Article :

« Nike going through a ‘massive transformation’ to keep pace with the competition »
http://markets.businessinsider.com/news/stocks/nike-stock-price-is-going-through-a-massive-
transformation-to-keep-pace-with-the-competition-2017-10-1005709887

Current Practice or Trend:

Currently, Nike relies on thousands of retailers to sell its products. Nike currently adheres to a
market culture. In the past, the company prided itself with its limited edition merchandise. For
example, Air Jordan’s, Nike’s coveted shoe line that partnered with basketball star, Michael
Jordan, were high-end products where much of the price was associated with its scarcity.
However, today, Nike’s apparel has a much higher availability than it did in the past, hence
losing its prestigious image. The organization’s rival, Adidas, has taken advantage of the scarcity
strategy that Nike has slowly let go.
Theory into Practice:
Last week, the CEO of Nike announced that they would be undertaking a massive transformation
which includes a restructuring of its product distribution. The company will be “reducing its
retail partners from 30,000 to just 40.” The goal of this organizational change is to allow the
company to be more innovative and quicker to react to changing demands from the customers
and markets. With this change, the organization will likely move toward an adhocracy culture. In
addition to the reduction of retailers, Nike will be focusing on building loyalty with its customers
by creating a more direct connection with them by selling their products through e-commerce.
Key Takeaway:
This change is significant because Nike is a part of a growing group of organizations that are
veering toward being direct contacts with their consumers which means this squeeze of retailers
is also part of this growing trend. This massive change is a huge step to regaining Nike’s edge on
innovation and ahead of the trend ideas that it once used to have. The whole change on its
external image is more important to Nike’s shoe department but its effects can be felt on the
company as a whole. One challenge that they could face with this change is that their target of
regaining their prestige may not be realized with its customers. In other words, the damage may
have been to extensive to rebuild especially when facing other competitors who already focus on
their prestige. It is much easier to decline from a luxury brand than it is to rebuild it back to a
luxury brand because they now see it as overpriced having experienced it at a more readily
available product.