| Type | Public company |
|---|---|
| Traded as | NYSE: NKE S&P 500 Component |
| Industry | Clothing and Sports equipment |
| Founded | 1964 (as Blue Ribbon Sports)[1] |
| Founder(s) | Bill Bowerman Philip Knight |
| Headquarters | Washington County, Oregon, United States (Near Beaverton, Oregon) |
| Area served | Worldwide |
| Key people | Philip Knight (Chairman) Mark Parker (President and CEO) |
| Products | Athletic shoes Apparel Sports equipment Accessories |
| Revenue | US$ 19.014 billion (FY 2010)[2] |
| Operating income | US$ 2.517 billion (FY 2010)[2] |
| Net income | US$ 1.907 billion (FY 2010)[2] |
| Total assets | US$ 14.419 billion (FY 2010)[2] |
| Total equity | US$ 9.754 billion (FY 2010)[2] |
| Employees | 34,400 (May 2010)[2] |
| Website | Nike.com |
Nike, Inc. ( /ˈnaɪkiː/; NYSE: NKE) 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[3] and a major manufacturer of sports equipment, with revenue in excess of US$18.6 billion 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,[1] and officially became Nike, Inc. on May 30, 1978. 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 Skateboarding, and subsidiaries including Cole Haan, Hurley International, Umbro and Converse. Nike also owned Bauer Hockey (later renamed Nike Bauer) between 1995 and 2008.[4] 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.
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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.[5]
The company's profits grew quickly, and, in 1967, 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 Swoosh newly designed by Carolyn Davidson.[6] 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.[7]
The first shoe sold to the public to carry this design 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 derived from the Greek goddess of victory. In 1978, BRS, Inc. officially renamed itself to Nike, Inc. Beginning with Ilie Năstase, 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 attained a 50% market share in the U.S. 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.
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.[8] Walt Stack was featured in Nike's first "Just Do It" advertisement, which debuted on July 1, 1988.[9] Wieden credits the inspiration for the slogan to "Let’s do it", the last words spoken by Gary Gilmore before he was executed.[10]
Throughout the 1980s, Nike expanded its product line to encompass many sports and regions throughout the world.[11]
As of November 2008, Nike, Inc. owns four key subsidiaries: Cole Haan, Hurley International, Converse Inc. and Umbro. Nike's first acquisition was the upscale footwear company Cole Haan in 1988. In February 2002, Nike bought surf apparel company Hurley International from founder Bob Hurley.[12] In July 2003, Nike paid US$309 million to acquire Converse Inc., makers of the iconic Chuck Taylor All Stars sneakers.[13] On March 3, 2008, Nike acquired sports apparel supplier Umbro, known as the manufacturers of the England national football team's kit, in a deal said to be worth £285 million (about US$600 million).[14] Other subsidiaries previously owned and subsequently sold by Nike include Bauer Hockey and Starter.[15]
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 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. 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 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.[18][19]
In 2004, they launched the SPARQ Training Program/Division.
Some of Nike's newest shoes contain Flywire and Lunarlite Foam to reduce weight.[20]
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.
The 2010 Nike Pro Combat jersey collection will be worn by teams from the following universities: Miami, Alabama, Boise State, Florida, Ohio State, Oregon State, 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.[21]
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.[22]
Nike has contracted with more than 700 shops around the world and has offices located in 45 countries outside the United States.[23] Most of the factories are located in Asia, including Indonesia, China, Taiwan, India[24], Thailand, Vietnam, Pakistan, Philippines, and Malaysia.[25] 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.
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.[26] 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.
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.[27]
In 2001, a BBC documentary uncovered occurrences of child labor and poor working conditions in a Cambodian factory used by Nike.[28] The documentary focused on six girls, who all 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.[29] Despite these campaigns, however, Nike's annual revenues have increased from US$6.4 billion in 1996 to nearly US$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 largest 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 abuse does not continue.[30]
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.[31]
Nike also caused controversy during the 2008 Olympics in Beijing, China, when their sponsored Chinese athlete, Liu Xiang, withdrew from the Olympic 110 metre hurdles, leaving the track after a false start by another competitor. Liu claimed that he withdrew due an ankle injury.[32] However, an anonymous message was posted on the internet, purportedly from a source close to Nike, claiming that the corporation had forced Liu to withdraw as he was unlikely to win, thereby tarnishing their image. Nike responded by announcing that "we have immediately asked relevant [Chinese] government departments to investigate those that started the rumour".[33]
Nike tries to counteract the detrimental effect with different projects. 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.[34] Nike has also been praised for its Nike Grind program (which closes the product lifecycle) by groups like Climate Counts.[35] 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.[36]
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.[37]
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.[38][39]
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.
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. This was the beginning of a successful partnership between Nike and W+K that remains intact today. The Cannes Advertising Festival has named Nike its Advertiser of the Year in 1994 and 2003, making it the first and only company to receive that honor twice.[40]
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.[41] The second was for a 2002 spot called "Move," which featured a series of famous and everyday athletes in a variety of athletic pursuits.[42]
In addition to garnering awards, however, Nike advertising has generated its fair share of controversy.
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.[43] 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: surviving Beatles 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 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.[44] The dispute was eventually settled out of court between Nike and Minor Threat. The exact details of the settlement have never been disclosed.
In 2004, an ad about LeBron James beating cartoon martial arts masters and slaying a Chinese dragon with martial arts offended Chinese authorities, who called the ad blasphemous and insulting to national dignity and to the dragon. The advertisement was later banned in China. In early 2007, the ad was reinstated in China for unknown reasons.[45]
The company rolled out a new campaign in June 2011 called "Nike 6.0" that was aimed at extreme sport athletes. As part of the 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 exclusively to pay homage to extreme sports, and that Nike does not condone the illegal use of drugs.[46] Nike was forced to replace the shirt line.[47]
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.
Besides Prefontaine, Nike has also sponsored many other successful track and field athletes over the years, such as Carl Lewis, Jackie Joyner-Kersee and Sebastian Coe. However, it is 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 and footwear sponsors for leading tennis players. Some of the more successful tennis players currently or formerly sponsored 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, and Serena Williams.
Nike was the official kit sponsor for the Indian cricket team for five years, from 2006 until the end of 2010. Nike beat Adidas and Puma by bidding US$43 million.[48][49]
Nike sponsors some of the leading clubs in world football, including the national teams of India, France, Brazil, Portugal, the Netherlands, the United States, and Malaysia.
Some of the world's top golf players are sponsored by Nike, among them Tiger Woods, Stewart Cink, Lucas Glover, Michelle Wie, 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.
Nike is a major sponsor of athletic programs at Penn State and has decided not to abandon that relationship in the wake of the Penn State sex abuse scandal.[50]
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