The Last Step Of Lining'S Vertical Integration Strategy

In January 28th, Lining, a sporting goods company, announced that it would open a series of vertical integration measures based on the existing company structure and take the core category business cluster as the main content, and try to form vertical integration management from seven aspects, namely, market analysis, commodity planning, product planning, product design, listing planning, sales channel strategy and consumer communication scheme, so as to make core categories a profit center for driving the company's future development.

According to the reporter, Li Ning Co's organizational structure integration is adjusted with previous strategic changes.

Li Ning Co believes that the business oriented optimization and integration of the organizational structure shows that the company has begun a new round of development.

Since returning to the essence of sports in 2012, Lining has carried out a series of strategic pformation measures such as closing stores, stocktaking, reshaping the supply chain and revitalization of channels, but until the first half of this year, sporting goods brands such as Anta, PEAK, 31st degree and Pathfinder have all made profits, but Lining recorded a loss of 586 million yuan.

CEO Zhang Qing of key Road Sports Consulting Co., Ltd. believes that the restructuring of the business is expected to increase the internal competition of the Li Ning Co, and will have a positive role in optimizing the allocation of resources, but at the same time, higher requirements for the comprehensive coordination ability of the higher level management level are put forward.

In November last year, Jin Zhenjun, who was once regarded as the key figure of Lining pformation, resigned as the acting chief executive of the company. The position of chief executive of the company is still in the hands of Lining himself.

For this structural adjustment, Li Ning Co founder and executive chairman Lining said: "the company will continue to adhere to the inherent strategic focus in the future, increase cooperation with national sports teams, CBA professional basketball league matches and CUBA national high school basketball league matches, focus on core sports category business, and strive to improve the company's product design capabilities, operational efficiency and profitability."

It is understood that before this

The company set up departmental structure according to different functions such as product design, production, market and so on. For example, the product design unit will be responsible for the design and research and development of different products including sports shoes and clothing, and then submit it to the headquarters, and then order the factory according to the demand information from different parts of the sales department according to the sales unit feedback.

After the restructuring, the original "function oriented" organizational structure will be adjusted to "business oriented, core business driven" category business unit structure.

Li Ning Co stakeholders further explained that the focus of the organizational adjustment is to integrate the two existing systems of the company's existing products and markets. The purpose of establishing the core category business unit is to fully integrate the two functions of the product and the market, and truly make every category of products and business the king, so that from the upstream product planning design to the final listing promotion, each link is more business oriented and will comprehensively enhance the overall efficiency of the core category.

It is understood that Lining intends to set up the core category of business will include basketball, running, comprehensive training, badminton and sports five categories of life, this is consistent with the previous company's "focus on Lining brand, focus on the Chinese market", and "focus on five core sports category" strategy adjustment.

In fact, this kind of structure according to category is the most mature in Procter & Gamble and other international companies. Nike, ADI and other sporting goods companies also have applications, but local

Companies are relatively rare.

"As far as I know, Anta's operation on basketball has been partial to the exploration of the operation of the division, but no other company has."

According to Zhang Qing analysis, because different types of business departments eventually share a channel, the better performance of the business department often gets more input from the company in R & D and promotion, thus intensifying the competition among the departments, and has a larger pulling effect on the overall performance of the company.

As of June 30th last year, the loss of equity holders in the first half of Lining was 586 million yuan, an increase of 184 million yuan compared to the same period last year.

In December, Lining again raised the price of shares to raise funds from 1 billion 518 million to HK $1 billion 695 million, which was widely interpreted as Lining's "last resort".

Final stroke

In fact, after more than two years of adjustment, Lining reduced nearly 10000 stores to nearly half.

According to Lining's interim results announcement in 2014, the number of shops in Lining regular stores, flagship stores, factory stores and discount stores was 5671, compared with 244 at the end of last year, while Lining had more than 1200 stores at the peak of the crisis.

A Li Ning Co observer for many years believed that after undergoing a massive exchange of blood between 2011 and 2012, the restructuring of this round is actually the last step of Lining's strategic adjustment.

Mr. Lining, who can do the same thing, "return to the essence of sports, control the scale of shops, reshape the supply chain" and so on, depends on how the model works in the future.

These people said.

According to the reply sent by the Li Ning Co to this newspaper, the company has set up core business groups including basketball, running, badminton, training and sports activities, and the group leaders in the future will report to the executive chairman Lining for their daily work.

The company also stressed that "in the face of the growing sports market of the middle class in the Chinese market, the new products developed by Li Ning Co for professional and sports enthusiasts show unique competitiveness in the market".

According to Lining's recent announcement, after a series of changes, the company's core indicators have shown positive signs: the growth rate of revenue is about 20% based on the year-on-year benchmark, much higher than the 8% recorded in the first half of 2014, which was disclosed in the mid 2014 report.

In addition, orders for orders in the second quarter of 2015 have increased year-on-year in the five quarter, while the same store sales in the second half of 2014 have also turned positive.

"The continuous strengthening of products, the steady enhancement of online and offline operation platforms, and the vigorous development of sports marketing have made the organizational structure with the leading role of the business department as the leader of the East, and this change is also the inevitable outcome."

Li Ning Co said.

But Zhang Qing believes that Lining's vertical integration reform at the same time put forward higher requirements for the company's internal management. "Once coordination is not good, the competition between the departments will become a resistance, but if implemented well, it will be an important turning point for Lining to turn over."

Zhang Qing said.