Nike, Inc.

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Nike, Inc.
Public
Traded as NYSE: NKE
Dow Jones Industrial Average Component
S&P 500 Component
Industry Apparel, accessories
Founded 1964 (as Blue Ribbon Sports)[1]
1971 (as Nike, Inc.)
Founder Bill Bowerman
Phil Knight
Headquarters Washington County, Oregon, United States
(Near Beaverton, Oregon)
Area served
 Worldwide
Key people
 Phil Knight
(Chairman)
Mark Parker
(President and CEO)
Products Athletic footwear and apparel, sport equipments and other athletic and recreational products
Revenue Increase US$25.3 billion (FY 2013)[2]
Increase US$3.040 billion (FY 2012)[3]
Increase US$2.223 billion (FY 2012)[3]
Total assets Increase US$15.465 billion (FY 2012)[3]
Total equity Increase US$10.381 billion (FY 2012)[3]
Number of employees
 44,000 (2012)[3]
Website www.nikeinc.com

Nike, Inc. (official, US /ˈnaɪki/; also, non-US /ˈnaɪk/)[note 1] is an American multinational corporation that is engaged in the design, development, manufacturing and worldwide marketing and selling of footwear, apparel, equipment, accessories and services. The company is headquartered near Beaverton, Oregon, in the Portland metropolitan area. It is one of the world's largest suppliers of athletic shoes and apparel[6] and a major manufacturer of sports equipment, with revenue in excess of US$24.1 billion in its fiscal year 2012 (ending May 31, 2012). As of 2012, it employed more than 44,000 people worldwide. In 2014 the brand alone was valued at $19 billion, making it the most valuable brand among sports businesses.[7]

The company was founded on January 25, 1964, as Blue Ribbon Sports, by Bill Bowerman and Phil Knight,[1] and officially became Nike, Inc. on May 30, 1971. The company takes its name from Nike (Greek Νίκη, pronounced [nǐːkɛː]), the Greek goddess of victory. Nike markets its products under its own brand, as well as Nike Golf, Nike Pro, Nike+, Air Jordan, Nike Blazers, Air Force 1, Nike Dunk, Air Max, Foamposite, Nike Skateboarding, and subsidiaries including Brand Jordan, Hurley International and Converse. Nike also owned Bauer Hockey (later renamed Nike Bauer) between 1995 and 2008, and previously owned Cole Haan and Umbro.[8] 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

Old logo of Nike, Inc.
A Nike Factory Store

Nike, originally known as Blue Ribbon Sports (BRS), 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 (now ASICS), making most sales at track meets out of Knight's automobile.[9]

According to Otis Davis, a student athlete whom Bowerman coached at the University of Oregon, who later went on to win two gold medals at the 1960 Summer Olympics, Bowerman made the first pair of Nike shoes for him, contradicting a claim that they were made for Phil Knight. Says Davis, "I told Tom Brokaw that I was the first. I don't care what all the billionaires say. Bill Bowerman made the first pair of shoes for me. People don't believe me. In fact, I didn't like the way they felt on my feet. There was no support and they were too tight. But I saw Bowerman make them from the waffle iron, and they were mine."[10]

In 1964, in its first year in business, BRS sold 1,300 pairs of Japanese running shoes grossing $8,000. By 1965 the fledgling company had acquired a full-time employee, and sales had reached $20,000. In 1966, BRS opened its first retail store, located at 3107 Pico Boulevard in Santa Monica, California next to a beauty salon, so its employees no longer needed to sell inventory from the back of their cars. In 1967, due to rapidly increasing sales, BRS expanded retail and distribution operations on the East Coast, in Wellesley, Massachusetts.[11]

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 Swoosh newly designed by Carolyn Davidson.[12] The Swoosh was first used by Nike on June 18, 1971, and was registered with the U.S. Patent and Trademark Office on January 22, 1974.[13]

In 1976, the company hired John Brown and Partners, based in Seattle, as its first advertising agency. The following year, the agency created the first "brand ad" for Nike, called "There is no finish line", in which no Nike product was shown. By 1980, Nike had attained a 50% market share in the U.S. athletic shoe market, and the company went public in December of that year.[14]

Together, Nike and Wieden+Kennedy have created many print and television advertisements, and Wieden+Kennedy remains Nike's primary ad agency. 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 enshrined in the Smithsonian Institution.[15] Walt Stack was featured in Nike's first "Just Do It" advertisement, which debuted on July 1, 1988.[16] Wieden credits the inspiration for the slogan to "Let's do it", the last words spoken by Gary Gilmore before he was executed.[17]

Throughout the 1980s, Nike expanded its product line to encompass many sports and regions throughout the world.[18] In 1990, Nike moved into its eight-building World Headquarters campus in Beaverton, Oregon.[19]

Acquisitions

Nike has acquired several apparel and footwear companies over the course of its history, some of which have since been sold. Its first acquisition was the upscale footwear company Cole Haan in 1988,[20] followed by the purchase of Bauer Hockey in 1994. In 2002, Nike bought surf apparel company Hurley International from founder Bob Hurley.[21] In 2003, Nike paid US$309 million to acquire Converse, makers of the Chuck Taylor All-Stars line of sneakers.[22] The company acquired Starter in 2004[23] and Umbro, known as the manufacturers of the England national football team's kit, in 2008.[24]

In order to refocus on its core business lines, Nike began divesting of some of its subsidiaries in the 2000s.[25] It sold Starter in 2007[23] and Bauer Hockey in 2008.[26] The company sold Umbro in 2012 [27] and Cole Haan in 2013.[28] As of 2013, Nike owns two key subsidiaries: Converse Inc. and Hurley International.[29][30]

Finance

Nike Inc. will buy back $8 billion of Nike's class B stock in 4 years after the current $5 billion buyback program is completed in second quarter of fiscal 2013. Up to September 2012, Nike Inc. has bought back $10 billion of stock.[31]

On December 19, 2013, Nike Inc's quarterly profit rose as a result of global orders for merchandise for delivery by April increased 13 percent. Future orders of shoes or clothes for delivery between December and April, rose to $10.4 billion. Nike shares (NKE) rose 0.6 percent to $78.75 in extended trading.[32]

Products

A Nike brand athletic shoe
A pair of Nike Air Jordan I basketball shoes

Nike produces a wide range of sports equipment. Their first products were track running shoes. They currently also make shoes, jerseys, shorts, cleats,[33] baselayers, etc. for a wide range of sports, including track and field, baseball, ice hockey, tennis, association football (soccer), lacrosse, basketball, and cricket. Nike Air Max is a line of shoes first released by Nike, Inc. in 1987. Additional product lines were introduced later, such as Air Huarache, which debuted in 1992. 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'.[34] 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,[35] 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 for their supplying of urban fashion clothing. Nike recently teamed up with Apple Inc. to produce the Nike+ product that monitors a runner's performance via a radio device in the shoe that 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.[36][37]

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

Some of Nike's newest shoes contain Flywire and Lunarlite Foam to reduce weight.[38]

On July 15, 2009, the Nike+ Sports Band was released in stores. The product records distance run and calories expended, keeps time, and also gives runners new programs online they could try running.[clarification needed]

The 2010 Nike Pro Combat jersey collection were worn by teams from the following universities: Miami, Alabama, Boise State University, Florida, Ohio State, Oregon State University, Texas Christian University, Virginia Tech, West Virginia, and Pittsburgh. Teams will wear these jerseys in key matchups as well as any time the athletic department deems it necessary.[39]

Headquarters

Nike's world headquarters are surrounded by the city of Beaverton, but are within unincorporated Washington County. The city attempted to forcibly 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 Washington County for 35 years, while Electro Scientific Industries and Tektronix receive the same protection for 30 years.[40]

Controversy

Nike has contracted with more than 700 shops around the world and has offices located in 45 countries outside the United States.[41] Most of the factories are located in Asia, including Indonesia, China, Taiwan, India,[42] Thailand, Vietnam, Pakistan, Philippines, and Malaysia.[43] 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.

Sweatshops

Nike has been criticized for contracting with factories (known as Nike sweatshops) 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 stopped.[44] 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 for this criticism include Naomi Klein's book No Logo and Michael Moore documentaries.

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.[45]

As of July 2011, Nike stated that two-thirds of its factories producing Converse products still do not meet the company's standards for worker treatment. A July 2011 Associated Press article stated that employees at the company's plants in Indonesia reported constant abuse from supervisors.[46]

Child labor allegations

During the 1990s, Nike faced criticism for the 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, 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.[47]

In 2001, a BBC documentary uncovered occurrences of child labor and poor working conditions in a Cambodian factory used by Nike.[48] The documentary focused on six girls, who all worked seven days a week, often 16 hours a day.

Strike in China factory

In April 2014, one of the biggest strikes in mainland China took place at the Yue Yuen Industrial Holdings Dongguan shoe factory, producing amongst others for Nike. Yue Yuen did underpay an employee by 250 yuan (40.82 US Dollars) per month. The average salary at Yue Yuen is 3000 yuan per month. The factory employs 70,000 people. This practice was in place for nearly 20 years.[49][50][51]

Environmental record

According to the New England-based environmental organization Clean Air-Cool Planet, Nike ranks among the top three companies (out of 56) in a survey of climate-friendly companies.[52] Nike has also been praised for its Nike Grind program (which closes the product lifecycle) by groups like Climate Counts.[53] One campaign that Nike began for Earth Day 2008 was a commercial that featured basketball star Steve Nash wearing Nike's Trash Talk Shoe, which had been constructed in February 2008 from pieces of leather and synthetic leather waste from factory floors. 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.[54]

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 produced is then used to help create sports surfaces such as basketball courts, running tracks, and playgrounds.[55]

A project through the University of North Carolina at Chapel Hill found workers were exposed to toxic isocyanates and other chemicals in footwear factories in Thailand. In addition to inhalation, dermal exposure was the biggest problem found. This could result in allergic reactions including asthmatic reactions.[56][57]

Marketing strategy

Nike promotes its products by sponsorship agreements with celebrity athletes, professional teams and college athletic teams.

Advertising

In 1982, Nike aired its first national television ads, created by newly formed ad agency Wieden+Kennedy (W+K), during the broadcast of the New York Marathon. The Cannes Advertising Festival has named Nike its Advertiser of the Year in 1994 and 2003, making it the first company to receive that honor twice.[58]

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 the Y2K problem came to fruition.[59] The second was for a 2002 spot called "Move," which featured a series of famous and everyday athletes in a variety of athletic pursuits.[60]

Beatles song

Nike was criticized for its use of the Beatles song "Revolution" in a 1987 commercial against the wishes of Apple Records, the Beatles' recording company. Nike paid US$250,000 to Capitol Records Inc., which held the North American licensing rights to the 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 for $15 million.[61] 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, a shareholder and director of Apple."

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 advertisement.

New media marketing

Nike was an early adopter of internet marketing, email management technologies, and using broadcast and narrowcast communication technologies to create multimedia marketing campaigns.

Minor Threat advertisement

In late June 2005, Nike received criticism from Ian MacKaye, owner of Dischord Records, guitarist/vocalist for Fugazi and The Evens, and front man of the 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 have tried to remove and dispose of all flyers. They stated that the people who designed it were skateboarders and Minor Threat fans themselves who created the advertisement out of respect and appreciation for the band.[62] The dispute was eventually settled out of court between Nike and Minor Threat.

Niketown at Oxford Circus, London

Nike 6.0

As part of the 6.0 campaign, Nike introduced a new line of T-shirts that include phrases such as "Dope", "Get High" and "Ride Pipe" – sports lingo that is also a double entendre for drug use. Boston Mayor Thomas Menino expressed his objection to the shirts after seeing them in a window display at the city's Niketown and asked the store to remove the display. "What we don't need is a major corporation like Nike, which tries to appeal to the younger generation, out there giving credence to the drug issue," Menino told The Boston Herald. A company official stated the shirts were meant to pay homage to extreme sports, and that Nike does not condone the illegal use of drugs.[63] Nike was forced to replace the shirt line.[64]

Sponsorship

Nike sponsors Mario Götze and many other players and clubs in football

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

Nike's first professional athlete endorser was Romanian tennis player Ilie Năstase. The first track endorser was distance runner 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.

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

Nike has been the official kit sponsor for the Indian cricket team since 2005.[65][66]

Nike is a major sponsor of the athletic programs at Penn State University and named its first child care facility after Joe Paterno when it opened in 1990 at the company's headquarters. Nike originally announced it would not remove Paterno's name from the building in the wake of the Penn State sex abuse scandal. After the Freeh Report was released on July 12, 2012, Nike CEO Mark Parker announced the name Joe Paterno would be removed immediately from the child development center. A new name has yet to be announced.[67][68]

Nike also sponsored soccer players such as Ronaldinho, Ronaldo, Cristiano Ronaldo, Didier Drogba, Neymar, Zlatan Ibrahimović, Mario Balotelli, Wesley Sneijder, Wayne Rooney, Landon Donovan among others.[69]

In January 2013, Nike signed Rory McIlroy, the then No 1 golfer in the world to a 10-year sponsorship deal worth $250 million. The deal includes using Nike's range of golf clubs, a move Nick Faldo previously described as "dangerous" for McIlroy's game.[70]

On February 21, 2013, Nike announced it suspended its contract with Oscar Pistorius, due to his being charged with premeditated murder.[71]

In January 2014, it was widely reported that Nike had entered negotiations with Manchester United F.C. over a "billion dollar" kit manufacturing deal, extending their current contract beyond 2015.[72]

Current sponsorships

Main article: List of Nike sponsorships

Causes

In 2012, Nike is listed as a partner of the (RED) campaign, together with other brands such as Girl, American Express and Converse. The campaign's mission is to prevent the transmission of the HIV virus from mother to child by 2015 (the campaign's byline is "Fighting For An AIDS Free Generation").[73]

See also

Notes

  1. ^ The pronunciations of "Nike"[4][5] include /ˈnaɪki/ NY-kee officially and in the US, as well as /ˈnaɪk/ NYK outside of the US.

References

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