Nike’s Organizational Structure: All You Need To Know

Introduction

Nike’s organizational structure is worthy of study due to the fact that it has been a successful organization since its inception. Nike is an American multinational company producing equipment, footwear, clothes, and accessories. It is the world’s largest supplier of athletic shoes and apparel.

The company has gone through several controversies including the child labor allegations in 1990, strike in Yue Yuen Industrial Holdings Dongguan shoe factory (China) in 2014, and so on. Despite the problems, the firm has been thriving over the years and has no plans of going down anytime soon. Consequently, the firm’s tactic of employing creative and innovative ways to market their products is commendable.

Nike organizational structure reflects the abilities and limits of the business in its operations. A company’s organizational or corporate structure is the composition and system design applied on the interconnections among employees, groups, and divisions of the business. In Nike’s case, the corporate structure highlights the need to address differences among regional markets. These differences are linked to region-specific demands of target customers, such as variations in the preferences for apparel based on sports popularity and climate.

As such, Nike Inc. has developed its organizational structure to enable adjustments in dealing with market differences. As one of the leading players in the athletic footwear, apparel and equipment industry, the company and its corporate structure serve as an example of how regional variations must be included in business strategies. Structural and strategic alignment that considers these variations reinforces Nike’s competitive advantages, especially in penetrating regional markets.

Nike Inc. has an organizational structure that facilitates regionalization of business strategies. Such regionalization promotes value chains that specifically fulfill customers’ expectations, especially in the area of service and marketing. The characteristics of its corporate structure provide Nike with flexibility to address consumer preferences for athletic shoes, apparel and equipment in regional markets. This flexibility is especially notable in how the company markets its products through company-owned Nike Town stores. This structural support, together with Nike’s organizational culture, helps the company in combating the financial and business developmental effects of competitors, such as Adidas, ASICS, Puma, and Under Armour. In relation, the organizational structure supports initiatives and strategies contained in Nike’s marketing mix or 4P.

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Nike’s Organizational Structure – Team Structure

While a legal business structure defines how your company operates in relation to federal and state governments and how you pay your taxes, a team structure affects the way the people within your organization work with each other. The organizational structure of a business includes the chain of command in addition to the individual roles and responsibilities of each employee.

The type of structure you choose for your business will help to define a hierarchy of employees. It will help those on your team to understand to whom they report and who reports to them. When roles are defined within a team structure, employees have a solid understanding of their job description and what they are responsible for doing while at work.

There are two main types of team structures: centralized and decentralized. A centralized organizational structure has a distinct chain of command. Often, centralized structures are pyramid models, where one person is at the top of the hierarchy followed by several layers of management who oversee a large group of people at the bottom of the hierarchy. The decisions for the entire organization are made by those at the top of the hierarchy.

In contrast, a decentralized organization is where the major decisions of the business are made by mid-level employees, not those at the top of the hierarchy. This format is common in startup businesses. Having a decentralized team structure enables the business to remain fast and agile.

Nike’s Organizational Structure – Types of Team Structures

1. Functional Organizational Structure

The functional team model is one of the most common types of organizational structures. This model follows the traditional pyramid top-down approach, where the few people at the top manage the many people near the bottom of the pyramid. It’s common for the CEO or business owner to be at the top of the pyramid, followed by vice presidents, directors, managers and then frontline employees. The number of layers of management depends on the size of the organization.

The departments within a functional team structure are organized based on their primary job function. For example, all marketing employees are grouped together in the marketing department, which is managed by the marketing manager, and all sales employees are grouped together in the sales department, which is managed by the sales manager.

The main advantage of this approach is that it enables employees to have a high degree of specialization in their area, which they can use to help grow the business. This model is also easy to scale as the business expands. One of the primary disadvantages is that it can create barriers and rivalries between different departments and limit the knowledge employees have of other departments. The functional team structure is common in many small- and medium-sized businesses as well as in larger corporations.

2. Product or Divisional Organizational Structure

A product or divisional team structure is an organizational model that is best for companies that have different product lines or product divisions. In this pyramid structure, employees are grouped by function within their own product line. For example, if a company has clothing, shoes and jewelry product lines, then each division will have its own product development, marketing, sales and shipping departments.

This organizational structure helps businesses that have multiple divisions to cut their time to market. When each area of the business has its own functional departments, the company is able to shorten product-development cycles and reach consumers sooner. It also helps employees to have a high degree of specialization in their respective areas.

On the flip side, it can be difficult for businesses to scale using this structure. The business is not as efficient when it begins to grow because there can be a duplication of resources in each division. This can affect the company’s profitability and stunt its growth.

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3. Matrix Organizational Structure

A matrix team structure is unique because the reporting structure is set up as a grid. As a result, employees usually have two or more reporting structures. Typically, in a matrix structure, there is a functional reporting line where employees are grouped by departments, such as sales or customer service. On top of that, employees are also part of product or project groups, so they have an additional manager who oversees that line of work.

When there are dual reporting structures, one area is primary, and there is a direct line of reporting. The secondary area does not have as much authority as the other line of reporting. This complexity is one of the major disadvantages of a matrix team structure. Employees can be confused about to whom they report, especially if their two managers have differing priorities and goals.

The key advantage of the matrix organizational structure is that it offers balanced decision making since there is not just one layer of authority. Business groups can share resources and communicate more effectively in a matrix structure as well. This kind of organizational structure is best for larger organizations that have long-term projects on the go at all times.

4. Geographic Organizational Structure

Similar to a divisional structure, in this case, the team is organized based on location. Each location, which can be a large geographic region, country or small district, has its own functional departments. This is typically best for companies that need to be physically close to groups of customers or sources of supply.

One of the biggest advantages of this structure is that it enables the regions to make decisions based on what is best for them. They may have specific market requirements or customer needs, for example. On the downside, this type of decentralization can cause duplication of resources and lack of cohesiveness with the corporate brand.

5. Circular Organizational Structure

The circular team structure is ideologically different from the functional, divisional, matrix and geographic structures. While there is still a hierarchy in this model, the goal of the executive team is not to share their directives down the chain of command. Instead, the goal of the executives is to sit at the center of the company and share their ideas and vision outward to the rest of the employees.

The major advantage of this team structure is that it enables communication to flow more easily among work groups. While employees still have distinct roles and responsibilities, they are not grouped by function or division — everyone is on the same team. A disadvantage of the circular team structure is that it is confusing, as employees don’t have a clear chain of command and do not have a deep understanding of how their job fits into the organization.

Circular structures work well for small companies where the roles of employees and managers require them to communicate well with one another and share responsibilities. It is a difficult structure to scale.

6. Flat Organizational Structure

On the other end of the organizational spectrum is the flat team structure, which is organic in nature and does not have multiple layers of management like a pyramid structure. In the flat organizational model, there may still be a hierarchy with team leaders, but in general, all employees have more authority and agency than in a traditional model.

The key advantage of a flat structure is that employees are more agile and able to act more quickly on their decisions since there is less of a hierarchy. The management team is seen as equals to frontline employees and shares authority and decision-making power with them.

The major disadvantage of the flat team structure is that it can be difficult to resolve conflicts when there is no chain of command. It can be confusing for employees to determine with whom they need to speak to get approval for specific tasks. This kind of team structure is best for companies that need to take action quickly, such as tech startups.

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Nike’s Organizational Structure– Nike’s Organizational Structure Type and Features

The Matrix Structure

A matrix structure is made up of different types of organizational structures. In a matrix structure, the authority passes vertically as well as horizontally. Nike follows geographical divisional structure to facilitate customers in different areas.

The product design is done specifically for their needs. There is no manufacturing of standard products for the entire world’s population.

Divisional structure

On the other hand, it follows a divisional structure on the product basis.  This is to make sure that the development and innovation keep happening in all products that Nike manufactures.

Moreover, there are functional departments under the Global corporate leadership, and there is also a team structure in the organization. The global corporate leadership at Nike which involves corporate leaders makes sure to implement policies throughout the company that is, in all divisions.

Under this leadership comes a functional structure that divides finance, global human resources, product & merchandising, administration &legal, global sports marketing, and operations departments.

Functional Structure

All the departments of a functional structure come under the president. North America, Western Europe, Central & Eastern Europe, Greater China, Japan and Emerging markets are the regional divisions of Nike structure. The operations of each division are separate from each other.

The regional divisions are given autonomy in taking decisions in their regions. But there is a limitation to that autonomy. A close check is kept on these divisions. Hence, this prevents them from doing any unethical or inappropriate thing that might harm the entire firm’s image.

Other divisions within Nike organizational structure are the subsidiaries’ and Nike licensing divisions. The Converse is another footwear brand that Nike owns and management in its division controls its operations.

Other brands that Nike owns are Bauer, Hurley, and Exeter which also have the same structural characteristics as Converse. On the other hand, the Nike licensing division, as its name suggests, controls the licensing of the Nike brand name.

Nike’s Organizational Structure – Characteristics of Nike’s Organizational Structure

The following characteristics are notable in Nike’s organizational structure:

1. Global corporate leadership
2. Semi-autonomous geographic divisions
3. Global divisions for Converse and brand licensing

Global Corporate Leadership

Nike’s organizational structure has global corporate leadership, which involves corporate managers. The managers have offices in the company’s headquarters in Oregon, USA. They decide for the global corporate structure of Nike.

For example, the Global Sports Marketing group releases new athletic shoe marketing campaigns for worldwide marketing. Through this feature of Nike’s organizational structure, decisions are easily implemented throughout the company. The following are the main global leadership groups headed by a President, Executive Vice President, or Chief Officer:

• Office of the President & CEO, Nike, Inc.

• Nike Brand

• Finance

• Global Human Resources

• Product & Merchandising

• Administration & Legal

• Global Sports Marketing

• Operations

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Semi-Autonomous Geographic Divisions

Geographic divisions are a major organizational structure characteristic of Nike, Inc. The company’s operations are divided into segments based on regional markets. Each regional division’s managers optimize operations in the regional sports shoes, apparel, and equipment market. Nike’s organizational structure has the following regional divisions:

• North America
• Western Europe
• Central & Eastern Europe
• Greater China
• Japan
• Emerging Markets

Global Divisions for Converse and Brand Licensing.

Nike’s organizational structure also has two global divisions: one for the Converse brand and another for brand licensing. One global division is responsible for managing the worldwide operations of Converse, which is another footwear brand and subsidiary of Nike Inc. Another global division is responsible for licensing the Nike brand. This characteristic of the corporate structure offers control for brand licensing and the operations of Converse.

Nike’s Organizational Structure– Nike Organizational Hierarchy

The hierarchical structure of Nike can be broken down into three key segments, which are Global Headquarters, Regional Headquarters and subsidiaries. This hierarchical structure allows the company to maintain a globalized approach to managing its business while ensuring regional control.

Global Headquarters

The global headquarters is the top of the hierarchical ladder, where all the major decisions about the company’s business operations are taken. It also oversees all regional operations, except the EMEA, which is managed by the regional headquarter in Europe. The centralized decision-making structure of Nike helps the firm to streamline its information processing and focus on areas which matter the most. It allows the company to prioritize its goals, as having the right structure leads to the right flow of information. The global headquarter allows the company to take a standardized approach to run its business across the entire global operation. It also enables the firm to establish an organizational culture which is universally accepted in the firm. This is only possible with a centralized structure. It allows the company to develop a brand image which is universally identical in all target markets, thereby creating a globalized brand.

The global headquarter also holds the responsibility of market research, and product development, especially for the footwear segment. The market demand is highly dynamic, which compels the firm to be constantly on the lookout for new design trends, which can be turned to a new product. It should be noted that the apparel design takes place locally, but the footwear design takes place at the global headquarters in Oregon.

Regional Headquarters

The regional headquarters situated in the Netherlands oversees the business operations in the EMEA region, which comprises of 27 nations. The geographic regions in the EMEA are segregated into subregions for better management and control

The diagram shown above highlights the structure of Nike in terms of geographic distribution in different regions in the EMEA. The introduction of an additional layer in the hierarchy has helped the firm to foster better transparency, seamless flow of information and reduction in complexity. By creating sub-regions can help in streamlining the operations of the company. Moreover, it also reduces the reporting lines, which leads to better coordination and enhances decision making. It also makes it efficient for the company to filter the local demand trends based on the sub-regions. Subdividing the markets also provide better support for each individual markets. Each sub-region is overseen by a sub-regional manager. The local requirements of the individual markets in a sub-region is reported by the sub-regional manager to the EMEA regional headquarter in the Netherland. The regional headquarters are responsible for designing some of the marketing campaigns, which helps in localization of the communicational message sent to the target audience. The company realizes that even though it operates with a global brand image, some of the marketing communications need to be adjusted for cultural differences. The localization of the marketing activities has helped Nike to become more effective in attracting the customers.

The matrix organizational structure is also followed at the sub-regional level. The employees have two reporting authorities, one from the functional department and the other from the product category.

The diagram shown above clearly highlights the multiple reporting lines inthe matrix organizational structure of Nike.

Subsidiaries

Nike own several wholly-owned subsidiary brands such as Cole Haan, Converse, Hurley, Umbro, etc. These subsidiaries operate with certain degree of autonomy, which clearly mentioned boundaries. These subsidiaries take most of the decisions themselves, with authorization from the headquarters. However, in terms of localization of the marketing strategies, the regional or sub-regional intervention is present. The independence of decision making and operational autonomy allows these subsidiaries to function free from the strict control of the global and regional headquarters. It is important to understand that each of these subsidiary brands appeal and cater to different groups of customers. Therefore, each of them will have to follow their own product development and marketing communication strategies.

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Nike’s Organizational Structure – Nike Executives

The diagram above showcases the key individuals in operating in the global headquarters and are responsible for taking all the centralized decisions of the company. Needless to say, that the entire organizational structure of Nike encompassing every reporting authority in every market location, is extremely complicated. However, it should be noted that what makes it beneficial for the company is the streamlined approach to running the business operations. The combination of standardization and localization has enabled the company to adopt marketing strategies which can seamlessly appeal to the local customers, while retaining the global Nike culture, which has helped the firm to bring itself closer to its customers.

It is important for you to understand that different companies have different organizational structure, which is responsible for respective growth and sustenance. The complex matrix organizational structure of Nike has worked out as expected for the company, but it does not necessarily mean that it would be good fit for another company. The success of an organizational structure largely depends on the leadership styles and the organizational culture

Nike’s Organizational Structure – Advantages of Nike’s Organizational Structure

The matrix organizational structure of Nike accumulates advantages of all different types of organizational structures within it.

First, the regional divisional structure allows Nike to provide different goods in different regions in relation to the preferences of people in those regions. This is the reason why you can find different variety of Nike products in your country in comparison to another country. This not only increases Nike’s sales, but it also helps it to enforce its brand image all across the world by not letting the competitors settle in.

Moreover, setting regional divisions at different places helps in promotion too. The firm gets to know about the culture of people living there and it markets its products according to their culture’s liking. The divisions according to products help the firm in developing its products as the employees in each division focus on their product only. This allows them to become specialists in their particular field, makes them best for the job.

Adding to this, the functional structure helps in enhancing the best form the workforce. People have specialization and perfect skill sets and their placement is with similar people in a group. This means that the tasks of each functional group are done quickly. It not only brings about efficiency but also reduces the chances of error.

The matrix structure, as a whole, uses the scarce human resources of the firm very efficiently by employing a single person for more than one jobs. This not only increases their incomes but also motivates them to do even better.

Nike’s Organizational Structure – Disadvantages of Nike’s Organizational Structure

The matrix structure of Nike also accumulates the disadvantages of all different types of organizational structures in it.

First, when a single person is working on more than one jobs, he is answerable to more than one bosses. This leads to confusion and conflicts, as to whose work should be given priority. The unnecessary grudges and conflicts arising from this can be detrimental for the firm as well as the employees.

Secondly, the divisional structure leads to a duplication of duties within the firm. Two divisions will have different departments for the same function, no matter how small the divisions are. This leads to wastage of money and other resources of the firm.

Moreover, lack of coordination, which is highly likely, can prove to be fatal for the organization. This is because one department will not be aware of the plans of the other departments. For example, the research and development department may be planning to conduct research on a new kind of product, but at the same time finance department feels that there is too much idle money and it invests the money somewhere.

The research plan may face postponement due to low funds. Adding to this, the teams within the organization might start having unhealthy competition amongst them to win over each other.

Nike’s Organizational Structure – Nike Inc. Organizational Culture

Nike Inc.’s organizational culture supports business resilience and capability. Organizational culture is the combination of traditions, habits, values, and behavioral expectations among employees. Nike’s workers are given a set of instructions, rules and expectations on how to do their jobs, with consideration for their relations with customers and other employees.

This approach ensures that the company maintains its corporate culture, which partly contributes to the success of the business. As one of the giants in the global athletic shoe, apparel and equipment market, Nike Inc. continues its policies and strategies to promote an organizational culture that reinforces business resilience and competence.

Nike has an organizational culture that encourages human resources to behave in ways that address business objectives. Training programs are designed to uphold such corporate culture that aligns with the Nike brand image for sports footwear, apparel and equipment.

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Features of Nike’s Organizational Culture

Nike’s organizational culture is centered on creativity and innovation to provide products that suit current consumer preferences. The company is known for cutting-edge sports shoes, apparel and equipment. The following main characteristics of Nike’s corporate culture sustain business and market competence:

1. Talented
2. Diverse
3. Inclusive

Talented

Nike Inc. understands that talent and innovation go hand-in-hand. This feature of the organizational culture emphasizes the need to provide human resource support for product development and internal services in the corporation. As such, Nike uses training programs to maintain employee talent. The company also has coaching and mentoring programs.

These approaches are based on the strategy that develops and enables leaders within the organization for Nike’s global growth. The purpose of this characteristic of Nike’s corporate culture is to sustain talent and infrastructure necessary for producing some of the world’s most popular athletic shoes, equipment and apparel

Diverse

Diversity is continually developed in Nike’s organizational culture. The company believes that this feature of the corporate culture leads to a dynamic workforce.

Diversity promotes Nike’s creativity, innovation, brand image and, consequently, competitive advantage. The company maintains diversity through HR programs, such as the Speak Up! program, which facilitates sharing of ideas among workers. This feature of the corporate culture maximizes Nike’s product development cycles, especially in creating new designs for its sports shoes, apparel and equipment.

Inclusive

Nike Inc. emphasizes inclusiveness in its organizational culture. The purpose of this cultural characteristic is to minimize barriers to employee performance. Nike’s strategy uses inclusiveness as a tool for optimal performance, diversity and talent development.

The company supports this feature of the corporate culture through a team-based approach to management. In addition, Nike employs a number of programs, such as Bias to Breakthrough (a program for removing barriers to creativity) and NCourage (a set of employee networks for cultural awareness and community building).

This feature of the organizational culture minimizes problems in Nike’s workforce and supports streamlining athletic shoes, apparel and equipment design and production processes.

References

1. U.S. Department of Commerce – International Trade Administration – Textiles, Apparel & Sporting Goods.
2. Mark ides, C. C., & Williamson, P. J. (1996). Corporate diversification and organizational structure: A resource-based view. Academy of Management Journal, 39(2), 340-367.
3. Alvesson, M. (2016). Organizational Culture. Sage Publications Incorporated.
4. Alvesson, M., & Sveningsson, S. (2015). Changing organizational culture: Cultural change work in progress. Routledge.
5. Corporate Structure and Strategy: the Case of Nike (n. d.). University of Washington.