addition, decreased operational costs are more likely to attract and retain company investors because more money can go into increasing business profitability. Because Nike is able to more efficiently produce its product and reduce costs due to outsourcing, it can more competitively price its products. This enables Nike to price its brand at a competitive rate with other companies that sell a similar product. Decreasing competition can help Nike corner the market for its particular products.

Outsourcing allows Nike to skirt some of the financial obligations it might face with the confines of tax laws in the United States. In addition, when it outsources to subcontractors, Nike assumes less risk associated with producing its product such as insurance liability.

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