Question 1: How did Nike transform the way it made choices and introduce new products?
When Nikes CEO and founder Phil Knight realized that the organizations designers were making poor decisions, he decided to bring in new managers to change the manner in which choices were made. These new managers came with new ideas including the need of acquiring smaller specialized organizations to diversify Nikes products and creating specific functionalized product groups. After purchasing these organizations, Phil Knight decided to group Nikes designers into distinct teams depending on their sport/market segment. These changes were meant to diversify the decision-making process within the company and most importantly develop the team of experts who are used to changing client requirements.
Moreover, to overcome the past mistakes and to revolutionize its decision-making process, Nike had to divide the production units into groups. Every group was required to design shoes in specific niche markets instead of having all the companys designers in a single design department. This technique allowed the organization to eliminate the old organization-wide mindset that had led to decision-making blunders that threatened the companys profitability. The categorization of the market into smaller units played a huge role in widening the organizations diversity. In general, Paul Knights idea to bring in new managers was one of the most important decisions since it led to the development of strategic plans to reinvent the organization. Changes in the companys structure and the decision-making process assisted Nike beat the organizational inertia that was causing a decrease in innovation and profits. It is evident that the decentralized decision-making process and other functional changes that occurred within the company allowed each design team to specialize in their areas of expertise.
2. In what ways could Nike use the change techniques discussed in this chapter to find ways to improve its effectiveness and competitive advantage?
There are several ways in which Nike could use the change techniques we discussed in our readings to find the ways to improve its competitive advantage and effective. First, ensure that there is effective communication between the management and the employees. For instance, Nike will have to teach its workers about the challenges the organization is facing and why it was important to change the trend. Second, Nike should allow its designers and employers to participate in major decision-making process. This step will assist the company to reverse the trend of decreasing sales and consequently save the organization more money. Third, to enhance the effectiveness of the change technique, Nike should often employ exceptionally talented people and most importantly purchase specialized organizations to develop a forward-thinking group of designers. Organizational meetings and inter-group training would be very advantageous techniques to enhance performance within the teams since it would improve the companys structure through effective communication amongst the groups. Fourth, Nike should strive to meet the ever-changing client needs while maintaining influential leaders at the same time for the long-term success of the company. Fifth, the company should create a business model hypothesis which is based on the groups evaluation of several market divisions as defined by the client demands. This hypothesis should contain strategies to widen the customers base, institute change of product components, and determine appropriate distribution channels and pricing. In general, it is crucial to know that changes in functional and human resources will assist develop the culture and structure that will enable Nike to compete with other specialized footwear organizations. Incorporation of flexible work teams, for instance, will enable Nike to train its employees on all aspects of product development. Trained employees are likely to respond quickly to consumer needs.
Case 2: Schering Plough
1) What kinds of problems was Schering-Plough experiencing with its global strategy and structure?
There are a lot of challenges Schering-Plough was experiencing with its global structure and strategy. The company had too many layers of management, and it was affecting the daily management and the communication systems within the management. Over time the firm created a multi-domestic technique and divided its operations into world regions. These world regions were allowed to run independently including conducting sales and manufacturing operations. This bureaucracy and structure affected communication within the company and prevented top leaders from getting timely and correct information. Challenges linked to financial outcomes remained unattended, which developed a key financial disruption within the organization. This company was facing these challenges because it was being run without proper coordination. It is evident that lack of communication, quality control, integration, and differentiation were some of the key issues Schering-Plough were experiencing with its global structure and strategy. The culture and structure of the company were tall and had adverse subunit orientation which was disadvantageous to the firm. This subunit orientation motivated managers to follow their interests including intentionally delaying information when quality concerns rose. Moreover, higher levels of complacency and bureaucracy affected innovation in the organization and even worse segmented regions were not sharing knowledge anymore. This led to quality control issues and duplication which forced the Food and Drug Administration to run a full evaluation of the company in an attempt to enhance and preserve food quality. Managers who were at the companys headquarters were unable to receive correct information about each region. Therefore, they could not make viable decisions to salvage the company.
2) How did Schering Plough change its global structure to solve these problems?
To address these challenges, Schering Plough employed Fred Hassan to act as the CEO and the chairman of the pharmaceutical firm. The first thing Hassan did was to reduce the number of levels in the firms hierarchy, which consequently removed all the levels between himself and the regional managers. This process created transparency and allowed easy assessment of the performance of companys workers and their divisions. When Hassan realized that the companys problems stemmed from its global structure and strategy he decided to transform the firms tall structure into a flat structure. Every country manager was now required to report directly to Hassan. Cutting the number of managerial levels in the companys worldwide management hierarchy established a quick decision-making system and most importantly it played a crucial role in assisting the company monitor the sales volume globally and standardizing the quality of its commodities. Moreover, the new chairman diversified the products sold worldwide by acquiring a new company that major in the production of animal vaccines. Removing several layers of management enhanced the evaluation and communication processes, and inspired a culture which values efficiency and innovation. Changes to culture and structure were in line with the companys business strategy hence it increased organizational and functional resources. In general, Hassan also eliminated the ineffective multi-domestic technique to reduce bureaucracy and conflict and most importantly to minimize hierarchy, standardize quality, and streamline functions. It is evident that cultural and structural changes together with appropriate control and integration mechanisms provided better opportunities at the corporate and business levels and improved coordination capabilities. By removing the bloat, simplifying the structure, and concentrating on key competencies the company was able to gain the competitive advantage once more. Hassan addressed Schering Plough problems by simplifying the companys hierarchy and diversifying the firms products.
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