Nike’s Global Women’s Fitness Business

Driving Strategic Integration

Group 1

Beginnings

• Nike was founded by Bill Bowerman and Phil Knight

• With a $500 investment by both men, Blue Ribbon Sports(BRS) was born in 1964.

• By 2006, that company, called Nike for the Greek goddess of victory, had grown into the one of the world's most well-known brands.

• Nike's fiscal year 2006 sales reached $15 billion(up 9% percent from FY 2005),with net income of $1.4 billion(compared to $1.2 billion the previous year)

2002 2003 2004 2005 2006

$9,893$10,697

$12,253

$13,740 $14,955

$663$474

$946$1,212 $1,392

Nike Financial History (In millions)

Sales Revenues Net Income

Organization

• With the main primary focus on footwear, apparel and equipment, Nike organized its business around a ‘Product Orientation’.

• The business units represented the lead dimension of the matrixed structure with few global functions- sales, brand, customer service etc.

• United States, Europe, Middle East, and Africa, Asia-Pacific, and the Americas--represented the second dimension.

44%

33%

16%7%

Regional Percent of Nike in fiscal 2006

United StatesEMEAAsia-PacificAmericas

EMEA—Europe, Middle East, and Africa

Change

• After much debate among the senior management, Nike created its women’s footwear division in 2001.

• The team in charge was made up of handful of executives from different parts of the business.

• The project was not given top priority and was considered as their second job with them having to manage different tasks at the same time.

Steps Taken• The whole operation was divided into phases

depending on the action taken.

Phase One Evaluation of successes and challenges so far. Getting an external take on the present state. Analysis of the consumer. Lot of ground work was done on the women

market but no monumental steps were taken so far.

Phase TwoCritical decisions were taken in the form of six milestones.

Month 2: Seasonal kick-off and Creative Direction.

Month 9: Design Review. Month 10: Prototype Review Month 12: Go to the Market Strategy. Month 13: Realign. Month 15: Brand Execution and post-season

review.

Phase Three: Refocus on how much money was needed and

about reorganization.

Making It Happen

Winslow began building her dream team: Needed people who had influence in the

organization. Proper reputation and authority. Communication skills. Passion for the Women’s business

Many promotions were made within the company like theroad show which kept the spirits of the staff high and earned a positive response.

Change In Strategy

• Though there was a solid organizational structure, change in trends and competition in the niche market brought about the change in strategy.

Product to Category Focus• Product Focused organization is one that has a roadmap

and even vision for the product based on delivering something that the team believes will meet market demand – whatever the market maybe

• Customer Focused organization is one where decisions about the product are made based on aligning customer needs and wants with the overall goals of the organization. 

Problems Faced By Nike• Change in Game was a good move, with Mindy Grossman in

charge but the execution phase was sketchy.

• Strain on the employees as they were associated to different other tasks along with the Women’s business.

• Though there is a shift in the approach, it is still composed of the same skeletal structure thus resulting in misalignment of priorities between global and regional teams.

• The women’s business team had no proper structure within itself and the key members only were assessed. This is a major flaw as the other employees will lack the drive to achieve anything substantial.

• The change was extremely slow from the beginning.

• The belief that success of the women’s line of products will put the men’s business in the back page is very wrongly assessed and resulted in the late start.

• The experienced executives in the company might stop any radical changes as they were used to working in a certain way from the start.

• These were some of the issues Nike faced and resulted in

the late launch of the Women’s products.

Initiatives

• Proper incentives should be provided to the women’s team in appreciation of the extra effort they are putting for taking up the business up a notch.

• Motivation of the employees regularly by the top executives will keep up the spirit going.

• Adopting activities like the road shows to obtain collaboration from departments.

• Defining proper roles and responsibilities.

• The company should make sure that along with its perception and commitment, it should also think one step ahead of the first delivery due to the fast pace of the retail.

Options For Reorganization Hybrid organization by readjusting all the elements and

the company would have autonomous divisions with regional offices.

Divisions would have their own product design.

Internal departments like sales, operations, logistics, supply chain and customer service, their own strategic planning.

This will provide them with less complexity and more alignment in their structure thus leading to uniformity.

PROS CONS

1. Roles and responsibilities are clearly

defined.

1. Reorganization can be a costly affair

and can take some getting used to time.

2. Enhanced customer entrepreneurship. 2. Long-term customers can become

confused.

3. Increased standardization. 3. Unknown territory for leaders who have

vast experience and gotten used to one

way of working.

4. Increased customer touch points. 4. Workforce can face problems like

dealing with all the changes and might

feel like they are working for different

companies.

Basic idea of autonomous division will remain the same with powers like Strategic planning Market development Sales

But they would be informally supported by the Corporate Offices. Organization will be centralized at the corporate level and also have functional capabilities along with regional offices.

PROS CONS

1. Requires little additional investment. 1. Harder to distinguish exploration from

exploitation tasks.

2. No emotional impact for employees. 2. Reduced corporate entrepreneurship

spirit.

3. Senior management will remain in the

comfort zone.

3. Reduced ability to standardize

exploitation.

4. Faster implementation.  

5. No creation of confusion to the customer

and addresses all the arising challenges.

 

Recommendations• Since the trend of the women’s market keeps changing, Nike should

make sure that with the reorganization of its structure it keeps with the ever increasing demand especially as it turned out to be a huge hit in all the parts.

• It should refine its marketing strategies on a frequent basis and keep up with its competitors.

• The top tier executives should take a personal approach with the employees.

• Incentives should be awarded to the ever working hard team.

• They should concentrate on prioritizing its most successful department and market and make sure that the sales are properly delivered on time.

• Also every store can be personalized depending on the popularity of the sport in the particular region.

• More importantly, with the increase in the online customers every available product should be put up on the website with the facility of customizing it for an additional fee.

• The stores can also be reflect the taste of the customer in the particular area with priority of customer service as women prefer stores with the best service and products.

2007

• Nike’s Revolutionary Support Sports Bra, The Considered 2K5 shoe and Nike+ Air Zoom Moiré, were recognized by I.D. magazine in its Best of Consumer Product Category.

• #55 on Business Week’s Top 100 Places to Launch A Career list

• Recognized in 2006, 2007 as well as 2008 on Fortune magazine’s 100 Best Companies To Work For list because of Nike’s employee benefits

Aftermath and Nike Today

• Acquired the sports apparel supplier Umbro

• Ranked as being the Most Admired Company in America in the Apparel industry

• Runner-up to Apple in Innovation

• Topped the industry in long-term investment, financial soundness and social responsibility

• Two popular products: Nike Air Hyperdunk and Nike Zoom Kobe IV

2008

• Released the Nike+ Sports Band in stores

• Earned silver in the CLIO Awards for Nike+.

• First on the Dutch Top 100 Best Brand Awareness list

• Second in the European Football Sponsor Brands Top 20 2009

• Ranked number 1 for the “green score” and number 2 for the “reputation score” based on Newsweek’s Green Rankings

• Named as one of the World’s Most Ethical Companies by the Ethisphere Institute

• Ended being the official kit sponsor for the Indian cricket team (2006-2010)

• Nike Pro Combat jersey collection was worn by teams from many Universities

2010

• Nike stated that 2/3 of its factories in Indonesia producing Converse products did not meet the company’s standards for the treatment of their workers

• Named one of the best American companies for gay, lesbian, bisexual, and transgender workers

• Ranked tenth on the Corporate Responsibility Magazine’s 100 Best Corporate Citizens List

2011

• Announced its intention of selling Cole Haan and Umbro

• Earned the number 1 spot in the Climate Counts performance rankings in the Apparel/Accessories sector

• Cleverly leveraged their recognizable logo and received brand identification at the 2012 Olympic Games

• CEO Mark Parker announced the removal of Joe Paterno’s name from the child development center

• Joined the (RED) campaign to prevent the transmission of the HIV virus from mother to child

• Officially became the sponsor of the NFL

2012

Income Statement Evolution

• Corporate mission states “to bring inspiration and innovation to every athlete in the world”

• Announced that an increase of its fiscal 2015 revenue target will be increased from $27 billion which was announced in May 2012 to $28-$30 billion

• Will buy back another $5 billion by the end of second quarter fiscal 2013 and set up a 4 year plan to buy back $8 billion

and strong growth in China • Continue being one of the largest

and most successful companies

Plans for the Future