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Nike, Inc.
Type Public (NYSENKE)
Founded 24 January 1964
1978[1]
Founder(s) William J. "Bill" Bowerman
Philip H. Knight
Headquarters Washington County, Oregon, United States
(Near Beaverton, Oregon)
Area served Worldwide
Key people Philip H. Knight
(Chairman)
Mark Parker
(CEO) & (President)
Industry Designing and Manufacturing: Sportswear
Sports equipment
Products Athletic shoes
Apparel
Sports equipment
Accessories
Revenue US$ 18.627 billion (2008)
Operating income US$ 2.199 billion (2007)
Net income US$ 1.883 billion (2008)
Total assets US$ 12.443 billion (2008)
Total equity US$ 7.825 billion (2008)
Employees 30,200 (2008)
Website Official Website

Nike, Inc. (pronounced /ˈnaɪki/) (NYSENKE) is a major publicly traded sportswear and equipment supplier based in the United States. The company is headquartered near Beaverton, Oregon, which is part of the Portland metropolitan area. 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 $18.6 billion USD in its fiscal year 2008 (ending May 31, 2008). As of 2008, it employed more than 30,000 people worldwide. Nike and Precision Castparts are the only Fortune 500 companies headquartered in the state of Oregon, according to The Oregonian.

The company was founded on January 25, 1964 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 pronounced [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 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.

Contents

Origins and history

Nike, originally known as Blue Ribbon Sports, was founded by University of Oregon track athlete Philip Knight and his coach Bill Bowerman in January 1964. The company initially operated as a distributor for Japanese shoe maker Onitsuka Tiger, making most sales at track meets out of Knight's automobile.[4]

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 by Carolyn Davidson.[5] The Swoosh was first used by Nike in June 1971, and was registered with the U.S. Patent and Trademark Office on January 22, 1974.[6] Today the Onitsuka Tiger brand is owned by one of Nike's competitors, ASICS.[7]

The first shoe to carry this design that was sold to the public was a soccer 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. After the University of Oregon resurfaced the track at Hayward Field, Bowerman began experimenting with different potential outsoles that would grip the new urethane track more effectively. His efforts were rewarded one Sunday morning when he poured liquid urethane into his wife's waffle iron. Bowerman developed and refined the so-called 'waffle' sole which would evolve into the now-iconic Waffle Trainer in 1974.

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.[8] 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.[8] San Franciscan Walt Stack was featured in Nike's first "Just Do It" advertisement that debuted on July 1, 1988.[9] The "Just Do It" trademark was filed by Nike, Inc. on October 3, 1989 with the description attributed to sports clothing, on which the mark was to be affixed.[10]

Throughout the 1980s, Nike expanded its product line to include many other sports and regions throughout the world.[11]

Acquisitions

Products

A Nike brand athletic shoe
A pair of Nike Air Jordan I 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, baseball, ice hockey, tennis, Association football, lacrosse, basketball and cricket. Nike Air Max is a line of shoes first released by Nike, Inc. in 1987. The most recent additions to their line are the Nike 6.0, Nike NYX, 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'.[16] In 2008, Nike introduced the Air Jordan XX3, a high performance basketball shoe designed with the environment in mind.

Nike sells an assortment of products, including shoes and apparel for sports activities like association football,[17] 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.[18][19]

In 2004, they launched the SPARQ Training Program/Division.[citation needed]

Some of Nike's newest shoes contain Flywire and Lunarlite Foam. These are materials used to reduce the weight of many types of shoes.[20]

Headquarters

Nike's world headquarters are surrounded by the city of Beaverton, but are within unincorporated Washington County. The city attempted to forcible annex Nike's headquarters, which 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.[21]

Manufacturing

Nike has contracted with more than 700 shops around the world and has offices located in 45 countries outside the United States.[22] Most of the factories are located in Asia, including Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, Philippines, and Malaysia.[23] 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.[24] 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.[25]

During 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.[26]

In 2001 a BBC documentary uncovered occurrences of child labor and poor working conditions in a Cambodian factory used by Nike.[27] In the documentary, six girls were focused on, all of whom worked seven days a week, often 16 hours a day.

Campaigns have been taken up by many colleges and universities, especially anti-globalisation groups as well as several anti-sweatshop groups such as the United Students Against Sweatshops.[28] 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.[29]

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.[30]

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.[31]

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.[32] Nike has also been praised for its Nike Grind program (which closes the product lifecycle) by groups like Climate Counts.[33] 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.[34]

Another project Nike has begun is called Nike's Reuse-A-Shoe program. This program, started in 1993, 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.[35]

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".[36] 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

In 1982, Nike aired its first national television ads, created by newly formed ad agency Wieden+Kennedy, during the New York Marathon. This would mark the beginning of a remarkably successful partnership between Nike and W+K that remains intact today. The Cannes Advertising Festival has named Nike its 'advertiser of the year' on two separate occasions, the first and only company to receive that honor twice (1994, 2003).[37]

Nike also has earned the Emmy Award for best commercial twice since the award was first created in the 1990s. The first was for "The Morning After," a satirical look at what a runner might face on the morning of January 1, 2000 if every dire prediction about Y2K came to fruition.[38] The second Emmy for advertising earned by Nike was for a 2002 spot called "Move," which featured a series of famous and everyday athletes in a stream of athletic pursuits.[39]

In addition to garnering awards, Nike advertising has generated its fair share of controversy:

Beatles song

Nike was the focus of criticism for its use of the Beatles song "Revolution" in a 1987 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.

Apple sued Nike Inc., Capitol Records Inc., EMI Records Inc. and Wieden+Kennedy advertising agency for $15 million.[40] 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.[41] 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 and slaying a Chinese dragon in martial arts offended Chinese authorities, who called the ad blasphemous and insulting to national dignity and the dragon. The ad was later banned in China. In early 2007 the ad was reinstated in China for unknown reasons.[42]

Sponsorship

Niketown at Oxford Street, London

Nike pays top athletes in many different sports to use their products and promote/advertise their technology and design.

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.

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, Juan Martín del Potro, Andre Agassi, Rafael Nadal, Pete Sampras, Marion Bartoli, Lindsay Davenport, Daniela Hantuchová, Mary Pierce, Maria Sharapova, Serena Williams.

Nike is also the official kit sponsor for the Indian cricket team for 5 years, from 2006 till end of 2010. Nike beat Adidas and Puma by bidding highest (US$43 Million total).

Nike also sponsors some of the leading clubs in world football, such as the US National Team, Manchester United, Arsenal, FC Barcelona, Inter Milan, Juventus, Shakhtar, Porto, Steaua, Red Star, Club América, Aston Villa, Celtic and PSV Eindhoven. Nike will also sponsor Dundee United from summer 2009.

Nike sponsors several of the world's top golf 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 (June 26, 2008). "Nike profit up but shares tumble on U.S. concerns". Reuters. http://uk.reuters.com/article/companyNews/idUKWNAS924120080626. Retrieved 2008-07-10. 
  3. ^ "Nike sells Bauer Hockey for $200 Million". The Sports Network. February 21, 2008. http://www.tsn.ca/nhl/news_story/?ID=230199&hubname=nhl. Retrieved 2008-06-02. 
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  6. ^ "Registration Number 72414177". TESS. U.S. Patent & Trademark Office. http://tess2.uspto.gov/bin/gate.exe?f=doc&state=4002:r9hu49.4.1. Retrieved 11 February 2010. 
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  9. ^ "Nike's 'Just Do It' slogan celebrates 20 years | Oregon Business News". OregonLive.com. http://www.oregonlive.com/business/index.ssf/2008/07/nikes_just_do_it_slogan_celebr.html. Retrieved 2010-03-04. 
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  18. ^ T. Scott Saponas, Jonathan Lester, Carl Hartung, Tadayoshi Kohno. "Devices That Tell On You: The Nike+iPod Sport Kit". http://www.cs.washington.edu/research/systems/nikeipod/tracker-paper.pdf. 
  19. ^ Tom Espiner (2006-12-13). "Nike+iPod raises RFID privacy concerns". CNet. http://www.news.com/NikeiPod-raises-RFID-privacy-concerns/2100-1029_3-6143606.html?part=dl&tag=feed_2574&subj=6143606&tag=news. 
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  23. ^ [1]
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  26. ^ MIT:
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  28. ^ Sweatfree Campus Campaign Launch
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  31. ^ Emerging Textiles February 2008. Retrieved: May 4, 2008
  32. ^ Reuters report
  33. ^ ClimateCounts: Nike
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  40. ^ According to a July 28, 1987 article written by the Associated Press.
  41. ^ Nike: Skateboarding
  42. ^ Sandoval, Greg (December 7, 2004). "China Bans LeBron James Nike Ad". The Washington Post. http://www.washingtonpost.com/wp-dyn/articles/A41825-2004Dec6.html. Retrieved 2008-06-02. 
  • Egan, Timothy. "The swoon of the swoosh". New York Times Magazine; September 13, 1998. 

External links

Coordinates: 45°30′33″N 122°49′48″W / 45.5093°N 122.8299°W / 45.5093; -122.8299


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