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Nike If you have a body, you are an athlete. And as long as there are athletes, there will be Nike. Bill Bowerman Introduction Undoubtedly, Nike is one of the most influential world leaders in manufacture and design of sport footwear, clothes and accessories. By 2001 the companys annual income approached 10 billion dollars. Nike is a multinational corporation that concludes contracts with 750 factories in 55 world countries.
The quantity of Nike's personnel makes up more than 28, 000 full-time employees. As of May 31, 2006 the company operated 212 retail stores in America and 206 retail stores worldwide (Nike Key Statistics 2007). According to all market unwritten rules such giant corporation should be developed over a long run. Yet, Nike's history hardly numbers nearly thirty years of growth. The official year of Nike's foundation is considered 1972.
The companys headquarters is set up in Beaverton (Oregon, the United States). The research examines the history of Nike's success, its financial performance and issues, the companys cultural impact of both first and third world countries, and Nike's ethical performance (e. g. law suits, business practices, environmental performance, and human relations). Financial Performance and Product Line The history of Nike is inextricably entwined with Phil Knights name.
Phil Knight was a mediocre mid-distance runner from Oregon University's team. Nowadays Phil Knight is known as the sixth richest American with more than 3. 8 billion dollars. In 1964 Phil Knight founded the company in the partnership with his former coach Bill Bowerman. At those times American sports footwear was the solution of very poor quality at low cost (approximately $ 5). Many sportsmen suffered from corns and traumas. German sports footwear was of higher quality for higher price ($ 30).
The theory of Knight and Bowerman was very simple. Sports footwear can be designed in the U. S. , made in Asia and sold in America at a lower price compared to the popular German sneakers. As far as Knight got his MBA in Stanford in 1960 s, he had lectures in Frank Shallenbergers class. One of Shallenbergers class activities was the proposal to develop a strategy of business development for a small private enterprise, including business plan and other business activities. According to the Nike's legend, it was the seminar, where Knight invented the concept of his new business company.
Japan was chosen in the capacity of Asian manufacturer due to several reasons. One of the reasons was cheap labor cost, because Japanese workers salaries were lower than those of Americans. In 1963 Knight went to Japan. There Phil Knight signed the agreement with Onitsuka factory concerning sale of high-quality Japanese jogging shoes to the United States. When Phil Knight came back to the U.
S. , he started selling jogging shoes just from the truck body of his truck near the stadiums and running tracks. Their project the forerunner of Nike was called Blue Ribbon Sports. The name of the company was invented during the negotiations with Japanese business partners, where Knight introduced himself in the name of the non-existing American distributor of sneakers Blue Ribbon Sports, which was interested in wholesale of jogging shoes in the United States. By 1964 Knight sold the first lot of shoes to the amount of $ 8. 000 and sent the order for the next lot. Bowerman and Knight worked together; however, quite soon they hired sales manager Jeff Johnson. In 1965 Knight and Bowerman changed the name of the company.
The new name Nike was invented by Phil Knight, who saw in his dream the goddess of Victory Nike. In 1971 Caroline Davidson, the student of design department in Portland University developed new logo for the Nike company. $ 35 dollars was quite a modest fee for one of the most recognized logos throughout the world. Twelve years later, in 1983, Knight invited Davidson for a dinner and presented her a golden ring with a diamond, decorated with Nike's logo. He also added the envelope with a certain quantity of Nike's shares.
Phil Knights present was a just remuneration for the logo, the only presence of which at any sports footwear makes it much more attractive for the consumers. This logo is well-known all over the world. It symbolizes the wing of the goddess and is called SWOOSH (Strasser, 1993). Fitness revolution and fashion for jogging in the mid- 1970 s gave a strong incentive to the development of Knights business. By 1969 the sales of sports footwear reached $ 1. 000. 000, however, the companys profit was still not very high. In 1975 Bill Bowerman got an idea, which became the turning point in the Nike's history.
During the breakfast, when Bowerman saw a wafer-iron, he decided that in case the sole of the sneakers will be corrugated, on the one hand, this change improves the push and impulse, and on the other hand, the sneakers will reduce its weight. Shortly after his discovery, Bowerman added corrugated sole to the sports shoes and offered track and field athletes to try it. This genius invention immediately brought Nike to the leaders of the sports industry with the market share of 50 % (1979). Nike managed to gain the victory over one of his strongest competitor Adidas. Soon Reebok remained Nike's only competitor in the industry, until Michael Jordans appearance. In 1984 the company signed a contract for advertising of basketball shoes with 21 year old basketball star Michael Jordan.
Nowadays it is very popular to invite sport stars for advertising; however, in the mid- 1980 s the strategy of Nike had no precedents. By investing billions dollars in advertising campaign with Jordans participation, the company instinctively made the figure of Michael Jordan the part of the Nike's culture. Many American teenagers wanted to have the same sport shoes like the king of the air had. The shoes Air Jordan, designed especially for Michael Jordan, ideally suited for side forwards, who land with the triple dynamic load to the feet with reference to their own mass. Michael put on his shoes each time when he entered the basketball field. However, the shoes were black and read, and these colors were not allowed by NBA rules.
The NBA association fined Jordan at rate of $ 1. 000 per each game, but he continued wearing Air Jordan. This scandal was to Nike's good, as it immediately attracted attention of Jordans fans. In result, the Nike's sales grew from 870 million dollars to 4 billion dollars per year. Since this moment the company undertakes the efforts to restructure its business goals, objectives, policy and rules. Clear and cold logic, statistics, field investigation come up to take the place of intuition.
The budget of Nike marketing departments experiences growth. Knight decides that the company should not be limited by footwear production. Soon the company designs advertising campaign aimed to position Nike as global sport corporation that manufactures, among other things, clothes, watches, headdresses, and other sport accessories. In 1988 Nike makes its debut with participation of Bo Jackson, the baseball star.
Three TV commercials demonstrated how Jackson runs, rides a bicycle, and plays baseball. The TV commercials were ended by the phrase: Bo knows. The next commercial was based on sameness of the names Bo Jackson and Bo Diddley, a well-known musician. The headline of the message explained: Bo does not know Diddley. Though, the company didnt rest on its laurels too long.
In 1988 Nike's popularity declines because the consumers didnt want to wear the same things that other people wore. Yet, the situation wasnt unexpected for Nike that met it fully armed with new proposals. In 1998 Nike presented the new product line ACG all-weather accessories. Besides, the company restructured one branch of its business into separate groups: Nike Golf, Jordan Brand, Nike Hockey, and Nike ACG, to mention a few. Ethical Performance A great drop in prices in 1998, exchange price and shareholder value downfall, economic turmoil in Asia resulted in the loss of Nike's profit. For the first time in Nike's history, in June 1998 Nike took a bath that made up approximately 67. 7 million dollars.
The matter was compounded by the scandal about conditions and terms of remuneration of labor in Vietnamese, Indonesian and Chinese factories. Financial claims against Nike seemed to be more than grounded. For example, Nike paid to children working for Pakistan factories approximately 60 cents per day for making footballs. Vietnamese workers were receiving approximately 1. 6 dollars per day ($ 41 per month), whereas the average working week consisted of 65 working hours. What concerns occupational hazards, the discharge of hazardous substances in Chinas factories was one hundred seventy and seven times more than it was permitted. 78 per cent of workers suffered from respiratory infections. There were only one doctor and two nurses for each 10. 000 of workers.
At the same time, in 1997 Michael Jordans remuneration for participation in TV commercials for Nike's advertising campaign was more than the salary of all workers in Malaysia. There were another several lawsuits, such as Kasky v. Nike (concerning false advertising), the use of the Beatles Revolution 1 in Nike's commercial with no prior agreement with Apple records, the minor threat ad (June 2005) concerning the use of text and imagery from Minor Treats album in a flyer, Chinese-themed ad (2004), that was banned in China, etc. In 1999 Nike successfully copes with all lawsuits and unlawful practices.
The company conquers internet and designs plenty of websites. Nike's advertising is always a challenge. This assertion is not a mere phrase. In 1999 during NATO bombarding Nike put advertisement hoardings in the destroyed Belgrade.
These standard 3 x 6 hoardings were designed in compliance with traditional aesthetics of the company: the famous swoosh, slogan Just Do It! and a completely unexpected phrase: Stop the bombs! (Katz, 1994) It was very unequivocally: Stop the bombs! Just Do it! In January 2000, the company makes 30 -second commercial with participation of track and field athlete sprinter Marion Jones. The woman runs across the street, trying to run away from maniac with a gasoline-powered saw. The commercial unexpectedly stops and audience is referred to the website whatever.
nike. com in order to watch the continuation of the story. There the audience was proposed to watch TV commercial using Apple Quick Time and to invent the end of the story. The best variants of the commercial were broadcasted in the internet. In February 2000 the company runs new project Nike Alfa. The new product line is widely presented in online stores.
The NBA strike and Michael Jordans retirement from the sport seems to darken the entire situation, yet, the management of the company quickly replaces Jordan with the famous golf player Tiger Woods (Katz, 1994). Nike signs with Tiger Woods the most grandiose 5 year contract in the history of sport, because the contract weights 100 million dollars. Soon this union pays handsome dividends in 2000 Woods wins U. S. Open Championship with the Nike's ball. In 2002 Nike starts global campaign under the name Secret Tournament.
The aim of this campaign was to increase internet traffic around the Nike's online resource Nike Football. com designed by Fram Fab Denmark. The website proposed to play an interactive 3 D game Scorpion Knock Out, where the coaches of the most successful teams were awarded by Nike's production, including balls with football celebrities autographs. Conclusion Nike is a giant multinational corporation engaged in development, design and worldwide marketing of apparel, footwear, accessory and equipment sport products. The companys mission is to bring inspiration and innovation to every athlete in the world with a short explanation if you have a body, you are an athlete (Nike Mission 2007).
Nike Inc. is a seller of athletic apparel and athletic footwear in more than 160 world countries. The history of Nike's success is amazing with its thirty years of consistent growth resulting in world-recognized brand and almost 15 billion of total revenue as of year 2007. Despite all criticism, the company remains one of the most effective business models and continues its story of success. Personal Reactions Nike Corporations history proves that the company is completely different from all its numerous competitors.
Nike has not only the past. Nike has traditions of its own. Probably, the empathy, the enthusiasm and other valuable characteristics of the company influence the consumers feelings. When you enter Nike's stores, you feel that Nike's founders not only created the team of winners, but their wise advices had great impact on lives on many young people. Nike proposes you the solution for all life problems through sport. The company gives you the lesson how to set a task, to concentrate emotionally, physically and mentally, to undertake all efforts to complete the task, to compete and to win through being a part of a team.
Such values like honesty, the spirit of competitiveness, the ability to work in team seem to appeal to the consumers through Nike's product line and, thus, forcing to make a purchase that will reveal the untapped reserves and will motivate to achieve maximum possible results. Bibliography Nike. Key Statistics. (n. d. ). Retrieved March 31, 2007, from Yahoo Finance! : web Katz, D. (1994). Just Do It: The Nike Spirit in the Corporate World.
Holbrook, MA: Adams Media Corporation. Nike Mission. (n. d. ). Retrieved March 31, 2007, from web Strasser, J. (1993). Swoosh: The Unauthorized Story of Nike and the Men Who Played There.
New York: Harper Business.
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