Nike has a matrix organizational structure incorporating geographic divisions. Nike’s matrix structure is also present at the regional and sub-regional levels. Managerial responsibility is segmented according to business unit (apparel, footwear, and equipment) and function (human resources, finance, marketing, sales, and operations).
Understanding the Nike organizational structure
Nike is the world’s most valuable global apparel brand, estimated to be worth dozens of billions.
The company has a matrix organizational structure that combines aspects of a hierarchical and product-based structure.
To support the immense valuation of the Nike brand, teams are divided based on product and must report to project managers. These teams are also accountable to broader department managers who handle policy and regulation. The presence of multiple chains of command with overlapping responsibility is a key feature of the matrix approach.
There are four main components to Nike’s organizational structure. In the following sections, we will look at each of these in more detail.
Global corporate leadership
At the top of the hierarchy is global corporate leadership. This comprises managers who make corporate decisions that have global ramifications for the company. For example, the responsibility for creating a worldwide marketing campaign ultimately rests with a single group at company headquarters.
Each group is headed by a President, Executive Vice President, or Chief Officer:
Each is also based at the global headquarters in Beaverton, Oregon, and is responsible for managing operations in the United States, Americas, and Asia Pacific.
Nike executives note that this structure allows employees to identify with a streamlined company culture that makes consumer needs a priority. They also note that it enables the company to develop a valuable, globalized, and instantly recognizable brand regardless of geographic location.
Regional headquarters
In the case of the EMEA (Europe, Middle East, and Africa) region, operations for 27 countries are managed by a centralized European headquarters in the Netherlands.
EMEA is further segregated into sub-regions including France, Iberia, Italy, Northern Europe, UK & Ireland, AGSS (Austria, Germany, Slovenia, Switzerland), and CEMEA (Central Europe, Middle East, Africa).
Here, the additional level of hierarchy seeks to reduce complexity by managing the number of direct reports for each senior manager. By grouping single markets into regions, fewer direct reports need to be funneled back to regional headquarters.
Sub-regions are semi-autonomous geographic divisions, allowing Nike to build synergies derived from the grouping of countries. For example, AGSS was created to streamline logistics, finance, and marketing operations for each member of the group.
Further streamlining is also seen by examining the way the countries themselves are grouped. They may be clustered according to:
Consumer similarities. For example, consumers in the UK and Ireland are likely to have similar preferences and expectations. This helps Nike adjust marketing strategies accordingly.
Retail similarities, or a likeness of retail structures.
Similarities in market size or market development stage.
Regional matrix structure and subsidiaries
Regional matrix structure
Nike’s matrix structure is also present at the regional and sub-regional levels. Managerial responsibility is segmented according to:
Business unit – apparel, footwear, and equipment.
Function – human resources, finance, marketing, sales, and operations.
Again, the employee must report to two managers. In this case, the functional department manager and the product manager.
Subsidiaries
Nike has 54 wholly-owned subsidiaries, including Umbro, Cole Haan, Converse, and Hurley.
Like sub-regions, these subsidiaries enjoy some level of autonomy. However, projects exceeding limits set by either the regional or global headquarters must obtain approval.
Generally speaking, subsidiaries are free to make operational decisions at the country level. These decisions may encompass the implementation of plans, local initiatives, or adaptation strategies.
Key takeaways:
Nike has a matrix organizational structure with a strong preference for geographic and regional divisions.
At the top of the Nike hierarchy is global corporate leadership headquartered in Beaverton, Oregon. Senior executives head seven functional groups that manage operations in the United States, Americas, and Asia Pacific.
Nike also has regional headquarters in the Netherlands that manages Europe, Middle East, and Africa. Countries in these regions are segregated to streamline operations and group consumers with similar preferences or attributes.
The Knight family owns Nike. Indeed, the top individual shareholder is Travis A. Knight, son of Philip Knight, co-founder of Nike, with a 7% stake in Class A stocks and a 2.7% stake in Class B stocks. On the other hand, the Knight family also controls the company tightly through their Trusts and an LLC called Swoosh (the Nike logo’s shape is a “swoosh”). Through individual shares, Swoosh LLC, and Travis Knight’s irrevocable trust, the Knight family controls over 97.1% of Class A and 21.4% of Class B stocks.
Nike follows a wholesale strategy combined with a very strong direct distribution. The company makes money primarily from footwear. As of 2022, over 62% of revenues came from footwear and 29% from apparel. The most successful Nike brand is the Jordan Brand, which in 2022 generated $5.2 billion in revenue. Nike is the master of demand creation and generation through its influencer campaigns, where athletes become an inspiration for everyday people.
Nike leverages both a wholesale and direct distributionstrategy. Indeed, while still in 2022, most sales come from wholesale distribution, in reality, since 2020, Nike has been ramping up its direct distribution through its NIKE stores and e-commerce platform (SNKRS).
Nike generated most of its revenue from footwear. Indeed, in 2022, Nike generated over $29 billion in revenue from footwear, over $13.5 billion in apparel, $2.35 billion in equipment, and over $1.6 billion from the Converse brand.
Nike generated over $47.7 billion in revenue and over $6 billion in net profits in 2022, compared to over $44.5 billion in revenue and almost $5.8 billion in 2021.
Nike’s vision is “To bring inspiration and innovation to every athlete in the world.” At the same time, its mission statement is to “do everything possible to expand human potential. We do that by creating groundbreaking sports innovations, by making our products more sustainably, by building a creative and diverse global team, and by making a positive impact in communities where we live and work.”
Jordan follows a demand generation business model, where its iconic brand works as a propeller for the sale of its footwear and apparel, that in 2022 generated more than $5 billion in revenue for Nike or more than 10% of its total revenue.
Converse is an independent brand part of Nike’s family of brands. Indeed, Converse generated $2.35 billion in revenue in 2022. And like Nike, it follows an heave Wholesale distributionstrategy, where most of its sales are made, through footwear. However, Converse follows also a direct distribution approach where it sells directly via its monobrand stores.
Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.
eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.
IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams based on the main corporate functions (like HR, product management, investor relations, and so on).
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
