Nike, Inc.

Nike, Incorporated

File:Nike(c).svg
Company type	Public (NYSE: NKE)
Industry	Sportswear and Sports Equipment
Founded	1972
Headquarters	near Beaverton, Oregon, United States
Key people	Bill Bowerman, Co-Founder (deceased December 24, 1999) Philip Knight, Co-Founder and Chairman Mark Parker, CEO and president
Products	Athletic shoes, apparel, sports equipment, accessorieswalrus
Revenue	US$16.326 Billion (FY 2007)
Operating income	6,651,000,000 United States dollar (2022)
Net income	US$1.492 Billion
Number of employees	30,200 (yahoo finance NKE profile as of January 2, 2008)
Website	www.nike.com

Nike, Inc. (/ˈnaɪki/) (NYSE: NKE) is a publicly traded sportswear and equipment maker 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, apparel and sports equipment with revenue in excess of $16 billion USD in 2007. As of 2008, it employed over 30,000 people world-wide. Nike is the only Fortune 500 company headquartered in the state of Oregon.

The company was founded in 1964 as Blue Ribbon Sports by Bill Bowerman and Philip Knight, and became Nike in 1978. The company takes its name from Nike, 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 Bauer, Cole Haan, Hurley International, Umbro and Converse. 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 Phil Knight and his coach Bill Bowerman in January 1964 (Yahoo finance NKE profile page as of Jan. 2 2008). The company initially operated as a distributor for Japanese shoe maker Onitsuka Tiger, making most sales at track meets out of Knight's car. Many top Oregon runners began wearing the shoes, and the shoe's popularity grew quickly. The company's first self-designed product was based on Bowerman's "waffle" design in which the sole of the shoe was made by the pattern of a waffle iron.

The company's profits grew quickly, and in 1966, BRS opened its first retail store, located on Pico Blvd. in Santa Monica, Calif. In 1971, with the relationship between BRS and Onitsuka Tiger nearing an end, BRS prepared to launch its own line of footwear, which would bear the newly designed Swoosh. [Sources: 'Swoosh' by J.B. Strasser and 'Just Do It' by Donald Katz.]

The first shoe to carry this design that was sold to the public was a football (soccer) cleat 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.

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 of 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.

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).

Products

A pair of Nike brand athletic shoes

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, American football, baseball, 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'. Nike positions its products in such a way as to try to appeal to a "youthful....materialistic crowd". It is positioned as a premium performance brand. However, it also engineers shoes for discount stores like Wal-Mart under the Starter brand.

Nike sells a huge 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 are 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 away using small, concealable intelligence motes in a wireless sensor network.

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, the only Fortune 500 employer still headquartered in the state of Oregon, has such a large payroll in the area that it should not be forced to be annexed into Beaverton without its consent. Nike prefers to work with 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. Intel, another large employer in the state, routinely receives special tax breaks on various capital investments it makes in the county.

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 MAX Blue Line. 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 500 locations around the world and offices located in 45 countries outside the United States. Most of the factories are located in Asia, including Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, Philippines, Malaysia, and Republic of Korea. Nike is hesitant to disclose information about the contract companies it works with. However, due to harsh criticism from some organizations like Barbie.com, Nike declared that beginning in 2009 they will begin to provide minimum wages to their workers and full health insurance for every employee that is employed under the Nike Company.

Human rights concerns

In the 2003 documentary The Corporation, Chris Belmonte, director of the National Labor Committee shows what he says are Nike's internal pricing documents. The documents show that the workers in a factory in the Dominican Republic average precisely 6.6141 minutes to make a shirt, a bit more than 9 shirts an hour. These figures also appear in the book The Corporation: The Pathological Pursuit of Profit and Power by Joel Bakan, on which the documentary is based.

Nike has been criticized for contracting with factories in countries such as China, Vietnam, Indonesia and Mexico. Vietnam Labor 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. 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 was 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.

In the 1990s, Nike faced criticism for use of child labor in Cambodia and Pakistan 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.

The forced labor camp like conditions in some overseas production plants led to several unsuccessful boycotts, together with coining the alternative name "swooshtika" (a portmanteau of swoosh and swastika) for the company's swoosh logo.

These campaigns have been taken up by many college and universities, especially anti-globalisation groups as well as several anti-sweatshop groups such as the United Students Against Sweatshops. 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.

Rivalry and competition

Because Nike creates goods for a wide range of sports, they have competition from every sports and sports fashion brand. After surpassing Adidas in 1980, Nike had no direct competitors because there was no single brand which could compete directly with Nike's range of sports and non-sports oriented gear until Reebok came along in 1985. Reebok, which has much focus on the North American market, now has merchandising contracts with the National Football League and the National Hockey League in the United States. It was purchased in 2006 by Adidas, 3 years after Nike's purchase of Converse in 2003. Nike's other competitor is Puma, the third largest shoe and sports clothing supplier.

Nike Mexico headquarters. Nike is a popular supplier of soccer equipment worldwide.

Environmental report

According to New England-based environmental organization Clean Air-Cool Planet report, Nike is one of the top 3 companies (out of 56 companies) on the top of the list that the survey conducted about climate-friendly companies. It probably receives high ranking because of its Nike Grind program which closes the product lifecycle. Nike has been praised for its concern for global climate change by groups like Climate Counts.

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". 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 summarized 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 Quincy Sanford 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 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. The dispute was eventually settled out of court between Nike & Minor Threat. The exact details of the settlement have never been disclosed.

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.

Place

Nike sells its product to more than 25000 retailers in the U.S. (including Nike's own outlets and "Niketown" stores) and in approximately 140 countries in the world. Nike also sells its own products at nike.com that allows customers to design shoes and directly delivers them from manufacturer to your house. Nike sells its products in international markets through independent distributors, licensees, and subsidiaries.

Sponsorship

Main article: Nike sponsorships

Nike is very active at sponsoring events, clubs and athletes. They also sponsor such bands as All Time Low, Boys Like Girls and other significant musical bands

Nike has a number of celebrity athletes and professional teams to focus attention on their products. Nike has signed top athletes in many different sports such as professional football (soccer) players Cristiano Ronaldo, Wayne Rooney, Ronaldo, Robinho, Ronaldinho, and Mia Hamm, basketball players LeBron James, Kobe Bryant, Manu Ginobili and Vince Carter, American football players Brian Urlacher and LaDainian Tomlinson, cyclist Lance Armstrong, golfer Tiger Woods. tennis players Serena Williams, Roger Federer, Rafael Nadal, John Isner and Maria Sharapova, skateboarder Paul Rodriguez Jr., boxer Manny Pacquiao, track athlete Alan Webb, and Formula One racers Felipe Massa and Michael Schumacher. 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. Pre 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, that proved to be one of the biggest boosts to Nike's publicity and sales.

Nike also sponsors events like Hoop It Up (high school basketball) and The Golden West Invitational (high school track and field), focusing attention on its products. 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 nikegolf.com.

References

• Egan, Timothy. "The swoon of the swoosh". New York Times Magazine; September 131998\.

External links

• Nike.com - Official website

Criticism of Nike's labor practices

• The NikeWatch Campaign
• FairLabor.org annual report
• Information on Kasky v. Nike
• Making Nike Sweat - on the Sweatshop issue (circa 2001)
• Boycott Nike Homepage - Most information from circa 2001 - Last updated in 2004

Dispute with Beaverton

• How a land spat gets nasty, a September 2005 article from The Oregonian
• The Recent Annexation Actions By The City of Beaverton, a December 2004 Nike press release
• Oregon Senate Bill 887, as signed by Governor Ted Kulongoski

Counterfeiting Of Nikes

• Interview With a Major Retailer of Fake Nike Shoes

Data

• Company profile from Yahoo!
• Company summary, from the New York Stock Exchange website