Nike, Inc. - Wikipedia, the free encyclopedia

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Nike, Inc.From Wikipedia, the free encyclopedia

Nike, Inc.

Type Public (NYSE:NKE)

Founded 24 January 1964

1978[1]

Founder(s) William J. "Bill" Bowerman

Philip H. Knight

Headquarters NearBeaverton, Oregon,United States

Area served Worldwide

Key people Philip H. Knight

(Chairman)

Mark Parker

(CEO) & (President)

Industry Designingand Manufacturing:Sportswear

Sports equipment

Products Athletic shoes

Apparel

Sports equipment

Accessories

Revenue US$ 18.627 billion (2008)

Operating income US$ 2.199 billion (2007)
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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 / na ki/) (NYSE: NKE) is a majorpublicly traded sportswear and

equipment supplier based in the United States. The company is headquartered

nearBeaverton,Oregon, which is part of the Portland metropolitan area. It is the world's leading

supplier ofathletic shoes andapparel[2]and a major manufacturer ofsports 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 byBill

Bowerman and Philip Knight, and officially became Nike, Inc. in 1978. The company takes its

name fromNike (Greek pronounced [nk ]), the Greek goddess of victory; it is also based

on Egyptianusage of "strength", "victory", nakht[citation needed]. Nike markets its products under its own

brand as well as Nike Golf, Nike Pro,Nike+,Air Jordan, Nike Skateboardingand subsidiaries

including Cole Haan,Hurley International,Umbroand 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 Swooshlogo.

Contents

[hide]

1 Origins and history

o 1.1 Acquisitions

2 Products

3 Headquarters

4 Manufacturing
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o 4.1 Human rights concerns

5 Environmental record

6 Marketing strategy

o 6.1 Advertising

6.1.1 Kasky v. Nike

6.1.2 Beatles song

6.1.3 Minor Threat ad

6.1.4 Horror ad

6.1.5 Chinese-themed ad

6.1.6 Pretty

o 6.2 Place

o 6.3 Sponsorship

7 References

8 External links

Origins and history

Nike, originally known as Blue Ribbon Sports, was founded by University of Oregontrack

athlete Philip Knightand his coach Bill Bowerman in January 1964. The company initially

operated as a distributor for Japanese shoe makerOnitsuka 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 inSanta 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 Swooshby J.B. Strasser, and trademarked on January 31, 1972[5]. Incidently, the

Onitsuka Tiger brand today is owned by one of Nike's competitor,ASICS.[6]

The first shoe to carry this design that was sold to the public was a soccershoe 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
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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.[7]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 agencyWieden+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-founderDan Wieden who

coined the now-famous slogan "Just Do It" for a 1988 Nike ad campaign, which was chosen

byAdvertising Age as one of the top five ad slogans of the 20th century, and the campaign has

been enshrined in the Smithsonian Institution.[7]San FranciscanWalt Stack was featured in Nike's

first "Just Do It" advertisement that debuted on July 1, 1988.[8] 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.[9]

Throughout the 1980s, Nike expanded its product line to include many other sports and regions

throughout the world.[10]

Acquisitions

As of November 2008, Nike, Inc. owns four key subsidiaries:Cole Haan,Hurley

International,Converse Inc.andUmbro.

Nike's first acquisition was the upscale footwear companyCole Haan in 1988.

In February 2002, Nike bought surf apparel company Hurley Internationalfrom

founderBob Hurley.[11]

In July 2003, Nike paid US$305 million to acquire Converse Inc., makers of the iconic

Chuck Taylor All Stars.[12]

On March 3, 2008, Nike acquired sportsapparel supplierUmbro, known as the

manufacturers of theEngland national football team's kits, in a deal said to be

worth 285 million (aboutUS$600 million).[13]

Other subsidiaries previously owned and subsequently sold by Nike include Bauer

Hockey and Starter.[14]
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Products

A Nike brandathletic 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,baselayersetc. for a wide range of sports

including track & field,baseball,ice hockey,tennis,Association

football,lacrosse, basketball and cricket.Nike Air Maxis 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 SBshoes,

designed forskateboarding. Nike has recently introduced cricket shoes, called Air Zoom Yorker,

designed to be 30% lighter than their competitors'.[15] 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 apparelfor sports activities

like association football[16],basketball, running, combat sports,tennis,American

football,athletics, golfandcross 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,chavculture

andhip hop culture as they supplyurban fashionclothing. Nike recently teamed up with Apple

Inc. to produce theNike+product which monitors a runner's performance via a radio device in the

shoe which links to theiPod 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 intelligencemotes in awireless sensor network.[17][18]

In 2004, they launched theSPARQ Training Program/Division.
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Some of Nike's newest shoes contain Flywireand Lunarlite Foam. These are materials used to

reduce the weight of many types of shoes. [19]

In the video gameGran Turismo 4 there is a car by Nike called the NikeOne 2022, designed by

Phil Frank.

Headquarters

This section needs additionalcitations forverification.Please helpimprove this articleby addingreliable references. Unsourced material may

bechallengedandremoved.(July 2007)

Nike's world headquarters are surrounded by the city ofBeaverton, but are

withinunincorporatedWashington County.

This distinction, according to The Oregonian, has been a source of contention between the city of

Beaverton and Nike since the company purchased 74 acres (0.3 km) of nearby Beaverton land

that soon fronted theJared Co-operation. When Nike proposed expanding their headquarters in

that direction, Beaverton at first wanted them to build housing near theMAX light railstation 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 withMetro'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 Sportswearoccupy in unincorporated Washington County for 35 years,

whileElectro Scientific Industries and Tektronix get that same protection for 30 years.[20]

The world headquarters is situated on approximately 200 acres (0.81 km2) of land. The first phase

of construction was completed in 1990, followed by expansions in 1992, 1999, 2001 and 2008.

There are 17 buildings, together providing approximately 2,000,000 square feet (190,000 m2) of

office space. Each building is named for a legendary coach or athlete who has had a long

affiliation with Nike, includingTiger Woods,Lance Armstrong, Mia Hamm,Michael Jordan,Pete

Sampras,Joan Benoit Samuelson,John McEnroeand several others.

Two of the buildings are child development centers, named forJoe PaternoandC. Vivian

Stringer, that together provide daily child care for approximately 500 children of Nike employees.

A man-made lake, fed by a natural spring, covers 6 acres (24,000 m2) and is adjacent to a

protected wetland area that runs through the center of the campus. The dirt from the lake was
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deposited around the perimeter of the grounds to create a 14-foot (4.3 m) tall, sloping berm that

helps create a campus-like feel. Approximately 5,000 employees are based at the world

headquarters, with another 2,000-2,500 in additional buildings in office complexes nearby.

Manufacturing

Nike has contracted with more than 700 shops around the world and has offices located in 45

countries outside the United States.[21]Most of the factories are located in Asia, including

Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, Philippines, and Malaysia.[22] 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,Indonesiaand 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.[23] The company

has been subject to much critical coverage of the often poor working conditions

andexploitation of cheap overseas labor employed in the free trade zones where their goods are

typically manufactured. Sources of this criticism include Naomi Klein's bookNo LogoandMichael

Moore's documentaries.

Nike has been criticized about ads which referred to empowering women in the U.S. whileengaging in practices in East Asian factories which some felt disempowered women.[24]

During the 1990s, Nike faced criticism for use of child labor in Cambodia and Pakistanin 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.[25]

In 2001 a BBC documentary uncovered occurrences of child labor and poor working conditions in

a Cambodian factory used by Nike.[26]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.[27] Despite these campaigns, however, Nike's annual revenues have
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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.[28]

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.[29]

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.[30]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.[31] Nike has also been praised for its Nike Grindprogramme

(which closes theproduct lifecycle) by groups like Climate Counts.[32] In addition to this, one

campaign that Nike began for Earth Day 2008 was a commercial that featured Steve

Nashwearing 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.[33] 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.

[34]

Marketing strategy
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This section needs additionalcitations forverification.Please helpimprove this articleby addingreliable references. Unsourced material may

bechallengedandremoved.(July 2007)

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".[35] 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

From 1972 to 1982, Nike relied almost exclusively on print advertising in highly vertical

publications including Track and Field News. Most of the early advertising was focused on a new

shoe release, essentially outlining the benefits of the running, basketball or tennis shoe. In 1976,

the company hired its first outside ad agency, John Brown and Partners, who created what many

consider Nike's first 'brand advertising' in 1977. A print ad with the tagline "There is no finish line"

featured a lone runner on a rural road and became an instant classic. The success of this simple

ad inspired Nike to create a poster version that launched the company's poster business.

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).[36]

Nike also has earned theEmmy 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.[37]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.[38]

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

Kasky v. Nike

Consumer activistMarc Kaskyfiled a lawsuit in California in 2002 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
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expression of its views on a public issue, and that these were entitled toFirst

Amendment protection. The local court agreed with Nike's lawyers, but theCalifornia Supreme

Courtoverturned this ruling, claiming that the corporation's communications were commercial

speechand 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 withcivil liberties, as well as anti-sweatshop

activists.

Beatles song

Nike was the focus of criticism for its use of theBeatles song "Revolution" in a 1987 commercial,

against the wishes ofApple Records, the Beatles' recording company. Nike paid $250,000

to Capitol RecordsInc., 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.[39] Capitol-EMI countered by saying the lawsuit was 'groundless' because

Capitol had licensed the use of "Revolution" with the "active support and encouragement ofYoko

Ono Lennon, a shareholder and director of Apple."

According to a November 9, 1989 article in theLos 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 ofDischord Records,

guitarist/vocalist forFugazi&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
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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.[40] 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 runnerSuzy Favor-Hamiltonis 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 during the opening ceremony of the 2000 Summer Olympics (Friday), the ad titled

"Horror" generated roughly 200 complaints (according to NBC) that caused the network to pull the

ad by Sunday. ESPN followed suit, but the ad continued to air with little or no controversy on

several other networks, including FOX, WB, UPN and Comedy Central.

Protesters argued that the ad made light of violence against women, while others claimed 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 to satirize the typical horror flick where

a helpless woman was destined to be slashed. Hamilton herself stated the ad was inspirational,

since it is the woman who defeats the man.

Chinese-themed ad

In 2004, an ad aboutLeBron James beating cartoon martial arts masters and slaying a Chinese

dragon inmartial 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.[41]

Pretty

In the run up to the 2006 U.S. Open, Nike began runningPretty, a television advertisement

featuring Maria Sharapova. The ad was a popular and critical success, and went on to win

several of the industry's top awards, including twoCannes Gold Lions.

Place
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Niketown at Oxford Street,London

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 pays top athletes in many different sports to use their products andpromote/advertise their

technology and design.

Nike's first professional athlete endorser was Romanian tennis playerIlie Nstase, and the

company's first track endorser was distance running legendSteve Prefontaine. Prefontaine was

the prized pupil of the company's co-founderBill Bowerman while he coached at the University of

Oregon. Today, the Steve Prefontaine Building is named in his honor at Nike's corporateheadquarters.

Besides Prefontaine, Nike has sponsored many other successfultrack & field athletesover the

years such asCarl Lewis,Jackie Joyner-Kersee and Sebastian Coe. However, it was the signing

of basketball playerMichael Jordan in 1984, with his subsequent promotion of Nike over the

course of his storied career with Spike LeeasMars 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 formerlysponsored by Nike include: James Blake, Jim Courier,Roger Federer,Lleyton Hewitt,Juan

Martn del Potro, Andre Agassi, Rafael Nadal,Pete Sampras,Marion Bartoli,Lindsay

Davenport,Daniela Hantuchov,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 Adidasand Puma by bidding highest (US$43 Million total).
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Nike also sponsors some of the leading clubs in world football, such as theUS National

Team, Manchester United, Arsenal, FC Barcelona,Inter

Milan,Juventus,Shakhtar, Porto, Steaua,Red Star, Club Amrica,Aston Villa, CelticandPSV

Eindhoven. Nike will also sponsorDundee Unitedfrom summer 2009.

Nike sponsors several of the world's top golfplayers, 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.
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