There are a number of factors that drive the decisions of Nike executives to maintain a network organizational structure. First, the company outsources its manufacturing just like any other major clothing brand in the United States. The price of investing in domestic production is the main factor that urges brands to move the process elsewhere. Additionally, in terms of legal regulations, labor laws, and environmental requirements, countries such as India, Indonesia, and Vietnam are much more lenient.
This allows Nike to adapt the manufacturing process and make it even more time- and resource-efficient. As for Nike’s decision to stick to decentralization in supply chain management and other non-executive responsibilities, it can be justified as well. It is important to understand that a global brand such as Nike cannot afford to wait for executives in Oregon to operate in international markets and deal with local distributors or suppliers. Thus, Nike chooses to give regional offices more authority for them to respond quickly to any crises. Therefore, it is apparent that the need to save time and remain flexible is another factor that explains the network organizational structure incorporated by Nike.
Another crucial consideration is work efficiency in the company since any large corporation uses performance outcomes to guide its strategic business decisions. A decentralized structure allows individual units to focus on their core responsibilities without wasting time on corporate bureaucracy. This also fosters a more autonomous work environment that empowers employees. The constant need for approval from the head office in Oregon would make Nike less flexible, which could lead to the company’s failure to respond to market changes efficiently. With the rise of social media and digital advertising, small brands have an opportunity to attract customers easily. This results in a more competitive market, which requires large corporations to find innovative ways to adapt quickly. Thus, the current need for agility and pliability is another factor that is important to mention when talking about Nike’s loyalty to the network organizational structure.
