In a world full of dynamism and change, many companies go through some form of organizational change. According to Jones (2010), organizational change is the process of facilitating alterations in strategies and policies of a firm in order to manage firm’s present and future goals and objectives to increase effectiveness of the company. Organizational change is significant in improving functionality and efficiency of the company, especially regarding economic, human, and technological resources of the firm. With organizational change, there are bound to be effective alterations in different managerial aspects of the company. In this regard, this paper will assess effectiveness of organizational change in Nike Inc. In the early 2000s, Nike’s sales and profits fell as a result of increased competition and lack of coordinative efforts in the company.
Change Techniques to Improve Effectiveness
As mentioned earlier, Nike went through a period of hardship that saw a drop in sales in their line of products. This decline in sales was a result of new competition in the market and the lack of proper coordination in the management of the firm. In order to counter these challenges, the company could use different change techniques to improve effectiveness.
As Barrett (2012) suggests, one of the primary change techniques that the company could use is strategic change. Strategic change techniques involve altering business goals, objectives, and policies in order to respond to dynamics of the external environment. It is an evolutionary approach to improving effectiveness that involves changing the structural design of the company and enhancing a human resource-centered approach to management. It is a change technique that occurs in a gradual process.
Strategic change method could be useful for Nike because of the threat of competition in the external environment. Nike was facing the threat of competition from new entrants in the market. These new competitors brought a new perspective into the industry that saw them offer alternative kinds of sports shoes for particular market segments. In this regard, strategic change would ensure that Nike changes its company mission and goals to incorporate new policies that venture into distinct market segments. Venturing into these markets will ensure that the business can stay in touch with other firms in the industry and thus offer competition that will enhance a rise in sales, in the long run.
Another change technique that Nike could use is a process-oriented change (Barrett, 2012). Process-oriented change techniques include changing managerial strategies in workflow to enhance creativity and productivity in the firm. This revolutionary change happens rapidly in order to facilitate sudden change in productivity. Nike is experiencing challenges in terms of coordination. The lack of coordination in the firm has created a rift between the top level management of the company and designers of different products. For this reason, they are unable to coordinate efforts to counter challenges facing them. Change techniques in terms of work processes will ensure that Nike can amend the manner in which the design of their products is done, venturing into particular market segments. Changing the design process from a general design process to a specific design process ensures that the firm can achieve coordination in the long run.
Organizational Life Cycle
As shown in the case study, Nike is going through different aspects of organizational change. The organizational change is necessary so as to ensure that the company keeps up with the competition in the market without going through profit decline. Every organization goes through the conventional organizational life cycle. It is a concept that describes different phases of growth, development, and decline that firms experience in their lifetime. In this regard, therefore, organizational life cycle gives a view of the organizational dynamics that keeps changing from time to time in the firm during its lifetime.
Organizations go through a five-phase life cycle that determines their effectiveness in the market (Jones, 2010). These phases include birth, growth, decline, renewal, and death. These are primary organizational life cycle stages that many firms experience. For Nike, some of these stages have been experienced while others are still being experienced by the company. As shown in the article, Nike is going through different changes that will either enhance its growth or cause its decline in the market. For this reason, Nike is therefore experiencing the growth stage of the organizational life cycle.
The growth phase of the organizational life cycle is one of the most challenging, yet revealing stages in the company’s lifecycle. It is a stage that will determine whether the business goes into decline or develops substantially. In the growth phase, effective decision-making is vital as it determines the level of maturity of the firm for the developmental purpose (Barrett, 2012). In the case of Nike, the growth stage has become very challenging. This challenge has been attributed to the lack of coordination in the company. In this regard, poor decision-making of Nike designers and the top level management has led to the business producing customer-preferred shoes. The company had failed to consider consumers’ tastes and preferences and, as a result, sales were starting to decline sharply. Furthermore, resistance of Nike designers to the purchase of small specialized companies also created a rift between the top level management and the designers. The lack of coordination therefore created massive obstacles that resulted in a reduced rate of innovation, sufficiency, and efficiency in terms of creating Nike’s products.
In essence, what Nike is experiencing is the problem of growth through coordination. Jones (2010) explains that this is a crisis that affects many companies, especially because of ineffective decision-making processes. In order for a business like Nike to experience growth through coordination, it is important that the top level management of the firm comes up with strategic ideas to enhance effective decision-making. In the Nike’s, case, these strategic plans were implemented through acquisition of small companies that would enable it to venture into small markets. Companies such as Cole Haan and Hurley have, therefore, provided Nike with necessary access to specialized markets in order to facilitate growth potential of the company. Differentiating design teams into specific categories has also changed the manner in which business is conducted in the firm. This expansion through coordination enables the company to become more customer-oriented in its products, taking tastes and preferences of customers into consideration while designing and producing Nike lines.
As Nike continues to change, it continues to experience different aspects of the growth stage in its organizational life cycle. More sales in the future will bring more elements into the firm’s perspective that will facilitate the manner in which the top level management makes its decisions in the long run. The most significant activity in this stage is strategic planning. Strategic planning will ensure that Nike changes its operations to fit its sales and profits margins. It also ensures that the company can build diversity into the decision-making process and take measured risks while being creative. Without strategic planning, the company runs the danger of dropping sales and running into administrative bureaucracies.
The discussion shows that Nike is not experiencing the decline stage of its organizational cycle. As much as the company was experiencing the lack of coordination among its employees, poor planning, and decline in sales in the past, the company has now recovered efficiently to prevent a decrease in strategy and policy formulation. By learning how to change and incorporating other ideas into their design processes, the top level management has ensured that Nike would avoid experiencing the decline stage of the organizational cycle.
In summary, organizational change is a managerial concept that is vital for the growth and development of any firm. Organizational change requires alteration of different strategies or processes to ensure that the company improves productivity and efficiency. As a company in the modern age, Nike is experiencing challenges that relate to organizational change. Occurrences of threats from external and internal environments make it necessary for the company to apply strategic and process-oriented change techniques to improve effectiveness and productivity. The company is also going through the growth stage of the organizational cycle that is fundamental in ensuring development. Managerial actions in this growth phase will determine the success or failure rate of the company in the long run.