Vans Case Study
Vans is considered as the largest and most profitable show manufacturer in the world. Vans’s success relies on the network structure that Vans founder and CEO Philip Knight created, allowing the company to produce and market shoes. Basically, the virtual organizational architecture that would allow Vans to focus on some functions such as design and leave others like manufacturing to keep costs low and to give the company greater flexibility. By far, the largest function of Vans Oregon is the design function responsible for pioneering innovations in shoe design while the rest of the major functions are scattered in Southeast Asian suppliers like China and Malaysia. Strategic alliances are important aspects of Vans production particularly since 99 million pairs of shoes manufactured annually are made through such. Moreover, the network structure provides Vans two important advantages: quick responding to changes in sports shoe fashion and low cost. Vans makes use of a global IT system that can literally change the instruction it gives each of the suppliers in real time (Jones and George, 2003, p. 232). As such, within a matter of short period its foreign manufacturers are producing new kinds of shoes. Vans’s cost are also low because of Southeast Asian labor are a fraction of that of its US counterparts. With Vans’s ability to outsource and use foreign manufacturers keep the headquarter’s structure flat and flexible. This relatively inexpensive functional structure to organise its activities enabled Vans to obtain talent and resources worldwide.
Although the virtual structure provides high flexibility for Vans to be responsive to market trends and changes, Vans is hindered by the loss of hands-on control of several functions and employees. Considerably a hollow organization, Vans has a weakened organizational culture and employee loyalty. Inherent risks are also evident including relationship management and contract partner failure and/or business exit. True
Although the virtual structure provides high flexibility for Vans to be responsive to market trends and changes, Vans is hindered by the loss of hands-on control of several functions and employees. Considerably a hollow organization, Vans has a weakened organizational culture and employee loyalty. Inherent risks are also evident including relationship management and contract partner failure and/or business exit. True