Nike's cost leadership position is not something that defines them. Nike is known for world class, best in industry athletic apparel that comes with a premium price. In a sense, they are the opposite or perfect example of what a cost leader equates to in the footwear, apparel and equipment arena.
In my opinion, I would argue that Nike does employ some cost leadership strategies by developing and maintaining long term, high volume product creation relationships around the globe to ensure they are continuously recognizing economies of scale. Nike's ever-increasing orders to factories that have built long, sustainable relationships with Nike, will be able to continue to decrease the cost of the products created. The less turnover in factory relationships Nike has, the more stable and efficient the products can be produced.
However, on another note, Nike implements a matrix organizational structure which does not exactly lined them up for a cost leadership strategy. Most groups within the organization work cross functionally with many stakeholders, with many layers of staff working upward, across and down to ensure all areas of business are represented. They operate like a well oiled machine with company-wide participation.
Again, on the flip side, Nike's compensation structure does motivate employees (at every single level in the organization) to think about top and bottom line. All employees are bonus eligible, and all have the same ultimate goal that does promote efficiency and savings where they can be had across the company. Employees are encouraged to think outside of the box and find better, faster ways to accomplish activities which would lend more to a cost leadership strategy. But, all in all, Nike's product is premium... better quality, better performance, elite.
No comments:
Post a Comment