Organizational Change Management: Strategies of Adidas and Nike Report

This report provides a comprehensive analysis of change management strategies employed by Adidas and Nike, two leading companies in the sports goods industry. The introduction defines change and its significance in a dynamic business environment, emphasizing the importance of adapting to market shifts. Task 1 examines the impact of change on organizational strategy and operations, comparing marketing and pricing strategies of Nike and Adidas, and highlighting how each company has adapted to internal and external changes. Task 2 explores the influence of internal and external drivers of change on leadership, team, and individual behavior, including organizational culture, financial management, and employee relations. The report also discusses external factors such as the economy, political landscape, environmental issues, and competition. Task 3 delves into the different barriers to change and their impact on leadership decision-making, while Task 4 examines the contribution of various leadership approaches to organizational change. The conclusion summarizes key findings and insights, emphasizing the importance of proactive change management for sustained success. The report uses references to support the analysis.

Understanding and
Leading Change

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK1 ............................................................................................................................................3
P1 Impact of change on an organisation’s strategy and operations............................................3
P2. Impact of internal and external drivers of change on leadership, team and individual
behaviour.....................................................................................................................................5
P3 Measures regarding minimising the negative impact of change ...........................................8
TASK 2............................................................................................................................................9
P4 Different barriers for change and determine how they influence leadership decision-making
.....................................................................................................................................................9
TASK 3..........................................................................................................................................10
P5 Contribution of different leadership approaches regarding organisational change.............10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
`Change refers to transformation of a function, practice or anything from its past stage to
something better in its present state. In this present era of dynamic environment it becomes
pivotal for an organization to introduce, accept and manage changes in reference to changing
market scenario. Thus in context of an organization change leads to modification or introduction
in process, organization structure, system or in job roles impact of which can be both negative as
well as positive. Thus, it becomes crucially significant fore a comp nay to implement strategies
that can effectively implement, control and support people to adapt to change (Al-Haddad and
Kotnour, 2015).
Adidas and Nike are the two leading sports goods industries managing their operations
worldwide.
The project undertaken will give a brief about how these companies are impacted by
change, how internal and external environment affects leadership, team and employees
behaviour. Moreover synopsis about barriers to change and various measures to be adopted to
reduce negative impact of it will be given.
TASK1
P1 Impact of change on an organisation’s strategy and operations
Change refers to alteration in a firm's procedure, structure, policies , tools and techniques
of an organization in order to cope up with new emerging competencies be it to be more
competitive, customer oriented or more efficient so as to be ahead of business rivals and be
market leader. Changes can be introduced both internally and externally to enhance the efficiency
and performance of a firm. Internal drives of changes involves alteration in organisation culture,
technology capacity , management of various department etc. (Brown, 2012). External drives of
change are because of political condition, social, technological, economical, environmental etc.
Nike and Adidas are the two market leaders over the decades has become synonym for
sports industry. Both these companies initially started off as athletic footwear and sportswear
manufacturers. But with the span of time and due dynamic environment full of heavy
competition and with frequently changing customers need and aspirations they recognize
opportunities in diversifying its operations by focusing on both product attributes and brand
values than merely on sportswear and equipments Adopting themselves and their business

operations with emerging changes has lead both these companies to be world's leading brands in
their industry.
Nike: It is an American multinational company which is engaged in designing and
manufacturing of footwear, apparel, equipment, accessories etc. More than 44000 employees are
working to deliver their products effectively to end customers. In 2017, brand value of Nike is
calculated as $ 29.6 billion. It is one of the largest supplier and manufacturer of sports equipment
in world.
Adidas: Adidas is the 2nd largest multinational brand deali8ng in designing and
manufacturing of shoes, clothings and accessories. It was established in 1924 in Germany and
is considered as one of the biggest sportswear manufacturer in Europe with a revenue of around €
19.29 billion as observed in 2016 (Doppelt, 2017) .
Nike and Adidas both are successfully running their operations all across the globe which
is the indicator that there are various external factors that have an impact on their business
operations. Although both companies ahead strong internal operations base which is a major
reason behind managing change successfully. Mentioned below are the comparison between the
strategies that both these companies follow to tackle change and to remain competitive :
Strategies NIKE ADIDAS
Marketing strategies Nike acquiring 18th position
according to top 100 Global
Brand Report 2017, is the one
of the leading designer and
supplier of sportswear
worldwide. Both female and
male between age group 18 to
35 years old and the football
players forms the target
audience of Nike. It has
different advertising and
promotional activities for men
and women and Gen Y
Adidas forms one of the
leading competitor of Adidas
as its market share has
tremendously increased by
11% according to NPD
data,2017. Adidas was able too
cater the needs of more than
50% of UK population
comprising target audience
between 18 to 30 years and
sports such as handball, rugby
and volleyball. By using
various promotional stargates

according to their nationality,
race and age. By implementing
innovative and creative
marketing strategies like
providing the option to
customers to design their own
shoes as per their requirements
, using celebrities for
sponsoring and promoting
their products and so on
company focuses to capture
the market of Europe where
Adidas has large market
share.
through TV commercials, sport
panorama, magazines,
billboards and sponsoring
football matches maintains a
close competition with NIKE.
Pricing strategies Nike pricing strategy is based on
vertical integration and the
company has maintained its
pricing structure in a way that it is
competitive to its business rivals
in terms of price as a well as
quality .
ADIDAS is second largest
organisation after NIKE. In
order to capture the attention
of customers and to take a lead
in market share company need
to work on its pricing strategy
and focus on catering the need
of moderate income groups.
Change in Adidas
With emergence of Nike Adidas encounters sudden jolt in its profits as well as sells. To
cope up with these company shift its direction into diversifying its business. In terms of
organizational structure change the percentage of women in its organization is around 47% and
are expected to outnumber male in workforce by 2020. Also 36% of its team is identified as
members belonging to minority groups which help company to spread the message of cultural
diversity as well as equal opportunities for each employee.

Changes in Nike
With immense increase in global warming and other climatic changes in environment
Nike has to shut down its 4 factories in Thailand,Vietnam, Indonesia that are prone to extreme
weather conditions. To deal with this change Nike been proactive implemented sustainable
business practices where in it has started using synthetic material which are less influenced by
climatic conditions as compared to cotton. It has also increased used of dyed yarn fabrics in its
sneakers as they biodegradable and thus posses less harm to environment.
Also to deal with water crisis around the world Nike has launched a new production
process which is expected to reduce energy consumption by 60% and to reduce water
consumption in manufacturing process up to 100-150 litres per 1 kg of textile.
P2. Impact of internal and external drivers of change on leadership, team and individual
behaviour
Business environment is amalgamation of a number of internal ans external factors that
influences the working and decision making of a firm (Fullan, 2014). Internal factors comprises
those attributes that are in control of company to manage and modify as per the changes
occurring in the market. These factors involves organizational culture, management, employees
etc. External factors are those that are beyond the control of a business and thus firm has to find
out a way to deal with it. Thus, to survive in a long run and to maintain the productivity and
profitability of its business operation all transnational accompanies like Nike and Adidas
requires to formulate or adopt policies and strategies which are in accordance with the market
trends of a particular country to be figurehead in its industry. To accomplish this a firm is
required to analysis both its internal and external factors in the light of market competencies so
as to formulate the most appropriate policies , procedures and strategies that can be supportive in
achieving targets and objectives and to get maximum returns with higher profits (Fyke and
Buzzanell, 2013). Every alteration or change introduced in a business significantly affects its
leadership, teams and individual behaviour which is responsibility of a manger to coordinate for
its success. Mentioned below are the internal and external drives regarding Nike and Adidas are
described below:-

Internal drivers of change
 Organisation Culture: It involves the values, beliefs assumptions that guides the
behaviour of employees in an organization. It is critical factor for both the companies to
analyse the cultural differences presented within the firm and to formu8late appropriate
policies and strategies to over come such gaps. This will give firms an opportunity to
improve and enhance coordination and well as relations among management and the
employees.
 Financial management: Funds forms one of the basic and most important internal factor
that have a great effect on the working of a business. Management of both firms need to
source of sufficient amount of funds for the smoothie running of their operations. Any
lacking while doing financial analysis may results in hampering the functionality of
business , leading to reduction in its operational capacity and negative effect on its output
and profits (Holt and Vardaman, 2013).
 Employees:- Employees are the cornerstone of any business. They forms the source of all
innovation and creative ideas utilizing which a company convert its inputs into maximum
outputs with higher returns. Thus, it is of vital importance for both the enterprises to keep
it human resources the center of focus while formulating any policies, procedures and
strategies in a way that align their personal goals with the organizational goals. This will
motive them resulting in increasing their productivity, work commitment and
performance.
External Factors driving to change
 Economy: This is one of the major external factor that impact organization and its
operations. IT is concerned with economic condition of a nation. Nike to cope up with
adverse financial crisis has used its brand equity to take advantage of emerging
customers demand in developing economies (Latham, 2013). This act has lead to creation
of employment and fulfilment of its CSR responsibility. Adidas products are categories
as leisure items that are not necessity. Due to which Adidas has to face a lot of
competition from other leisure product brands. Also due to fluctuation in global economy
it is required to search out new markets to sell and distribute its products to ensure
company's growth and opportunities.

 Political: It is concerned with the politico stability, government policies, ideology of
parties etc. of the countries in which both firms are running there operations. Nike has
been benefited with the initiative taken by government regarding transparency of global
value chain. Adidas on the other hand are prone to risks emerging from sudden hike in
import restrictions, charges in taxation system of a country and import tariffs that abstain
free flow of goods.
 Environmental Factors:- Both the companies maintain a positive image when in comes
to environmental issues. Nike under its environmental policy has launched projects for
checking out and reduction in carbon emissions and reducing and treating its industrial
waste (Lawrence, 2015). Adidas Group too has applied various approaches for controlling
and monitoring emission of VOC, tackling climatic changes by developing sustainable
products.
 New competitors: Competitors are biggest factors influencing the activities of business
organization. With the entry of competitors who have innovative technologies, ideas,
reasonable pricing policies to capture the attention of consumers which attracts the
customers of such leading organisation like Adidas and Nike
 Technology: It forms one of the major factors that affects the demand of goods and
services of an organization. With emerging new and latest technologies it becomes
important for firms to adopt and accept new and innovative technologies so that they can
utilize their resources to utmost level and can be figurehead in the market.
P3 Measures regarding minimising the negative impact of change
One of the most baffling issue faced by every firm, while implementing change is the
resistance from its employees which is inevitable. Change if not introduced effectively may
negatively influence the firms giving rise to issues like reduction in outcome, employees
absenteeism or turnovers, request for transfers, strikes and so on which all will ultimately
hamper the functioning of a n enterprise operation's leading to losses (Salmela, Eriksson and
Fagerström, 2012). Thus, to avoid any adverse effect it is responsibility of every management to
be pro active in focusing on developing strategies for change management which will help the
firm to convince its employees about the need and benefits that the particular change when
applied will bring. Following are some steps that if adopted by an enterprise will help it to
handle resistance from change from its workforce:-

 Creating pathway: It is of vital importance for management to create a transparent
system for communicating every detail and information regarding all the new initiatives,
policies and procedures that company is going to adopt and implement to its employees.
Besides this management should conduct meetings to discuss latest updates with its team
members so as to make them aware of all the know how of changes to be applied. Explain about plans: It is advisable for management to make employees aware about all
the refined and revised goals , objectives of the firm, strategies and plans to achieve
them and modified job roles and responsibilities in regard to changes that are going to be
implemented. This will help in reducing the fear of employees making them clear about
expected performance and ways to achieve the set targets. This all will benefit firm in
reducing the negative impact of change as employees will be clear about the need and
probable benefits that the change would bring (Thomas and et. al., 2013).
 Manage planning and its implementation: Proper planning and its successfully
implementation is the key issue while introducing change in an enterprise. Thus the
management should before hand prepare a detailed plan comprising responsibilities of
each manager, team leader and employees. Management should appoint one person from
each department to deal with various consents in suitable manner. Thus, that person
responsibility is to instruct employees as per the set guideline of the plan so that all
activities are implemented and executed as per initial plan.
 Continuous improvement model: This model helps in continuously identifying changes
occurring due to both internal and external factors and then accepting them to improve
firms productivity ans functionality. Application of this model helps in reducing the
workload and supports management to concentrate on other significant matters (Yoder-
Wise, 2014). It involves PDCA cycle which works to make the future of organisation
better.
 PDCA Cycle: This cycle involves various functions define below:
1. Plan: This is the initial stage which involves determining changes that are occurring in
various internal and external factors.
2. Do: This step involves implementing changes on real business operations.
3. Check: It is the most important and critical steps that involves identifying an d
monitoring the impact of the changes that are applied on both the organization as well as

on its workforce. It also includes studying weather these changes are accepted or rejected
to ascertain its effect on organization performance.
4. Act: This includes implementation of change at organizational level that is from strategic
to production level. The model is to be accepted if its produces positive effects otherwise
it is to be re checked and reviewed to be efficient enough for organization to be accepted.
Model of change that can be use by NIKE to manage change at workplace is Lewin's model of
change. This consists following three stages:
 Unfreeze: This is the first stage in which enterprise prepare for implement change. In this
effective strategies are developed. In case of Nike, after been alleged for providing low
wages to its labour force and poor working conditions for employees in 1991, Nike
planned out to introduce new incentive schemes and new labour policies to address the
issues faced by the workers.
 Change: This is that stage when entity present change, in this employees start remove
their confusion and look to do new things. In 1999, Nike established Fair Labour
Association to address the allegations related to slave wages, arbitrary abuse, forced
overtime. It also increased its Factory audits with repetitive visiting to worst offenders.
 Refreeze: When the changes take shape the entity is ready to refreeze. Sign of this stage is
stable organisational chart. Nike after successfully implementing the requisite change in
its labour policies become first industry to publish a complete lists of factories it had
contracts with. It continued to publish its audit data, standards and its commitment to
fulfil its Corporate responsibilities.
TASK 2
P4 Different barriers for change and determine how they influence leadership decision-making
Trait Theory: This theory is mainly taken into account in order to predict effectiveness
of leadership. It can be applied at all organisational level. This theory is based on the assumption
that people are either born as successful leader or made with certain attributes that will makes
them excel in their respective leadership roles. The theory laid stress on analysing physical,
social an mental characteristics in order gain to gain more understanding about particular
situation. This theory is suitable when company undergo change. Nike always believes that in
order to gain high competitive advantage in overseas market they need to develop a culture of

change within their organisation. They create the expectation among workers that change comes
regularly and this motivates everyone in Nike to contribute more effectively and efficiently
towards achieving business objective. However, leader play great role in such type of situation. It
become easier for them to adapt changes because of their special traits and characteristics which
also inspire their followers to act accordingly as per the change.
Contingency Theory: This leadership approach deals with finding the suitable match
between a leader and a situation. Under this theory, the success of leader is a function of various
contingencies in the form of task or group. When Nike undergo change management, they select
leader that is going deal with various situation on the basis of skill and knowledge. Selecting
right leader plays key role in organisational success and growth.
Transactional Leadership Theory: This theory is based on the assumption that
company can motivate employees by paying them great reward and benefits on the basis of their
work performance. This mainly deals with directing and motivating followers mainly through
appealing to their own sell-interest. The main objective of follower is to follow the path instruct
by its leaders. When Nike changes its organisational culture, it enable employee to change its
workings style and this can only be possible with the proper guidance and direction of motivated
leaders. Leaders possess the ability to shape the working of their followers. Therefore, the entire
working of followers depend upon the way they get the direction or guidance from its leaders or
managers (Wells and Nieuwenhuis, 2014).
Situational Leadership: The theory was prosed by Paul Hersey and Kenneth Blanchard.
Under this type of leadership, manager or leader of a company must change or adjust style to fit
the development level of the employees he is trying to influence. Basically under this, leaders
need to change its style not the workers or followers to adapt to the leader's style. The style may
change on frequent basis so as to accomplish organisational objectives in cost-effective and
timely manner. For example: When Nike experience cultural change they expect their leaders or
managers to change or adjust his style accordingly. Company undergo change so as to gain high
competitive advantage in overseas market but its success depend upon how employees perceive
the change.

Force Field model: This structure define the sameness between the such forces which are in
favour of change in the organisation. This framework includes different steps which are
determined as below:
Phase 1: Plan for change: This process support the business organisation to change their plan
with the motive to accomplish their long term goals and objectives in limited time duration. The
changes reflect Nike's focus on the user by accelerating innovation, creating product &
merchandising excellence,, emphasizing design and focusing importantly on effective supply
chain as well as manufacturing capabilities.
Phase 2: Designation of forces for modification: In this process, business entity analysis an
effective factor which assist the company to attract large number of customers in an effective and
efficient way. There are various internal as well as external factors which are impacts on
business operations including Outdated machinery, low team morale, uncertain business
environment, etc.
Phase 3: Finding of factors against alteration: Under the external factor company evaluate
government legislation and Loyalty to partnership. Company find different factor including
digitalisation in their business operations and activities which support them to attract large
number of customers. For example: business identify their internal factors including Fear of
unknown, organisational Structure etc.
Phase 4: Assign scores: In this stage which is chiefly exist respect the valuation of factors
according weaknesses and strengths regarding deeding potency on business activities. Creating
an innovative and dedicated employees will ensure continuity & development for company
beyond just the time period are there.
Phase 5: Investigation and application: It is last phase which is important for the company to
analysis accurate needs and wants of the customers about business products and services. In this
Nike conduct an effective research program that help them to identify basic needs and wants of
the customers towards business products and services.
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TASK 3
P5 Contribution of different leadership approaches regarding organisational change
Leadership is the ability of a person to influence other people and make them work
towards achieving set objectives. It has a direct cause and effect relationship with the
funbctionb9onhg and success of and enterprise. The role of leader is very significant in
introducing change in an organization. It is because they are people who shapes business
strategies starting from their execution to making them effectively implemented. There are
various leadership theories in management that describes leaders on basis of their traits and
power an d authority that they possess over others (van der Voet, Kuipers and Groeneveld,
2015). It thus become critical for an organization to identify the individual qualities of its
leaders and then choose the most appropriate leadership style to attain company's objectives with
specific time frame giving maximum outcomes. Following are some leadership theory that can
be taken into consideration while implementing change :-
Situational Leadership Style :- It is a leadership theory applies that there is no perfect
way or style of leadership. It is the capability and efforts of leader to understand needs of
individual or group they are going to lead and then mould his leadership style to meet those
requirements. This theory includes four behaviour types:-
 Directing the employees about their roles and responsibilities communicating about best
way to accomplish there tasks.
 Coaching is given to inexperience employees who are still learning. Leader uses two
way communication and provide support to individual or groups by asking them inputs
during the process of decision making process.
 Supporting is given proper feedback to improve the performance of employees and
praising teem for their efforts to build up their confidence and morale.
 Delegating involves process of distributing authority and responsibilities to employees
where they are responsible for selecting the task, its course of action and delivering
desired results within specific times.
Transactional leadership: The main function of this leadership theory is to focus on
managerial functions comprising controlling, organizing and short term planning to achieve pre
determined targets within specific time limits. Leaders applying this theory motivates its
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employees to give best of their efforts by using a system of rewards and punishments. If
employee perform as per desired resulted he is motivated by giving rewards.
Transformational Leadership :- It is the leadership style in which leaders and
subordinates work together to identify the changes that are need to be implemented, creating its
vision and mission for guidance, ascertaining the probable difficulties that employees might face
with their solutions and executing change allowing leader to align subordinates with tasks that
enhance their performance.
Nike follows a situational leadership style which involves applying mos t appropriate
leadership style in accordance with prevailing situation in an organization. Nike's founders Bill
Bowerman and Philip Knight , followed a mixed leadership styles depending upon
circumstances faced by NIKE. At time of when Nike begins its journey under name of Blue
Ribbon Sports, it was having an average track and field athletes. In initial phase to develop its
team, to motivate them to take up new challenges both founders follows both authoritative
leadership style to establish well versed organizational structure and also participative leadership
style to motivates its employees to give new and innovative ideas so as to assist company to
bring product innovation. At the 90's era when Nike faces labour issues company to cope up with
situation developed certain Code of conduct which requires working with government and non
government top bring change. To set up new standards and to monitor offenders company
followed autocratic style of leadership. In present scenario, CEO of Nike Mark G. Parker who
focuses on helping and encouraging subordinates , motivating them to look for new ideas and
adapt to environment changes follows a participative leadership style where in at on hand it
pushes its staff to make hard choices and on other side he gets involved personally in working
out with departments to establish criteria and to evaluate what company needs to achieved.
CONCLUSION
` From the assignment undertaken it can be concluded that, change is a significant attribute
in determining the success and growth of an enterprise. Thus is becomes highly important for
organization to be attentive and adoptive to such frequently occurring changes in market.
Moreover there are various approaches adopted by management of Adidas and Nike for
developing leadership among its workforce. Apart from that there are various internal and
external factors like political, economical, social, technological, legal that majorly influences
decision making process of an enterprise. There are various approaches that can be adopted
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along with PDCA cycle to minimise the negative effects of changes that are been applied. In A
firm can also make use of various leadership approaches for motivating and developing
knowledge and skills of employees for achieving predetermined goals.
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REFERENCES
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Different type of leadership styles, 2017. [Online] availavle
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