THE NIKE CASE STUDY

Textbook: Management, Fourth Canadian Edition. Nike Spreading Out to Win Case study, answer questions 1,2 and 3. (1000 words max) Textbook PDF page 1147

RUNNING HEAD: NIKE CASE STUDY

1NIKE CASE STUDY
1. Every year, Nike moves an average of 800 million units of their products through the process
of supply chain. The manufacturing network of the company consists of over 700 factories in 42
countries. Nike does not have a manufacturing plant for its own even though the footwear and
the apparels make upto eighty percent of their revenue. the company has taken the strategy of
outsourcing the manufacturing to the third parties. For companies like Nike, it is a strange ritual
to perform, since the reputation of the company totally depends upon the quality of the products
they are making. And this vast outsourcing can often hamper the product quality. Nike however
ensures that the independent contractors source the raw materials required for the manufacturing
to the manufacturing host country duly (Distelhorst, Hainmueller & Locke, 2017).. By
outsourcing the manufacturing, the company gains a huge cost advantage. Moreover, it optimises
the manufacturing as well as the production process. The company mainly delegates the
manufacturing part to the third world countries particularly China, Vietnam etc. where the wage
of labours are less. This helps the company in making a huge savings in the cost of production.
Moreover, by outsourcing the manufacturing process, the company can foster a continued
innovation process. In order to have a check on the quality, the company asks the plants to make
certain samples at first. The approval consists not only the samples but also the consideration of
the entire seasonal products like redesigns, mix and prices (Paine, Hsieh & Adamsons, 2013).
Only after it is approved, the plant starts commercialising the products. this lean manufacturing
process by the company helps in the improvement of efficiency and fosters better productivity.
2. The supply chain policies of Nike has earned the company a considerable amount of profit.
However, there is certain problem related to this global supply chain that caused for the fall of
reputation. The company’s manufacturing process includes the outsourcing of the production to a
host country, particularly to the third world countries like China, Vietnam, India and others. The

2NIKE CASE STUDY
company does this with the aim of cost reduction (Zick, 2013). However, this has made the
company to have a diversified and extended supply chain. The main problem that the company
faced due to this was its complaints against the poor condition of the workers and the unhealthy
working condition. Since the manufacturing plants are not directly owned by the company, the
company cannot exert any kind of legal rule regarding payment or labour laws. The
manufacturing plant owner gets the chance of exploiting the labours and making profit out of it.
The blame often falls on the company itself. An organised and mechanised supply chain policy
can help the company in overcoming such problems. The use of machineries will not only ensure
the consistency regarding the quality of the products but also help in regulating and minimising
the physical labour of the workers. A digital supply chain will further ensure the reaching f the
raw materials uniformly to all locations. A mechanised organisational design will enhance better
communication and regulation. The larger an organisation grows, the more is the need of
structuring and mechanising (Hemphill & WHITE III, 2016)..
4. One of the major problem that the company faced it the rise of competition in the market. The
entry of the giants like Adidas or Reebok are trying to catch up the market of Nike in terms of
variation and quality. the small brands are also playing a hard role in the competition with their
production of same type of fashion in a far low price. The threats of the new entrants have been a
problematic situation for nike at this stage. In order to overcome the problem the company has
identified the following areas for improvement:
a. Market expansion- the company has decided for a market penetration policies in further new
markets and target the consumers of every segments. They have focused more on the
modification of their products according to the market preferences.

3NIKE CASE STUDY
b. customisation- another major initiative taken by the company is to customise the products
according the personal choices of the consumers. Nike has often been criticised nt to engage its
customers within their operations. In order to make up the fault lines the company has duly
adopted this process. Moreover, the growth of the female customers in resent time has brought to
them facilities of designing their products in ways that are more attractive.
3. the organisational structure that can be idealised from the analysis of their operations has been
attached in the appendix below.
One of the major cause for the success of the company is the organisational structure of
the company. The company follows a divisional structure on the basis of the products. Also there
are functional departments under the Global Corporate leadership which adds to their benefits.
The company would need nothing extra to add in heir organisational structure. the success will
however depend on the proper co ordinations of the managers from different strata to ensure that
there are proper communication (Porteous & Rammohan, 2013).

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Bibliography:
Distelhorst, G., Hainmueller, J., & Locke, R. M. (2017). Does lean improve labor standards?
Management and social performance in the Nike supply chain. Management Science,
63(3), 707-728
Hemphill, T. A., & WHITE III, G. O. (2016). The world economic forum and Nike: Emerging
‘shared responsibility’and institutional control models for achieving a socially
responsible global supply chain?. Business and Human Rights Journal, 1(2), 307-313.
Paine, L. S., Hsieh, N. H., & Adamsons, L. (2013). Governance and sustainability at Nike (A).
Porteous, A., & Rammohan, S. (2013). Integration, Incentives and Innovation Nike’s Strategy to
Improve Social and Environmental Conditions in its Global Supply Chain. Stanford
Institute for the Study of Supply Chain Responsibility, Stanford, CA.
Zick, P. (2013). CSR infrastructure for communication and the Nike controversy. J. Mgmt. &
Sustainability, 3, 63.

5NIKE CASE STUDY
CEO
CHAIRMAN OF BOARD OF
DIRECTOR PRESIDENT OF BRAND CFO
HR BOARD OF
DIRECTORS PRESIDENT
OF
PRODUCT
GLOBAL
SPORTS
MARKETTI
NG
GENERAL
COUNSIL
CHIEF
OPERATING
OFFICER
APPENDIX:
3.