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B O A M E N T, C O L I N B E S T, B R E N D A N
C O U G H L I N , D A R R I E N H O R N , C H A S E F R E R K I N G ,
D A ...
STRATEGY FORMULATION & IMPLEMENTATION: 7S FRAMEWORK
SOGs,
SGs, VMPGs,
Strategy
(as Plan)
Strategy
(as Position)
Structure
...
CHECKPOINT 2: PRESENTATION OUTLINE
STATEGY FORMULATION
SOG’S: Vision, Mission, Purpose, Goals, and “Mantra”
STRATEGY: Busi...
STRATEGY FORMULATION: SUPERORDINATE GOALS
SOGs,
SGs, VMPGs,
Strategy
(as Plan)
Strategy
(as Position)
Structure
(OS)
Style...
STRATEGY FORMULATION: SUPERORDINATE GOALS
Mission Vision
Purpos
e
Goals Mantra
STRATEGY FORMULATION STRATEGY IMPLEMENTATIO...
Mission: “To bring inspiration and innovation to every athlete in the
world.”
Mission Vision Purpose Goals Mantra
STRATEGY...
Vision: “If you have a body, you are an athlete.”
Design a shoe for everyone
 Using high quality materials
 Made ethica...
Goals: We Strive for Innovation that:
 Serves the athlete
 Grows the company
 Delivers inspiration
 Minimize Waste (Re...
• Tagline: “Just Do It!”
• Mantra: “Authentic, athletic performance”
Mission Vision
Purpos
e
Goals Mantra
STRATEGY FORMULA...
STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE
S T R E N G T H S
 Great customer loyalty
 Sponsorship ...
CHECKPOINT 2: PRESENTATION OUTLINE
STATEGY FORMULATION
SOG’S: Vision, Mission, Purpose, Goals, and “Mantra”
STRATEGY: Busi...
STRATEGY FORMULATION: STRATEGY AS POSITION
SOGs,
SGs, VMPGs,
Strategy
(as Plan)
Strategy
(as Position)
Structure
(OS)
Styl...
Broad
Differentiation
Broad Low Cost
Focused
Differentiation
Focused Low
Cost
BroadNarrow
Differentiation Low Cost
Scopeof...
Type of Advantage: Differentiation
•Willingness to pay a premium price:
•On average Nike’s customers pay over twice the wo...
Strategy Formulation:
Business Level Strategic
Positioning
Scope of Advantage: Broad
• Diverse Demographic:
•People of all...
Strengths & Weaknesses: Business Level
Strategy
STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE
STRATEGY ...
CHECKPOINT 2: PRESENTATION OUTLINE
STATEGY FORMULATION
SOG’S: Vision, Mission, Purpose, Goals, and “Mantra”
STRATEGY: Busi...
STRATEGY IMPLEMENTATION: SKILLS
SOGs,
SGs, VMPGs,
Strategy
(as Plan)
Strategy
(as Position)
Structure
(OS)
Style
(OC)
Syst...
STRATEGY IMPLEMENTATION: SKILLS
Resources Valuable Rare Inimitability Organization
Leadership X
Diversity X
Accessibility ...
CORE COMPETENCIES METAPHOR
The
Approach:
Core
Competenci
es
• Brand Awareness
• Innovation
• Efficiency
• Consumer Loyalty...
VRIO AND CORE COMPETENCIES
S T R E N G T H S
 Nike’s combination of financial
resources, global supply chain, and
decades...
CHECKPOINT 2: PRESENTATION OUTLINE
STATEGY FORMULATION
SOG’S: Vision, Mission, Purpose, Goals, and “Mantra”
STRATEGY: Busi...
STRATEGY IMPLEMENTATION: STYLE
SOGs,
SGs, VMPGs,
Strategy
(as Plan)
Strategy
(as Position)
Structure
(OS)
Style
(OC)
Syste...
ORGANIZATIONAL
CULTURE
ANALYSIS
Cohesive
Strong
Non-cohesive
Weak
Focus on “Production”
Impersonal
Focus on “People”
Human...
ORGANIZATIONAL CULTURE:
STRENGTH ORIENTATION: 4
• Cult-like culture
• Nike’s tribal identity: “We have the best-kept secre...
ORGANIZATIONAL CULTURE:
CHANGE ORIENTATION: 3.5
1 542 3
Bureaucratic
Stability
Adaptive
Change
•“To fulfill our potential ...
ORGANIZATIONAL CULTURE:
SUPPORT ORIENTATION: 2.5
1 2 3 4 5
Focus on
“People”
Humanistic
Focus on
“Production”
Impersonal
•...
ORGANIZATIONAL CULTURE ANALYSIS
S T R E N G T H S
 Strong cult-like culture
 Focus on helping
employees grow
 Industry ...
CHECKPOINT 2: PRESENTATION OUTLINE
STATEGY FORMULATION
SOG’S: Vision, Mission, Purpose, Goals, and “Mantra”
STRATEGY: Busi...
STRATEGY IMPLEMENTATION: STRUCTURE
SOGs,
SGs, VMPGs,
Strategy
(as Plan)
Strategy
(as Position)
Structure
(OS)
Style
(OC)
S...
ORGANIZATIONAL STRUCTURE ANALYSIS
HIERARCHY OF AUTHORITY DIMENSION
STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PE...
ORGANIZATIONAL STRUCTURE ANALYSIS
FORMALIZATION DIMENSION
STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE...
ORGANIZATIONAL STRUCTURE ANALYSIS
SPECIALIZATION DIMENSION
STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANC...
ORGANIZATIONAL STRUCTURE ANALYSIS
OVERALL STRUCTURE ANALYSIS
STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMA...
ORGANIZATIONAL STRUCTURE ANALYSIS
STRENGTHS AND WEAKNESSES
STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANC...
CHECKPOINT 2: PRESENTATION OUTLINE
STATEGY FORMULATION
SOG’S: Vision, Mission, Purpose, Goals, and “Mantra”
STRATEGY: Busi...
ORGANIZATIONAL FIT & PERFORMANCE
SOGs,
SGs, VMPGs,
Strategy
(as Plan)
Strategy
(as Position)
Structure
(OS)
Style
(OC)
Sys...
ORGANIZATIONAL FIT & PERFORMANCE
MODIFIED 5S ANALYSIS
Superordinat
e Goals
Position Structure Style Skills
Superordinate
G...
ORGANIZATIONAL FIT & PERFORMANCE
MODIFIED 5S ANALYSIS
Best Fits
STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFO...
ORGANIZATIONAL FIT & PERFORMANCE
MODIFIED 5S ANALYSIS
Worst Fits
STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERF...
ORGANIZATIONAL FIT & PERFORMANCE
MODIFIED 5S ANALYSIS
Overall Subsystem Fit Very
Good
STRATEGY FORMULATION STRATEGY IMPLEM...
CHECKPOINT 2: PRESENTATION OUTLINE
STATEGY FORMULATION
SOG’S: Vision, Mission, Purpose, Goals, and “Mantra”
STRATEGY: Busi...
ORGANIZATIONAL FIT & PERFORMANCE
FINANCIAL ANALYSIS
Key takeaway: Nike is turning over inventory at a rate at least 30% gr...
ORGANIZATIONAL FIT & PERFORMANCE
FINANCIAL ANALYSIS
0
5
10
15
20
25
30
2010 2011 2012 2013 2014
NIasa%ofEquity
Profitabili...
ORGANIZATIONAL FIT & PERFORMANCE
FINANCIAL ANALYSIS – SUMMARY
Overall Financial Performance =
Excellent
At or near industr...
ORGANIZATIONAL FIT & PERFORMANCE
S T R E N G T H S
SOG & Position fit
Skills & Position fit
ROE
Inventory Turnover
W E A K...
ORGANIZATIONAL FIT & PERFORMANCE
MODIFIED 5S & FINANCIAL ANALYSIS SUMMARY
STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT...
CHECKPOINT 2: PRESENTATION OUTLINE
STATEGY FORMULATION
SOG’S: Vision, Mission, Purpose, Goals, and “Mantra”
STRATEGY: Busi...
APPENDIX
Complete Organizational Culture Analysis
Complete Organizational Structure Analysis
Complete Financial Analysis
R...
ORGANIZATIONAL CULTURE:
OUTCOME ORIENTATION: 5
• “Because we are Nike, we have a very powerful and very high profile brand...
ORGANIZATIONAL CULTURE:
RISK ORIENTATION: 5
1 52 3 4
Nike’s culture stresses risk, and more importantly, innovation. Using...
ORGANIZATIONAL STRUCTURE ANALYSIS
STANDARDIZATION DIMENSION
STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMAN...
ORGANIZATIONAL STRUCTURE ANALYSIS
CENTRALIZATION DIMENSION
STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANC...
ORGANIZATIONAL FIT & PERFORMANCE
FINANCIAL ANALYSIS
SG&A expenses cover everything from direct selling expenditures to sal...
ORGANIZATIONAL FIT & PERFORMANCE
FINANCIAL ANALYSIS
Liquidity ratios, such as the Quick and Current ratio, provide a look ...
ORGANIZATIONAL FIT & PERFORMANCE
FINANCIAL ANALYSIS
Leverage ratios provide a measure of how indebted the firm is. The Deb...
ORGANIZATIONAL FIT & PERFORMANCE
FINANCIAL ANALYSIS
Profitability ratios such as ROE and ROA provide a metric to analyze a...
REFERENCES
"1.3 About Nike Inc - NIKE, Inc." 1.3 About Nike Inc - NIKE, Inc. N.p., n.d. Web. 4 Apr. 2015.
Barbara, Brenner...
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Nike Checkpoint 2

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Nike Checkpoint 2

  1. 1. B O A M E N T, C O L I N B E S T, B R E N D A N C O U G H L I N , D A R R I E N H O R N , C H A S E F R E R K I N G , D A N I E L J O N E S , D Y L A N M O R G R E T, A A R O N P L AT T S NIKE INC. CHECKPOINT 2: STRATEGY FORMULATION, IMPLEMENTATION, FIT & PERFORMANCE
  2. 2. STRATEGY FORMULATION & IMPLEMENTATION: 7S FRAMEWORK SOGs, SGs, VMPGs, Strategy (as Plan) Strategy (as Position) Structure (OS) Style (OC) Systems (VCA) Skills (VRIO/CC) Staff (OL, VCA) Strategy Formulation Strategy Implementation • Main Idea: Greater fit amongst subsystems leads to greater organizational effectiveness
  3. 3. CHECKPOINT 2: PRESENTATION OUTLINE STATEGY FORMULATION SOG’S: Vision, Mission, Purpose, Goals, and “Mantra” STRATEGY: Business-Level Strategic Positioning STRATEGY IMPLEMENTATION SKILLS: VRIO Framework/Core Competencies STYLE: Organizational Culture Analysis STRUCTURE: Organizational Structure Analysis STRATEGY FIT AND PERFORMANCE FIT: Modified 5S Analysis PERFORMANCE: Financial Analysis  APPENDIX AND REFERENCES AT END STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE
  4. 4. STRATEGY FORMULATION: SUPERORDINATE GOALS SOGs, SGs, VMPGs, Strategy (as Plan) Strategy (as Position) Structure (OS) Style (OC) Systems (VCA) Skills (VRIO/CC) Staff (OL, VCA) Strategy Formulation Strategy Implementation • Main Idea: Greater fit amongst subsystems leads to greater organizational effectiveness
  5. 5. STRATEGY FORMULATION: SUPERORDINATE GOALS Mission Vision Purpos e Goals Mantra STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE STRATEGY FORMULATION: SUPERORDINATE GOALS
  6. 6. Mission: “To bring inspiration and innovation to every athlete in the world.” Mission Vision Purpose Goals Mantra STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE STRATEGY FORMULATION: SUPERORDINATE GOALS
  7. 7. Vision: “If you have a body, you are an athlete.” Design a shoe for everyone  Using high quality materials  Made ethically (wages and work conditions)  Safe for the Planet Purpose: “Nike is dedicated to serving athletes and helping them reach their full potential” ‘Continually innovate to remain sustainable’ Create value for shareholders Mission Vision Purpose Goals Mantra STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE STRATEGY FORMULATION: SUPERORDINATE GOALS
  8. 8. Goals: We Strive for Innovation that:  Serves the athlete  Grows the company  Delivers inspiration  Minimize Waste (Recycling ‘Reuse a Shoe’ program  Promote Social Responsibility  Focus on innovation, collaboration, transparency and advocacy Mission Vision Purpos e Goals Mantra STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE STRATEGY FORMULATION: SUPERORDINATE GOALS
  9. 9. • Tagline: “Just Do It!” • Mantra: “Authentic, athletic performance” Mission Vision Purpos e Goals Mantra STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE STRATEGY FORMULATION: SUPERORDINATE GOALS
  10. 10. STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE S T R E N G T H S  Great customer loyalty  Sponsorship Pride W E A K N E S S E S  Too geared towards the athlete and less towards their average consumer. STRATEGY FORMULATION: SUPERORDINATE GOALS
  11. 11. CHECKPOINT 2: PRESENTATION OUTLINE STATEGY FORMULATION SOG’S: Vision, Mission, Purpose, Goals, and “Mantra” STRATEGY: Business-Level Strategic Positioning STRATEGY IMPLEMENTATION SKILLS: VRIO Framework/Core Competencies STYLE: Organizational Culture Analysis STRUCTURE: Organizational Structure Analysis STRATEGY FIT AND PERFORMANCE FIT: Modified 5S Analysis PERFORMANCE: Financial Analysis  APPENDIX AND REFERENCES AT END STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE
  12. 12. STRATEGY FORMULATION: STRATEGY AS POSITION SOGs, SGs, VMPGs, Strategy (as Plan) Strategy (as Position) Structure (OS) Style (OC) Systems (VCA) Skills (VRIO/CC) Staff (OL, VCA) Strategy Formulation Strategy Implementation • Main Idea: Greater fit amongst subsystems leads to greater organizational effectiveness
  13. 13. Broad Differentiation Broad Low Cost Focused Differentiation Focused Low Cost BroadNarrow Differentiation Low Cost Scopeofadvantage Type of Advantage Strategy: Porter’s Strategy Typology STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE STRATEGY FORMULATION: STRATEGY AS POSITION
  14. 14. Type of Advantage: Differentiation •Willingness to pay a premium price: •On average Nike’s customers pay over twice the world average price for a running shoe •Over 50% of the shoe sales greater than 85% are Jordan’s STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE STRATEGY FORMULATION: STRATEGY AS POSITION
  15. 15. Strategy Formulation: Business Level Strategic Positioning Scope of Advantage: Broad • Diverse Demographic: •People of all ages, race and sex wear Nike shoes and apparel for a wide variety of uses. • Wide Geographic: •Nike has a presence on every continent and provides its products to every country in the world, touching a wide base of different cultures. • Variety of Usage: •Nike makes all sorts of shoes that serve a variety of purposes such as shoes for: Runners, Soccer, Skateboarding, Leisure, Formal, etc. There is a shoe for everybody. STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE STRATEGY FORMULATION: STRATEGY AS POSITION
  16. 16. Strengths & Weaknesses: Business Level Strategy STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE STRATEGY FORMULATION: STRATEGY AS POSITION S T R E N G T H S • Globally positioning themselves all over the World makes it fast and easy to produce and deliver products. W E A K N E S S E S High prices make switching costs lower for some consumers; potentially switch to lower cost rivals.
  17. 17. CHECKPOINT 2: PRESENTATION OUTLINE STATEGY FORMULATION SOG’S: Vision, Mission, Purpose, Goals, and “Mantra” STRATEGY: Business-Level Strategic Positioning STRATEGY IMPLEMENTATION SKILLS: VRIO Framework/Core Competencies STYLE: Organizational Culture Analysis STRUCTURE: Organizational Structure Analysis STRATEGY FIT AND PERFORMANCE FIT: Modified 5S Analysis PERFORMANCE: Financial Analysis  APPENDIX AND REFERENCES AT END STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE
  18. 18. STRATEGY IMPLEMENTATION: SKILLS SOGs, SGs, VMPGs, Strategy (as Plan) Strategy (as Position) Structure (OS) Style (OC) Systems (VCA) Skills (VRIO/CC) Staff (OL, VCA) Strategy Formulation Strategy Implementation • Main Idea: Greater fit amongst subsystems leads to greater organizational effectiveness STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE
  19. 19. STRATEGY IMPLEMENTATION: SKILLS Resources Valuable Rare Inimitability Organization Leadership X Diversity X Accessibility X Product Differentiation X Customer Service X Supply Chain X X Culture X X Endorsements X X Corporate Social Responsibility X X Marketing/Advertising X X X Research & Development X X X Brand Awareness X X X X Innovation X X X X Efficiency X X X X Consumer Loyalty X X X X STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE VRIO ANALYSIS
  20. 20. CORE COMPETENCIES METAPHOR The Approach: Core Competenci es • Brand Awareness • Innovation • Efficiency • Consumer Loyalty The Dunk: End Products • High quality Footwear/Apparel • Advanced technological products • Equipment STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE STRATEGY IMPLEMENTATION: SKILLS The Grip: Core Products • Soles • Fabrics
  21. 21. VRIO AND CORE COMPETENCIES S T R E N G T H S  Nike’s combination of financial resources, global supply chain, and decades of established vendor relationships makes the firm incredibly efficient.  Few companies are as globally recognized as Nike. This is in part due to their extensive marketing campaigns.  Nike has an extensive R&D program. This allows them to stay at the forefront of their industry, as they consistently release innovative and technologically advanced products. W E A K N E S S E S  Although Nike has strived to better their image of CSR, there are still allegations of abuse and mistreatment of employees in some factories STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE STRATEGY IMPLEMENTATION: SKILLS
  22. 22. CHECKPOINT 2: PRESENTATION OUTLINE STATEGY FORMULATION SOG’S: Vision, Mission, Purpose, Goals, and “Mantra” STRATEGY: Business-Level Strategic Positioning STRATEGY IMPLEMENTATION SKILLS: VRIO Framework/Core Competencies STYLE: Organizational Culture Analysis STRUCTURE: Organizational Structure Analysis STRATEGY FIT AND PERFORMANCE FIT: Modified 5S Analysis PERFORMANCE: Financial Analysis  APPENDIX AND REFERENCES AT END STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE
  23. 23. STRATEGY IMPLEMENTATION: STYLE SOGs, SGs, VMPGs, Strategy (as Plan) Strategy (as Position) Structure (OS) Style (OC) Systems (VCA) Skills (VRIO/CC) Staff (OL, VCA) Strategy Formulation Strategy Implementation • Main Idea: Greater fit amongst subsystems leads to greater organizational effectiveness STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE
  24. 24. ORGANIZATIONAL CULTURE ANALYSIS Cohesive Strong Non-cohesive Weak Focus on “Production” Impersonal Focus on “People” Humanistic Bureaucratic Stability Adaptive Change Risk-averse Security Focus on “Effort” (or not) Enjoy the Process Support Orientation Change Orientation Strength Orientation 5 4 5 4 5 4 5 4 5 4 1 2 1 1 2 1 1 2 2 3 1 3 3 3 3 2 STRATEGY IMPLEMENTATION: STYLE STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE
  25. 25. ORGANIZATIONAL CULTURE: STRENGTH ORIENTATION: 4 • Cult-like culture • Nike’s tribal identity: “We have the best-kept secrets” • Employees are said to quote the 11 Maxims of Nike – Similar to the Ten Commandments • Nike’s story and history is embedded into employees • Quote from one of Nike’s GMs: – “It’s about making sure that every person in the system adopts a different world view, sense of purpose and approach to their job.” 1 2 3 4 5 Non-Cohesive Weak Cohesive Strong STRATEGY IMPLEMENTATION: STYLE STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE
  26. 26. ORGANIZATIONAL CULTURE: CHANGE ORIENTATION: 3.5 1 542 3 Bureaucratic Stability Adaptive Change •“To fulfill our potential we know we need to operate in completely new ways, making sustainability integral to our innovation and performance.” (Mark Parker, Nike President & CEO) •After trouble regarding illegal manufacturing practices, Nike became the 1st company in the industry to voluntarily disclose names of all contract factories producing Nike products. •Nike launched Making, which is an app that helps designers and product creators make informed decisions about the environmental impacts of materials they choose. •33,000 employees worldwide, yet only 14 (board of directors) make the important decisions regarding the company. •Every year Nike requires all employees to read and verify they read the code of ethics, “Inside the Lines” STRATEGY IMPLEMENTATION: STYLE STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE
  27. 27. ORGANIZATIONAL CULTURE: SUPPORT ORIENTATION: 2.5 1 2 3 4 5 Focus on “People” Humanistic Focus on “Production” Impersonal •During the 1990s and early 2000s, people accused Nike of sweatshop labor: This proved to be an impersonal process stated by then Nike director, Todd McKean, “Hey, we don't own the factories. We don't control what goes on there. • •Four core principles for Nike management team: - Lead - Coach - Drive - Insprire •"Figure out where you want your career to go, and when you see something that would help you get there, ask us for it.” (Nelson Farris, Nike’s head of corporate education) STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE STRATEGY IMPLEMENTATION: STYLE
  28. 28. ORGANIZATIONAL CULTURE ANALYSIS S T R E N G T H S  Strong cult-like culture  Focus on helping employees grow  Industry leading results W E A K N E S S E S  Bureaucratic decision- making  High R&D costs from risk seeking STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE STRATEGY IMPLEMENTATION: SKILLS
  29. 29. CHECKPOINT 2: PRESENTATION OUTLINE STATEGY FORMULATION SOG’S: Vision, Mission, Purpose, Goals, and “Mantra” STRATEGY: Business-Level Strategic Positioning STRATEGY IMPLEMENTATION SKILLS: VRIO Framework/Core Competencies STYLE: Organizational Culture Analysis STRUCTURE: Organizational Structure Analysis STRATEGY FIT AND PERFORMANCE FIT: Modified 5S Analysis PERFORMANCE: Financial Analysis  APPENDIX AND REFERENCES AT END STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE
  30. 30. STRATEGY IMPLEMENTATION: STRUCTURE SOGs, SGs, VMPGs, Strategy (as Plan) Strategy (as Position) Structure (OS) Style (OC) Systems (VCA) Skills (VRIO/CC) Staff (OL, VCA) Strategy Formulation Strategy Implementation • Main Idea: Greater fit amongst subsystems leads to greater organizational effectiveness STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE
  31. 31. ORGANIZATIONAL STRUCTURE ANALYSIS HIERARCHY OF AUTHORITY DIMENSION STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE ORGANIC STRUCTURE Flat, horizontal hierarchy. HIERARCHY OF AUTHORITY The extent to which there are many (or few) levels in the organization’s hierarchy. 1 2 3 4 5 6 7 8 9 10 MECHANISTIC STRUCTURE Tall, vertical hierarchy. • PHILLIP H. KNIGHT (CHAIRMAN OF THE BOARD OF DIRECTORS) • MARK PARKER (PRESIDENT AND CEO, NIKE, INC.) • TREVOR EDWARDS (PRESIDENT, NIKE BRAND) • DAVID AYRE (EVP, GLOBAL HUMAN RESOURCES) • DON BLAIR (EVP AND CFO) • JEANNE P. JACKSON (PRESIDENT, PRODUCT & MERCHANDISING) • HILARY KRANE (EVP, CHIEF ADMINISTRATIVE OFFICER) • JOHN SLUSHER (EVP, GLOBAL SPORTS MARKETING) • ERIC SPRUNK (CHIEF OPERATING OFFICER) • CORPORATE GOVERNANCE • BOARD OF DIRECTORS STRATEGY IMPLEMENTATION: STRUCTURE
  32. 32. ORGANIZATIONAL STRUCTURE ANALYSIS FORMALIZATION DIMENSION STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE ORGANIC STRUCTURE Few (formal) written rules and regulations; more informal approach. FORMALIZATION The extent to which rules exist in written form and cover a wide range of contingencies. 1 2 3 4 5 6 7 8 9 10 MECHANISTIC STRUCTURE Lots of (formal) written rules and regulations; “by the book” approach. • Nike’s subsidiaries reap minor independence within definitively set boundaries. • Projects that exceed limits placed by regional headquarters or global headquarters do need approval of the region • Nike’s contracted manufactures are required to comply with their “code of conduct” • Environmental and sustainability requirements – suppliers • The 11 Nike Maxims that all employees follow STRATEGY IMPLEMENTATION: STRUCTURE
  33. 33. ORGANIZATIONAL STRUCTURE ANALYSIS SPECIALIZATION DIMENSION STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE ORGANIC STRUCTURE Employees perform a wide range of tasks in their job; fluid roles; overlapping tasks. SPECIALIZATION The extent to which tasks are subdivided into separate jobs. 1 2 3 4 5 6 7 8 9 10 MECHANISTIC STRUCTURE Each employee performs only a narrow range of tasks; rigid roles; task are separated with little/no overlap. • Nike uses a functional structure to divide up activities and decentralizes control within the design process to individual teams • Nike’s specialization within the company has lead to departmentalization (footwear, apparel, equipment, marketing/sales) • Nike has succeeded by remaining flexible in a volatile market by using subcontracting relationships overseas in low labor-cost countries STRATEGY IMPLEMENTATION: STRUCTURE
  34. 34. ORGANIZATIONAL STRUCTURE ANALYSIS OVERALL STRUCTURE ANALYSIS STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE FORMALIZATION 8 CENTRALIZATION 5 STANDARDIZATION 5 SPECIALIZATION 8 HIERARCHY OF AUTHORITY 3 OVERALL STRUCTURAL ANALYSIS 5.8 STRATEGY IMPLEMENTATION: STRUCTURE
  35. 35. ORGANIZATIONAL STRUCTURE ANALYSIS STRENGTHS AND WEAKNESSES STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE STRENGTHS • Standardization: Nike gives its employees flexibility (with specific guidelines) to continuously innovate WEAKNESSES • Specialization: Most of the income comes from footwear segment – may need to emphasize moreszk on other segments STRATEGY IMPLEMENTATION: STRUCTURE
  36. 36. CHECKPOINT 2: PRESENTATION OUTLINE STATEGY FORMULATION SOG’S: Vision, Mission, Purpose, Goals, and “Mantra” STRATEGY: Business-Level Strategic Positioning STRATEGY IMPLEMENTATION SKILLS: VRIO Framework/Core Competencies STYLE: Organizational Culture Analysis STRUCTURE: Organizational Structure Analysis STRATEGY FIT AND PERFORMANCE FIT: Modified 5S Analysis PERFORMANCE: Financial Analysis  APPENDIX AND REFERENCES AT END STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE
  37. 37. ORGANIZATIONAL FIT & PERFORMANCE SOGs, SGs, VMPGs, Strategy (as Plan) Strategy (as Position) Structure (OS) Style (OC) Systems (VCA) Skills (VRIO/CC) Staff (OL, VCA) Strategy Formulation Strategy Implementation • Main Idea: Greater fit amongst subsystems leads to greater organizational effectiveness STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE
  38. 38. ORGANIZATIONAL FIT & PERFORMANCE MODIFIED 5S ANALYSIS Superordinat e Goals Position Structure Style Skills Superordinate Goals Position Structure Style Skills STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE
  39. 39. ORGANIZATIONAL FIT & PERFORMANCE MODIFIED 5S ANALYSIS Best Fits STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE SOG’s & Position Skills & Position  Both “best fits” relate to Nike’s extremely strong positioning  Reaching every athlete everywhere made possible through broad differentiation  “PUPPY” achieved through effectively communicated SOGs, top-down  Excellent core and end products teamed with top-notch distribution & manufacturing system = SOGs satisfied
  40. 40. ORGANIZATIONAL FIT & PERFORMANCE MODIFIED 5S ANALYSIS Worst Fits STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE Structure & SOGs Style & SOGs  Both weaknesses point to issues with compatibility of the flat, mechanized, sometimes-bureaucratic organization with the goals of CSR, inspiration, and advocacy
  41. 41. ORGANIZATIONAL FIT & PERFORMANCE MODIFIED 5S ANALYSIS Overall Subsystem Fit Very Good STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE If 7S Thesis holds, then financial performance should be “very good” as well
  42. 42. CHECKPOINT 2: PRESENTATION OUTLINE STATEGY FORMULATION SOG’S: Vision, Mission, Purpose, Goals, and “Mantra” STRATEGY: Business-Level Strategic Positioning STRATEGY IMPLEMENTATION SKILLS: VRIO Framework/Core Competencies STYLE: Organizational Culture Analysis STRUCTURE: Organizational Structure Analysis STRATEGY FIT AND PERFORMANCE FIT: Modified 5S Analysis PERFORMANCE: Financial Analysis  APPENDIX AND REFERENCES AT END STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE
  43. 43. ORGANIZATIONAL FIT & PERFORMANCE FINANCIAL ANALYSIS Key takeaway: Nike is turning over inventory at a rate at least 30% greater than key industry competitors, implying strong sales and effective inventory management practices. 0 1 2 3 4 5 6 2010 2011 2012 2013 2014 COGS/AverageInventory Activity: Inventory Turnover Nike Under Armour Puma Adidas/Reebok Activity - Inventory Turnover 2010 2011 2012 2013 2014 Nike 4.64 4.77 4.5 4.21 4.16 Under Armour 2.93 2.82 2.97 3.03 3.13 Puma 3.45 3.1 3.11 2.98 2.9 Adidas/ Reebok 3.49 3.04 3.13 2.87 2.95 STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE
  44. 44. ORGANIZATIONAL FIT & PERFORMANCE FINANCIAL ANALYSIS 0 5 10 15 20 25 30 2010 2011 2012 2013 2014 NIasa%ofEquity Profitability: Return on Equity (ROE) Nike Under Armour Puma Adidas/Reebok Key takeaway: Nike has set the bar for the Textile and Apparel industry, achieving ROE greater than 20% every year with consistent and stable growth. Nike’s ROE indicates it is effectively using shareholder funds to generate profits. Profitability - ROE (%) 2010 2011 2012 2013 2014 Nike 20.67 21.77 21.92 23.08 24.5 Under Armour 15.27 17.1 17.67 17.36 17.31 Puma 15.4 15.38 4.38 0.34 4.11 Adidas/ Reebok 13.52 13.5 9.87 14.58 8.82 STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE
  45. 45. ORGANIZATIONAL FIT & PERFORMANCE FINANCIAL ANALYSIS – SUMMARY Overall Financial Performance = Excellent At or near industry leader in almost all financial ratio analyses STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE
  46. 46. ORGANIZATIONAL FIT & PERFORMANCE S T R E N G T H S SOG & Position fit Skills & Position fit ROE Inventory Turnover W E A K N E S S E S Skills & Style Structure & SOG STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE
  47. 47. ORGANIZATIONAL FIT & PERFORMANCE MODIFIED 5S & FINANCIAL ANALYSIS SUMMARY STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE Modified 5S Analysis: Over fit = Very Good Financial Analysis: Financial Performance = Excellent 7S Framework holds
  48. 48. CHECKPOINT 2: PRESENTATION OUTLINE STATEGY FORMULATION SOG’S: Vision, Mission, Purpose, Goals, and “Mantra” STRATEGY: Business-Level Strategic Positioning STRATEGY IMPLEMENTATION SKILLS: VRIO Framework/Core Competencies STYLE: Organizational Culture Analysis STRUCTURE: Organizational Structure Analysis STRATEGY FIT AND PERFORMANCE FIT: Modified 5S Analysis PERFORMANCE: Financial Analysis  APPENDIX AND REFERENCES AT END STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE
  49. 49. APPENDIX Complete Organizational Culture Analysis Complete Organizational Structure Analysis Complete Financial Analysis References
  50. 50. ORGANIZATIONAL CULTURE: OUTCOME ORIENTATION: 5 • “Because we are Nike, we have a very powerful and very high profile brand. Along with those come extremely high expectations, as well as very high demand with a very low timeframe” (Shawn Browning, Nike Facility Manager). • Quote from Professional Retailstore Maintenance Association – “Working with Nike, Inc.’s Facilities maintenance department to changing a tire on a car going 65 miles per hour down the road” (Former Supplier of Nike). • Accelerated innovation to maintain sustainability 1 2 3 4 5 Focus on “Performance” Pressurized/Get Results Focus on “Effort” (or not) Enjoy the Process STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE STRATEGY IMPLEMENTATION: SKILLS
  51. 51. ORGANIZATIONAL CULTURE: RISK ORIENTATION: 5 1 52 3 4 Nike’s culture stresses risk, and more importantly, innovation. Using a highly differentiated mindset, Nike aims to be the first company to expand its products and is unafraid of risks. Risk-seeking Innovative Risk-averse Security •Expanded to Canada in 1972 (Giving Nike their global recognition), now located in +24 countries •According to Fast Company, leading business media brand, Nike was the #1 most innovative company of 2013 • “My fear is being this big, slow, constipated, bureaucratic company that’s happy with its success.” (Mark Parker, Nike President & CEO) •Example of innovation: Flyknit Racers, which are lightest running shoe at 5.6 ounces STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE STRATEGY IMPLEMENTATION: SKILLS
  52. 52. ORGANIZATIONAL STRUCTURE ANALYSIS STANDARDIZATION DIMENSION STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE ORGANIC STRUCTURE People are free to create and introduce new ideas which means their organizations are less likely to routinely do things the same way after time. STANDARDIZATION The extent to which things are done the same way, time after time. 1 2 3 4 5 6 7 8 9 10 MECHANISTIC STRUCTURE Organization consistently and routinely does things the same way, time after time. • “Nike can respond to changes in sports shoe fashion very quickly. Using its global computer system, it can, literally overnight, change the instructions it gives to each of its suppliers so that, within a few weeks, its foreign manufacturers are producing new kinds of shoes.” – Hill, Jones • The Nike Swoosh is used as a pattern standardization tool among all levels of promotional/advertising functions • Nike divides product lines into specific customer categories – specific, individual customer groups STRATEGY IMPLEMENTATION: STRUCTURE
  53. 53. ORGANIZATIONAL STRUCTURE ANALYSIS CENTRALIZATION DIMENSION STRATEGY FORMULATION STRATEGY IMPLEMENTATION FIT AND PERFORMANCE ORGANIC STRUCTURE Decision making is delegated to empowered individuals at lower levels in the organization. CENTRALIZATION The extent to which decisions are made at or near the top of the organization’s hierarchy. 1 2 3 4 5 6 7 8 9 10 MECHANISTIC STRUCTURE Decisions are made at or near the top of the organization. • Global headquarters is at the top of the hierarchical decision-making matrix and also manages Nike’s regional operations/all major markets • Regional headquarters adds an additional layer to make the structure more effective/efficient by reducing complexity • Regional headquarters allows for leverage in financial/management operations and also enhances supply chain management STRATEGY IMPLEMENTATION: STRUCTURE
  54. 54. ORGANIZATIONAL FIT & PERFORMANCE FINANCIAL ANALYSIS SG&A expenses cover everything from direct selling expenditures to salaries of non-sales personnel, rent, etc. When normalized against revenue and compared to other industry firms, SG&A expenses can give insight into whether management is spending efficiently or wasting valuable cash flows. Key takeaway: Over the past five years, Nike has consistently spent a lower percentage of its revenues on SG&A expenses, suggesting efficient sales and effective monetary controls in comparison to industry firms. 0 5 10 15 20 25 30 35 40 45 50 2010 2011 2012 2013 2014 %ofRevenue Selling, General, & Administrative Expenses (% of Revenue) Nike Under Armour Puma Adidas/Reebok Selling, General, & Administrative Expenses (% of Revenue) 2010 2011 2012 2013 2014 Nike 34.45 33.14 30.34 30.80 31.53 Under Armour 39.30 37.45 36.55 37.27 37.55 Puma 38.02 37.65 42.70 42.97 40.82 Adidas/ Reebok 41.23 40.54 42.36 41.87 42.57
  55. 55. ORGANIZATIONAL FIT & PERFORMANCE FINANCIAL ANALYSIS Liquidity ratios, such as the Quick and Current ratio, provide a look into a firm’s ability to pay off its short-term debt obligations. The higher the liquidity ratio, the larger the margin of safety from insolvency. Key takeaway: Quick Ratio (QR) was used to eliminate significant inventory differences, as Nike carries noticeably less of its current assets in inventory (25-28%) than other key industry competitors (34-41%). Nike has remained at or near the top of its industry in terms of QR, suggesting strong management of short-term assets and sufficient protection against bankruptcy in the short term. 0.00 0.50 1.00 1.50 2.00 2.50 2010 2011 2012 2013 2014 QuickAssets/CurrentLiabilities Liquidity: Quick Ratio Nike Under Armour Puma Adidas/Reebok Liquidity Ratio - Quick Ratio 2010 2011 2012 2013 2014 Nike 2.32 1.94 1.82 2.31 1.71 Under Armour 2.00 1.64 2.02 1.29 2.05 Puma 1.19 1.22 1.18 1.23 1.15 Adidas/ Reebok 0.83 0.79 0.87 0.77 0.92
  56. 56. ORGANIZATIONAL FIT & PERFORMANCE FINANCIAL ANALYSIS Leverage ratios provide a measure of how indebted the firm is. The Debt/Equity (D/E) ratio in particular depicts how aggressive firm’s are with financing its activities with debt, versus equity. Aggressive debt financing can amplify shareholder returns, but can also contribute to volatile earnings. Key takeaway: Nike’s D/E ratio is similar to other key industry competitors, and indicates Nike is no more/less aggressive with debt financing than most industry competitors (exception: Adidas). The graph does depict Nike, and the industry, becoming more aggressive with debt financing over time. 0 0.2 0.4 0.6 0.8 1 1.2 1.4 2010 2011 2012 2013 2014 TotalDebt/TotalEquity Leverage: Debt/Equity Ratio Nike Under Armour Puma Adidas/Reebok Leverage - Debt-to-Equity Ratio (total debt/total equity as a %) 2010 2011 2012 2013 2014 Nike 47.84% 52.37% 48.97% 57.62% 71.78% Under Armour 35.81% 44.50% 41.62% 49.76% 55.19% Puma 70.71% 60.87% 58.99% 55.24% 59.02% Adidas /Reebo k 129.83% 113.54% 119.96% 111.48% 120.91%
  57. 57. ORGANIZATIONAL FIT & PERFORMANCE FINANCIAL ANALYSIS Profitability ratios such as ROE and ROA provide a metric to analyze a firm’s ability to generate earnings relative to various balance sheet accounts. ROA gives an idea of how efficient management is at using assets to generate income, with a higher ROA implying more effective use of assets. Key takeaway: While Under Armour is setting the industry standard, Nike is right behind, exhibiting strong and consistent returns on assets compared to industry firms. 0 2 4 6 8 10 12 14 16 18 20 2010 2011 2012 2013 2014 NIasa%ofAssets Profitability: Return on Assets (ROA) Nike Under Armour Puma Adidas/Reebok Profitability - ROA (%) 2010 2011 2012 2013 2014 Nike 13.78 14.5 14.55 15.04 14.89 Under Armour 15.27 17.1 17.67 17.36 17.31 Puma 9.23 9.3 2.75 0.22 2.64 Adidas /Reebo k 5.82 6.1 4.56 6.77 4.08
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