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Nike, Inc.

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Nike, Inc.
Company typePublic (NYSE: NKE)
IndustrySportswear
Sports Equipment
Founded1972[1]
FounderWilliam J. "Bill" Bowerman
Philip H. Knight
Headquarters near Beaverton, Oregon, United States
Area served
Worldwide
Key people
Philip H. Knight
(Chairman)
Mark Parker
(CEO) & (President)
ProductsAthletic shoes
Apparel
Sports equipment
Accessories
RevenueIncrease US$ 16.325 Billion (2007)
Increase US$ 2.199 Billion (2007)
Increase US$ 1.491 Billion (2007)
Total assetsIncrease US$ 10.688 Billion (2007)
Total equityIncrease US$ 7.025 Billion (2007)
Number of employees
30,200 (2008)
Websitewww.nike.com

Nike, Inc. (/'naɪki/) (NYSE: NKE) is a major publicly traded sportswear and equipment supplier based in the United States. The company is headquartered in the Portland metropolitan area of Oregon, near Beaverton. It is the world's leading supplier of athletic shoes and apparel[2] and a major manufacturer of sports equipment with revenue in excess of $16 billion USD in 2007. As of 2008, it employed over 30,000 people world-wide. Nike and Precision Castparts are the only Fortune 500 companies headquartered in the state of Oregon.

The company was founded in 1962 as Blue Ribbon Sports by Bill Bowerman and Philip Knight, and officially became Nike, Inc. in 1978. The company takes its name from Nike (Greek Νίκη IPA: [níːkɛː]), the Greek goddess of victory. Nike markets its products under its own brand as well as Nike Golf, Nike Pro, Nike+, Air Jordan, Nike Skateboarding, Team Starter, and subsidiaries including Cole Haan, Hurley International, Umbro and Converse. Nike also owned Bauer Hockey (later renamed Nike Bauer) between 1995 and 2008.[3] In addition to manufacturing sportswear and equipment, the company operates retail stores under the Niketown name. Nike sponsors many high profile athletes and sports teams around the world, with the highly recognized trademarks of "Just do it" and the Swoosh logo.

Origins and history

File:Nike waffle.gif
Bowerman's Waffle Racer

Nike, originally known as Blue Ribbon Sports, was founded by University of Oregon track athlete Philip Knight and his coach Bill Bowerman in January 1962. The company initially operated as a distributor for Japanese shoe maker Onitsuka Tiger, making most sales at track meets out of Knight's car.

The company's profits grew quickly, and in 1966, BRS opened its first retail store, located on Pico Boulevard in Santa Monica, California. By 1971, the relationship between BRS and Onitsuka Tiger was nearing an end. BRS prepared to launch its own line of footwear, which would bear the newly designed Swoosh.[4]

The first shoe to carry this design that was sold to the public was a football shoe named "Nike", which was released in the summer of 1971. In February 1972, BRS introduced its first line of Nike shoes, with the name Nike derived from the Greek goddess of victory. In 1978, BRS, Inc. officially renamed itself to Nike, Inc. Beginning with Ilie Nastase, the first professional athlete to sign with BRS/Nike, the sponsorship of athletes became a key marketing tool for the rapidly growing company.

The company's first self-designed product was based on Bowerman's "waffle" design. One day Bowerman randomly put liquid latex into his wife's Waffle maker. The experiment turned out with a solid piece of latex rubber with a design of a waffle, and a broken waffle maker. Bowerman showed this product to Knight. Knight thought it was a good idea because the rubber would help create traction for runners etc.

By 1980, Nike had reached a 50% market share in the United States athletic shoe market, and the company went public in December of that year. Its growth was due largely to 'word-of-foot' advertising (to quote a Nike print ad from the late 1970s), rather than television ads. Nike's first national television commercials ran in October 1982 during the broadcast of the New York Marathon. The ads were created by Portland-based advertising agency Wieden+Kennedy, which had formed several months earlier in April 1982.

Together, Nike and Wieden+Kennedy have created many indelible print and television ads and the agency continues to be Nike's primary today. It was agency co-founder Dan Wieden who coined the now-famous slogan "Just Do It" for a 1988 Nike ad campaign, which was chosen by Advertising Age as one of the top five ad slogans of the 20th Century, and the campaign has been enshrined in the Smithsonian Institution.

Throughout the 1980s, Nike expanded its product line to include many other sports and regions throughout the world.[5]

Acquisitions

In July 2003, Nike paid $305 million to acquire Converse Inc., makers of the iconic Chuck Taylor All Stars. [6]

In an effort to target the low-end athletic goods market, Nike purchased the parent company of Starter athletic clothing brand in August 2004 for $43 million.[7]

On 23 October 2007, it was announced that the sports apparel supplier Umbro, known as the manufacturers of the England national football team's kits, had agreed to be bought by Nike in a deal said to be worth £285 million (~$600m).

On 3 March 2008 Umbro was completely acquired by NIKE Inc. STEPHEN S. CANTERBURY HIGHSCHOOL MAKES POOR SHOES FOR $2.25

Products

A Nike brand athletic shoe

Nike produces a wide range of sports equipment. Their first products were track running shoes. They currently also make shoes, jerseys, shorts, baselayers etc. for a wide range of sports including track & field, baseball, ice hockey, tennis, Association football, lacrosse, basketball and cricket. The most recent additions to their line are the Nike 6.0 and Nike SB shoes, designed for skateboarding. Nike has recently introduced cricket shoes, called Air Zoom Yorker, designed to be 30% lighter than their competitors'.[8] In 2008, Nike introduced the Air Jordan XX3, a high performance basketball shoe designed with the environment in mind.

Nike positions its products in such a way as to try to appeal to a "youthful....materialistic crowd".[9] It is positioned as a premium performance brand. However, it also engineers shoes and apparel for discount stores like Wal-Mart under the Starter brand.[10]

Nike sells an assortment of products, including shoes and apparel for sports activities like association football, basketball, running, combat sports, tennis, American football, athletics, golf and cross training for men, women, and children. Nike also sells shoes for outdoor activities such as tennis, golf, skateboarding, association football, baseball, American football, cycling, volleyball, wrestling, cheerleading, aquatic activities, auto racing and other athletic and recreational uses. Nike is well known and popular in Youth culture, Chav Culture and Hip hop culture as they supply urban fashion clothing. Nike recently teamed up with Apple Inc. to produce the Nike+ product which monitors a runner's performance via a radio device in the shoe which links to the iPod nano. While the product generates useful statistics, it has been criticized by researchers who were able to identify users' RFID devices from 60 feet (18 m) away using small, concealable intelligence motes in a wireless sensor network.[11][12]

In 2004, they launched the SPARQ Training Program/Division. It is currently the premier training program in the U.S.[13]

In the video game Gran Turismo 4 there is a car by Nike called the NikeOne 2022, designed by Phil Frank.

Headquarters

Nike's world headquarters are surrounded by the city of Beaverton, Oregon but are technically within unincorporated Washington County.

From Nike's perspective, the company, one of only two Fortune 500 employers still headquartered in the state of Oregon (Precision Castparts is the other), has such a large payroll, that it should not be annexed to Beaverton without its consent. Nike prefers to work with the Washington County Government as it develops and expands its headquarters. Annexation would cost the company $700,000 per year in increased taxes for services it already receives from the county and various special-purpose districts.

From Beaverton's perspective, the company's expectation for special treatment is counter to the city's desire to have zoning and other laws apply equally to all businesses, big and small. A nearby Costco store, one of that company's earliest, was annexed into Beaverton years ago without incident, and Beaverton's focus on additional annexation during the 21st century reflects a desire to streamline both city and county government by having metropolitan-area services handled by cities instead of counties.

The Oregonian dates the bad blood between the two back to the Nike purchase of 74 acres (0.3 km²) of nearby Beaverton land which soon fronted the Jared Co-operation. When Nike proposed expanding their headquarters in that direction, Beaverton at first wanted them to build housing near the MAX station and criss-cross the property with two public roads, expectations defined by the zoning already in place when Nike bought the land. Beaverton's request was mostly consistent with Metro's transit-oriented development plans for the region. After a year, which included a threat by Nike to move 5,000 jobs out of the state, Beaverton backed down from the requirement for housing, but the lack of accommodation was something that Nike did not forget.

The annexation standoff soon led Beaverton to attempt a forcible annexation. That led to a lawsuit by Nike, and lobbying by the company that ultimately ended in Oregon Senate Bill 887 of 2005. Under that bill's terms, Beaverton is specifically barred from forcibly annexing the land that Nike and Columbia Sportswear occupy in unincorporated Washington County for 35 years, while Electro Scientific Industries and Tektronix get that same protection for 30 years.

Manufacturing

Nike has more than 700 shops around the world and offices located in 45 countries outside the United States.[14] Most of the factories are located in Asia, including Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, Philippines,and Malaysia.[15] Nike is hesitant to disclose information about the contract companies it works with. However, due to harsh criticism from some organizations like CorpWatch, Nike has disclosed information about its contract factories in its Corporate Governance Report.

Human rights concerns

Nike has been criticized for contracting with factories in countries such as China, Vietnam, Indonesia and Mexico. Vietnam Labour Watch, an activist group, has documented that factories contracted by Nike have violated minimum wage and overtime laws in Vietnam as late as 1996, although Nike claims that this practice has been halted.[16] The company has been subject to much critical coverage of the often poor working conditions and exploitation of cheap overseas labor employed in the free trade zones where their goods are typically manufactured. Sources of this criticism include Naomi Klein's book No Logo and Michael Moore's documentaries.

Nike has been criticized about ads which referred to empowering women in the U.S. while engaging in practices in East Asian factories which some felt disempowered women.[17]

During the 1990s, Nike faced criticism for use of child labor in Cambodia and Pakistan as well as Green, Ohio in factories it contracted to manufacture soccer balls. Although Nike took action to curb or at least reduce the practice of child labor, they continue to contract their production to companies that operate in areas where inadequate regulation and monitoring make it hard to ensure that child labor is not being used.[18]

These campaigns have been taken up by many [weasel words] college and universities, especially anti-globalisation groups as well as several anti-sweatshop groups such as the United Students Against Sweatshops.[19] Despite these campaigns, however, Nike's annual revenues have increased from $6.4 billion in 1996 to nearly $17 billion in 2007, according to the company's annual reports.

A July 2008 investigation by Australian Channel 7 News found a large number of cases involving forced labour in one of the biggest Nike apparel factories. The factory located in Malaysia was filmed by an undercover crew who found instances of squalid living conditions and forced labour. Nike have since stated that they will take corrective action to ensure the continued abuse does not occur. [20]

Following Liu Xiang's withdrawal from the 2008 Olympics, Nike admitted seeking help from "relevant government departments" in the Chinese government to track down and identify an anonymous Internet poster. [21]

Environmental record

The consistently growing textile industry often negatively impacts the environment. Because Nike is a large participant in this manufacturing, many of their processes negatively contribute to the environment. One way the expanding textile industry affects the environment is by increasing its water deficit, climate change, pollution, and fossil fuel and raw material consumption. In addition to this, today’s electronic textile plants spend significant amounts of energy, while also producing a throw-away mindset due to trends founded upon fast fashion and cheap clothing.[22] Although these combined effects can negatively alter the environment, Nike tries to counteract their influence with different projects. According to a New England-based environmental organisation Clean Air-Cool Planet, Nike ranks among the top 3 companies (out of 56) on a survey conducted about climate-friendly companies.[23] Nike has also been praised for its Nike Grind programme (which closes the product lifecycle) by groups like Climate Counts.[24] In addition to this, one campaign that Nike began for Earth Day 2008 was a commercial that featured Steve Nash wearing Nike’s Trash Talk Shoe, a shoe that had been constructed in February 2008 from pieces of leather and synthetic leather waste that derived from the factory floor. The Trash Talk Shoe also featured a sole composed of ground-up rubber from a shoe recycling program. Nike claims this is the first performance basketball shoe that has been created from manufacturing waste, but it only produced 5,000 pairs for sale.[25] Another project Nike has begun is called Nike’s Reuse-A-Shoe program. This program is Nike’s longest-running program that benefits both the environment and the community by collecting old athletic shoes of any type in order to process and recycle them. The material that is created from the recycled shoes is then used to help create sports surfaces, such as basketball courts, running tracks, and playgrounds.[26]

Marketing strategy

Nike's marketing strategy is an important component of the company's success. Nike is positioned as a premium-brand, selling well-designed and expensive products. Nike lures customers with a marketing strategy centering around a brand image which is attained by distinctive logo and the advertising slogan: "Just do it".[27] Nike promotes its products by sponsorship agreements with celebrity athletes, professional teams and college athletic teams. However, Nike's marketing mix contains many elements besides promotion. These are summarised below.

Advertising

Extensive advertising in print, television and other media has included several controversies that have gathered substantial publicity.

Kasky v. Nike

Consumer activist Marc Kasky filed a lawsuit in California regarding newspaper advertisements and several letters Nike distributed in response to criticisms of labor conditions in its factories. Kasky claimed that the company made representations that constituted false advertising. Nike responded that the false advertising laws did not cover the company's expression of its views on a public issue, and that these were entitled to First Amendment protection. The local court agreed with Nike's lawyers, but the California Supreme Court overturned this ruling, claiming that the corporation's communications were commercial speech and therefore subject to false advertising laws.

The United States Supreme Court agreed to review the case (Nike v. Kasky) but sent the case back to trial court without issuing a substantive ruling on the constitutional issues. The parties subsequently settled out of court before any finding on the accuracy of Nike's statements, leaving the California Supreme Court's denial of Nike's immunity claim as precedent. The case drew a great deal of attention from groups concerned with civil liberties, as well as anti-sweatshop activists.

Beatles song

Nike has been a focus of criticism for their use of the Beatles song "Revolution" in a commercial, against the wishes of Apple Records, the Beatles' recording company. Nike paid $250,000 to Capitol Records Inc., which held the North American licensing rights to the Beatles' recordings, for the right to use the Beatles' rendition for a year.

According to a July 28 1987 article written by the Associated Press, Apple sued Nike Inc., Capitol Records Inc., EMI Records Inc. and Wieden+Kennedy advertising agency for $15 million. Capitol-EMI countered by saying the lawsuit was 'groundless' because Capitol had licensed the use of "Revolution" with the "active support and encouragement of Yoko Ono Lennon, a shareholder and director of Apple."

According to a November 9 1989 article in the Los Angeles Daily News, "a tangle of lawsuits between the Beatles and their American and British record companies has been settled." One condition of the out-of-court settlement was that terms of the agreement would be kept secret. The settlement was reached among the three parties involved: George Harrison, Paul McCartney, Ringo Starr; Yoko Ono; and Apple, EMI and Capitol Records. A spokesman for Yoko Ono noted, "It's such a confusing myriad of issues that even people who have been close to the principals have a difficult time grasping it. Attorneys on both sides of the Atlantic have probably put their children through college on this."

Nike discontinued airing ads featuring "Revolution" in March 1988. Yoko Ono later gave permission to Nike to use John Lennon's "Instant Karma" in another ad.

Minor Threat ad

In late June 2005, Nike received criticism from Ian MacKaye, owner of Dischord Records, guitarist/vocalist for Fugazi & The Evens, and front-man of defunct punk band Minor Threat, for appropriating imagery and text from Minor Threat's 1981 self-titled album's cover art in a flyer promoting Nike Skateboarding's 2005 East Coast demo tour.
On June 27, Nike Skateboarding's website issued an apology to Dischord, Minor Threat, and fans of both and announced that they tried to remove and dispose of all flyers. They state that the people who designed it were skateboarders and Minor Threat fans themselves who created the ad out of respect and appreciation for the band.[28] The dispute was eventually settled out of court between Nike & Minor Threat. The exact details of the settlement have never been disclosed.

Horror ad

In this ad, a parody of horror films, Olympic runner Suzy Favor-Hamilton is running a bath in a remote wilderness cabin when a chainsaw-wielding masked killer appears. Hamilton is obviously in much better shape than the would be killer and, thanks to her Nike gear, sprints away. The final shot shows the killer out of breath, limping away and ends with the tagline, "Why Sport?" which is quickly answered with "You’ll live longer."

First aired on the third night of the Olympics (Friday), the ad titled "Horror" received so many complaints that NBC had pulled the ad by Sunday. The protesters argued that it made light of violence against women, while others claim it was just too scary to watch, especially for children who enjoy watching the Olympics. Nike spokespeople retorted it was meant to be humorous, and Hamilton herself stated the ad was inspirational, since it is the woman who defeats the man.

Chinese-themed ad

In 2004, an ad about LeBron James beating cartoon martial arts masters in martial arts offended Chinese authorities, who called the ad blasphemous and insulting to national dignity. The ad was later banned in China. In early 2007 the ad was re-instated in China for unknown reasons.[29]

Place

Nike sells its product to more than 25,000 retailers in the U.S. (including Nike's own outlets and "Niketown" stores) and in approximately 160 countries in the world. The company also has a program called NIKEiD at nikeid.com, which allows customers to customize designs of some styles of Nike shoes and deliver them directly from manufacturer to the consumer. Nike sells its products in international markets through independent distributors, licensees, and subsidiaries.

Sponsorship

Main article: Nike sponsorships

Nike has signed top athletes in many different professional sports to endorsement deals in order to further promote their products.

Nike's first professional athlete endorser was Romanian tennis player Ilie Năstase, and the company's first track endorser was distance running legend Steve Prefontaine. Prefontaine was the prized pupil of the company's co-founder Bill Bowerman while he coached at the University of Oregon. Today, the Steve Prefontaine Building is named in his honor at Nike's corporate headquarters.

Besides Prefontaine, Nike has sponsored many other successful track & field athletes over the years such as Carl Lewis, Jackie Joyner-Kersee and Sebastian Coe. However, it was the signing of basketball player Michael Jordan in 1984, with his subsequent promotion of Nike over the course of his storied career with Spike Lee as Mars Blackmon, that proved to be one of the biggest boosts to Nike's publicity and sales.

One of the most lucrative sports for Nike is tennis. During the past 20 years especially, Nike has been one of the major clothing/footwear sponsors for leading tennis players. Some of the more successful tennis players currently or formerly sponsored by Nike include: James Blake, Jim Courier, Roger Federer, Lleyton Hewitt, Andre Agassi, Rafael Nadal, Pete Sampras, Marion Bartoli, Lindsay Davenport, Daniela Hantuchova, Mary Pierce, Maria Sharapova, Serena Williams.

Nike is also the official kit sponsor for the Indian cricket team for 5 years, from 2006 to 2010. Nike was awarded the contract for US$43 Million.

Nike also sponsors some of the leading clubs in world football, such as Aston Villa, Arsenal, Manchester United, Barcelona, Inter Milan, Juventus, Porto, Steaua, Red Star, Club America and PSV Eindhoven.

Having diversified into golf, Nike sponsors several of the worlds top players, including Tiger Woods, Trevor Immelman and Paul Casey.

Nike also sponsors various minor events including Hoop It Up (high school basketball) and The Golden West Invitational (high school track and field). Nike uses web sites as a promotional tool to cover these events. Nike also has several websites for individual sports, including nikebasketball.com, nikefootball.com, and nikerunning.com.

References

  1. ^ 2007 Annual Report, p. 2 (PDF), Nike, Inc., Retrieved on January 7, 2007.
  2. ^ Sage, Alexandria (26 June 2008). "Nike profit up but shares tumble on U.S. concerns". Reuters. Retrieved 2008-07-10. {{cite news}}: Check date values in: |date= (help)
  3. ^ "Nike sells Bauer Hockey for $200 Million". The Sports Network. February 21, 2008. Retrieved 2008-06-02. {{cite web}}: Check date values in: |date= (help)
  4. ^ 'Swoosh' by J.B. Strasser and 'Just Do It' by Donald Katz
  5. ^ Nike Origins
  6. ^ Partlow, Joshua (July, 2003). "Nike Drafts An All Star". The Washington Post. Retrieved 2008-06-02. {{cite web}}: Check date values in: |date= (help)
  7. ^ "Nike pays $43M for Starter". Portland Business Journal. August 11, 2004. Retrieved 2008-06-02. {{cite web}}: Check date values in: |date= (help)
  8. ^ "Nike launches cricket shoe Air Zoom Yorker". The Hindu Business Line. September 2, 2006. Retrieved 2008-06-02. {{cite web}}: Check date values in: |date= (help)
  9. ^ Marketing Playbook: Nike vs. New Balance: Comparative Positioning
  10. ^ Nike Designs Shoes for Wal-Mart | Dexigner
  11. ^ T. Scott Saponas, Jonathan Lester, Carl Hartung, Tadayoshi Kohno. "Devices That Tell On You: The Nike+iPod Sport Kit" (PDF).{{cite web}}: CS1 maint: multiple names: authors list (link)
  12. ^ Tom Espiner (2006-12-13). "Nike+iPod raises RFID privacy concerns". CNet.
  13. ^ Nike SPARQ Training Ignites a Revolution | Reuters
  14. ^ NikeBiz | Investors | Corporate
  15. ^ http://www.nike.com/nikebiz/gc/mp/pdf/disclosure_list_2005-06.pdf
  16. ^ Nike Labor Practices in Vietnam
  17. ^ NMSU:Nike
  18. ^ MIT:
  19. ^ Sweatfree Campus Campaign Launch
  20. ^ YouTube - Nike Contractor in Malaysia using forced labour
  21. ^ [1]
  22. ^ http://www.emergingtextiles.com/?q=stu&s=TI-green-textiles&c=stu080423-&peu=eu395&pus=us632 Emerging Textiles February 2008. Retrieved: May 4, 2008
  23. ^ Reuters report
  24. ^ ClimateCounts: Nike
  25. ^ http://www.brandweek.com/bw/news/recent_display.jsp?vnu_content_id=1003793129&imw=Y BRANDWEEK April 23, 2008. Retrieved: May 4, 2008
  26. ^ http://www.wickedlocal.com/lexington/news/business/x883026486 Wicked Local April 29, 2008. Retrieved: May 4, 2008
  27. ^ "Kasky v. Nike: Just the Facts". Reclaim Democracy.org. Retrieved 2008-06-02.
  28. ^ Nike: Skateboarding
  29. ^ Sandoval, Greg (December 7, 2004). "China Bans LeBron James Nike Ad". The Washington Post. Retrieved 2008-06-02. {{cite web}}: Check date values in: |date= (help)
  • Egan, Timothy. "The swoon of the swoosh". New York Times Magazine; September 131998.
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