Li Ning's last stroke: can vertical integration reverse the downturn?

January 28, sporting goods company Li Ning announced, will be on the basis of existing company structure, open to core category division cluster as the main content of the series of vertical integration measures, try from market analysis, commodity planning, product planning, product design, listing planning, sales channel strategy, The seven major systems of consumer communication form the vertical integration management, which makes the core category become the profit center of the future development of the company. According to the 21st Century Economic report reporter learned that Li Ning Company's organizational structure integration, is in line with the previous strategic changes in the adjustment. Li Ning believes that this business-oriented organizational structure optimization integration, indicating that the company has begun a new round of development. Since returning to the essence of sports in the 2012, Li Ning has carried out a closing, to inventory, remodeling supply chain, channel rejuvenation and other series of strategic change measures, but until the first half of this year, such as Anta, horse, 361 degrees, Pathfinder and other sporting goods brands have realized profits, Li Ning recorded a loss of 586 million yuan. Key Road Sports Consulting Co., Ltd. CEO Zhang Qing that this restructuring of the business is expected to increase Li Ning's internal competition, in optimizing the allocation of resources will have a positive effect, but at the same time the high level of management of the comprehensive coordination capacity put forward higher requirements. Last November, Jin Jingjun, who was once regarded as a key figure in Li Ning's transformation, is acting chief executive of the company, and the chief executive of the company is still in the hands of Li Ning. As for the restructuring, Li Ning's founder and executive chairman Li Ning said, "the company will continue to adhere to the inherent strategic focus, to increase the national sports teams and the CBA professional basketball league and Cuba and other national college students high School Basketball League cooperation, focus on core sports category business, Focus on improving the company's product design capabilities, operational efficiency and profitability. "Vertical integration According to the reporter understand, before this, Li Ning Company is according to product design, production, market and other functions to set up a departmental structure, such as product Design Unit will be responsible for including sports shoes, clothing and other categories of product design and research and development, and then submitted to the Headquarters, And then by the headquarters according to the sales unit feedback of the regional demand information to the factory orders. After the restructuring, the original "function-oriented" organizational structure will be adjusted to "business-oriented, core business-driven" category division structure. Li-Ning company to further explain that the restructuring of the force focused on the integration of the company's existing products and market two systems, the establishment of the core category Division is the purpose of the product and the market to fully integrate the two functions, truly to all categories of products and business as the king, To do from the upstream product planning and design until the final listing to promote each link is more business-oriented, and will therefore comprehensively enhance the core category overall operational efficiency. It is understood that Li Ning's proposed core category will include basketball, running, training, badminton and sports life of the five categories, which was previously proposed by the company "focus on Li Ning brand, focus on the Chinese market," and "focus on the five core sports category" strategy adjustment. In fact, this classification according to the category of the architecture in the international companies such as Procter and Gamble the most mature, Nike, Adi and other sporting goods companies are also used, but the local sporting goods companies are relatively rare. "As far as I know, Anta's basketball operation has now been a bit biased towards the workings of the business sector, but none of the other companies have." "Zhang Qing analysis that, because the Department of different categories end up sharing a channel, so the division of good performance will often get the company in the research and development and promotion of more input, thereby exacerbating the competition between the division, the company's overall performance has a larger pull role. As at June 30 last year, the first half of Li Ning's equity holders were expected to account for a loss of $586 million, an increase of $184 million over the same period last year. In December, Li Ning again discounted the share price to raise money to raise 1.518 billion to HK $1.695 billion, which was widely interpreted by the industry as the "last resort" of Li Ning. The last shot. In fact, after more than two years of adjustment, Li Ning put the original nearly million stores cut nearly half. According to the 2014 interim results of Li Ning, the number of shops in the traditional, flagship, factory and discount stores was 5671, down 244 from the end of last year, while Li Ning had more than 1200 stores at the height of the crisis. A person who observes Li Ning's company for many years believes that after 2011 years of high level exchange and the closing tide since 2012, the restructuring is actually the last step in the adjustment of Li Ning's strategy. "Back to the essence of sports, control the size of the shop, reshape the supply chain and so on, Mr. said the person. According to Li Ning's reply to this newspaper, said that the company has established including basketball, running, badminton, training and sports life, including the core category of the corresponding division of the group, the future of major groups will be responsible for the chief executive Li Ning daily work report. The company also stressed that "in the face of the Chinese market in the growing ranks of the sports consumer group, Li Ning for professional and popular sports enthusiasts developed new products in the market to show a unique competitiveness." After a series of changes, the company's core indicators have shown positive signs that revenue growth is about 20% per cent year-on-year, well above the 8% recorded in the first half of the 2014 year, as revealed in the 2014 interim report, according to Li Ning. In addition, orders for the second quarter of 2015 have risen five consecutive quarters year-on-year, with sales in the second quarter of 2014 to be growing. "Continuous strengthening of products, line on the operation of the platform under the steady strengthening of sports marketing, the wind, so that the cause of the leading organizational structure to become a desirable Dongfeng, such a change is the inevitable." Li Ning company says. But Zhang Qing believes that the vertical integration of Li Ning and the company's internal management put forward higher requirements, "once the coordination of the relationship between the Department, this competition will become resistance, but if the implementation of good will be Li Ning turn over an important turning point." "Zhang QingSaid。