Case Study $1.$ How a Strategy Change Led to Nikes FormationNike, the worlds most famous athletic company, didnt start out by making Air Jordans. In fact, it didnt make shoes at all. It distributed them.Nike actually began as company called Blue Ribbon. It was founded in $1964$ by Phil Knight, a runner from Oregon, along with his former college track coach, Bill Bowerman. At the time, the running shoe market was dominated by the German firms Adidas and Puma. However, Knight and Bowerman had become intrigued by new lighter, lower$-$cost running shoes made in Japan. Bowerman had always tinkered with shoe designs to try to make his runners faster. Meanwhile, Knight had just earned an MBA from Stanford University and was looking for a way to combine what he loved sportswith work. So$,$ the two men each chipped in $$500,$ and began importing and selling Tiger$-$brand shoes $($now Asics$)$ made by the Japanese company Onitsuka.Blue Ribbons start wasnt glamorous. Bowerman and Knight began by selling the shoes out of their cars at local track meets. But runners liked the new lighter shoes, and the company started earning a profit. Eventually the business did well enough it was able to hire some employees, most of whom were passionate runners like the owners.For about a decade Blue Ribbons strategy worked well. Business grew, and the company even opened its own store in Santa Monica, California. But by $1971,$ the firm was facing a crisis. Bowerman wanted Onitsuka to make a lighter shoe he had designed; Onitsuka wasnt interested. Moreover, Knight believed Onitsuka was looking for other distributors to cut Blue Ribbon out of the business.What did Knight and Bowerman do$?$ They designed their own shoe called the Nike and began selling it$.$ Executives at Onitsuka were enraged by the move. They immediately stopped selling shoes to Blue Robbin and sued it to boot.At that point, it looked like it might be the end of the road for Blue Ribbon. There wasnt much of a market for the Nike shoes yet. The company was still young and in debt, and a lawsuit would be expensive to fight.Knight gave Blue Ribbons employees the bad news. But instead of throwing in the towel, he laid out a new vision and mission for the firm: This is the moment weve been waiting for, Knight recounts telling them in his bestselling book, Shoe Dog. No more selling someone elses brand. No more working for someone else. Onitsuka has been holding us down for years. Their late deliveries, their mixed$-$up orders, their refusal to hear and implement our design ideaswho among us isnt sick of dealing with all that? $...$ If were going to succeed, or fail, we should do so on our own terms, with our own ideasour own brand.After the initial shock wore off, relief swept across Blue Ribbons employees. Not only were they undaunted by the new mission, but they were energized and excited about it$.$ Their future lay in their own hands, and they would find a way to achieve it$.$ They immediately began formulating new strategies and plans.Knight thinks the culture and agility of the company were major reasons why Nike became the success it is today. Most, if not all, of its employees were scrappy competitive types. Each of us was willing to do whatever was necessary to win, he says. And if whatever was necessary fell outside our area of expertise, no problem. Not that any of us thought we wouldnt fail. In fact, we had every expectation that we would. But when we did fail, we had faith wed do it fast, learn from it$,$ and be better for it $...$ Taking a chance on peopleyou could argue thats what its all been about.

Questions

$1.$

Who is ultimately responsible for formulating a firms strategyits managers, its employees, or both?

$2.$

What strategy execution problems do you think Knight and Bowerman might have faced in their effort to make Nike successful?