Submitted in partial fulfillment of the requirements
For Master of Business Administration Degree
Tiffin University at University of Bucharest
Information and Decision Support Course
Instructor: Prof. John J. Millar Ph.D.
Dean Emeritus and Professor of Management
November 06, 2010
1. What external and internal pressures did Mark Parker face when he assumed the leadership of Nike, and how did he respond to this challenges?
In order to understand the challenges that Mark Parker had we need to know what the internal and external business environment was. Speaking about external environment in that period Adidas become more powerful in the U.S. market trough the acquisition of Reebok. So the company was facing the challenge of a growing competitor. Also Parker had to maintain Wall Street investor’s confidence because for the this leadership change was unexpected due to the fact that during Perez management Nike posted a 15% jump in the most recent quarter's profits so everything seemed to work well.
In terms of internal environment Parker inherited some difficult issues: Perez was appointed by Knight hopping that he will “bring some more organizational and managerial discipline to a company that has been expanding rapidly into new global markets as well as acquiring more brands, such as Converse. ” (see BW Online, 11/19/04, "Nike: Can Perez Fill Knight's Shoes?"). Unfortunately Perez had different approach to the strategic management decisions than Knight and most of the company management. This led to an organization which is resistant to change and a gap was build between the CEO and the organization. Under this circumstances Parker had to gain their support for the changes that he had in mind.
So Parker had to face a much more competitive external environment. He knew that that he had to drive an organizational change in order to meet the expectations of the customers. As an organization Nike had to align his internal strengths with external environment. But to achieve that goal first he had to establish a clear mission for the company: is the company doing a product-driven business or it is customer-driven business. Once he established the company mission he had to set the strategic goals for the company and to formulate the strategy and implement the changes. Doing all those things he had to avoid the main mistake made by the former CEO Perez: he had to form a powerful guiding coalition and gain managers support for the changes to be made. Due to his better work relationships with Knight he was able to gain his confidence and support. Also being a veteran with 27 years of experience in Nike helped him to overcame the resistance to change faced by his predecessor.
In summary Parker faced the increasing external pressures by shifting the company structure from product-based to customer-driven structure. Internal pressures was mostly resistance to change that was encountered by former CEO and for Parker was easier to overcame this because of his history with Nike that allowed him to gain the trust of the followers. Also he was helped by the fact that Nike’s corporate culture is oriented towards innovation.
2. Strategic management is about formulating strategies that align the organization’s internal capabilities with external opportunities while avoiding and minimizing threats. How effective has Mark Parker been as strategist so far?
What was the most relevant internal strength in Nike? Sure was innovation. Since established in 1972 Nike had a clear goal: “Our goal is to carry on his legacy of innovative thinking, whether to develop products that help athletes of every level of ability reach their potential, or to create business opportunities that set Nike apart from the competition and provide value for our shareholders. “. One goal was to provide customers innovative products for every level...