Nike Essay Research Paper Barker 2Inside Nike

Nike Essay, Research Paper

Barker 2

Inside Nike

Introduction

The Nike Company History; Beginning to the Present

For more than 25 years, Nike has been committed to giving people who compete and recreate the very best performance product. The company that we know today as Nike (received this name in 1972) was formally known as ?Blue Ribbon Sports.? Between 1957-1960, Bill Bowerman, a coach at the University of Oregon was handcrafting shoes for his runners, when he met Phil Knight an athlete at Stanford Business school. Knight, interested in breaking the domination of Germany over the United States athletic shoe industry, thought it would be logical to do so with high-tech exports from Japan. In 1962, Knight traveled to Japan to meet with the Onitsuka Tiger Company. By 1963, Knight was receiving his first shipment of 200 Tiger shoes.

Barker 3

In 1964, Knight and Bowerman both contributed $500 to start the BRS co. Knight was responsible for the accounting and the delivery of shoes at local track meets. Bowerman focused on the foot wear design. That year they sold 1,300 pairs of tiger shoes and gained $8,000 in revenues. By 1965, a former track rival of Knights became his first employee, Jeff Johnson. The next year Johnson opened the company?s first retail outlet. At the end of the sixties, BRS had twenty employees and several retail outlets and approached $300,000 in revenues.

As BRS entered into the seventies, the company was introduced to Nissho Iwai, a trading company, to subcontract BRS their own shoe line. The Cortez (designed by Bowerman) and the Swoosh (designed by student Carolyn Davidson) became Tiger and BRS largest selling models. Tiger and BRS broke up in 1972, and BRS launched the ?Nike? brand at the U.S. Olympic Trials. That same year Canada became BRS? first foreign market. Steve Prefontaine was the first major track athlete to wear Nike shoes in 1973. As the next year approached Bowerman introduced his new ?Waffle Trainer? training shoe, which was a famous outsole design that became America?s bets-selling training shoe. Nike expanded to Australia, and opened its first American factory at Exeter, New Hampshire. By 1974, Nike had 250 employees and $4.8 million in revenues. The seventies, approaching its end, Nike established the first U.S. track-and-field training club for elite athletes, known as Athletics West. By 1977 Nike was selling shoes in Asia and subcontracting factories in Taiwan and Korea. Nike added South America and Europe to its list of sellers in 1978, with nearly 50 percent of the U.S.

Barker 4

market revenues, Nike introduced its apparel line by 1979. At the end of that decade

Nike offered 2 million shares of common stock to the public.

By 1980, Nike Sport research Lab opened in Exeter, N.H., Nike now had 2,700 employees and revenues topped $269 million. No more than a year later Nissho Iwai and Nike form ?Nike-Japan.? By 1982 Nike was undergoing massive growth. The apparel line soared to 200 styles bringing Nike in $70 million. Nike now employed 3,000 people and revenues of $457.7 million. When the mid-eighties hit, Nike was sponsoring 58 athletes that took home 65 medals. Revenues had reached $919.8 million by 1985, which is a $462.1 million increase in two years. The success did not end hear. Michael Jordan, a rookie at the time, endorsed a line with ?Nike,? by the end of 1986 revenues had reached $1.07 billion. However, by 1987 Nike revenues had dropped to &877 million, but Nike-Air shoes re-established ?Nike? as the technological leader in the industry. The slump did not last long. By the end of that decade Nike introduced its ?Just Do It? campaign along with its ?Air Jordan? shoe line Nike?s Net income reached a high of $167 million.

At the beginning of the nineties, the burgeoning international market helped Nike surpass $2 billion in consolidated revenue. Their employees numbered at 5,300 worldwide. The ?Nike World? campus opened in Beaveron, Oregon, Its seven buildings named after athletes, and the first ?Nike Town? opened in Portland, Oregon. By the entrance of 1991, Nike was the world?s first sport company to surpass $3 billion in total revenues, and international revenues increase by 80 percent, topping $860 million. The next year international revenues increased 32 percent to more than $1 billion for the first,

Barker 5

making up 33 percent of total Nike revenues. By the end of 1992, through an agreement through Nike and the U.S. Track and Field, every U. S track competitor wore Nike apparel. The ?Nike Environmental Action? team was formed by 1993 and revenues reached $3.9 billion in the company?s sixth consecutive year. 1994 was a year full of good fortune for Nike. It launched Participate in the Lives of America?s Youth (P.L.A.Y.), a multi-million dollar initiative addressing the need for recreation for kids. P.L.A.Y. included ?Reuse-A-Shoe,? a program that diverts more than 1 million shoes from landfills, grinds them up, and reconstitutes them into new court surfaces. Nike sponsored 10 members of the World Cup winning Brazilian team, as well as runners ?up Italy, the U.S. National Men?s and Women?s Teams and the Chinese National Team. In Australia, Shane Warne became the first cricket superstar to sign with Nike. In Europe, Nike centralized distribution at the $138 million Laakdal Customer Service Center. In 1995, Nike broke industry records again, reporting $4.8 billion in revenues. ?Nike Town New York? opened in 1996, drafting off the success of the 1994 purchase of Canstar Sports Inc. (renamed Bauer). Nike?s Equipment Division produced hockey skates, in-line skates, protective gear, sport balls, eyewear and watches. The high-performance apparel led another banner year, accounting for nearly 31 percent of the $6.5 billion in revenues. ?Nike Asia? took off, pushing revenues from $300 million in ?96 to $800 million in ?97. Between 1997 up to the present Nike has had two major Customer Service Centers to open outside Seoul, Korea and Tokyo, Japan. China became both a

Barker 6

source country and a vital market for Nike. The expansion of the ?World Campus? continued with plans to house 7,100 of its 16,000 employees. Industry analyst predicted that Nike revenues would reach more than $9 billion in the beginning of the 21st century.

Nike

Management Culture

Nike has more than 500 contract factories around the world in about 45 countries. The Nike market has been broken into four regions: USA, Asia Pacific, Americas, and Europe. Three of the four regions were down in revenues with the exception of Europe. Revenues decreased for the first time since 1994. Below is the four regions of Nike, focusing on each regions overall performance and contributions to the company as a whole.

USA

Nike and its retail partners finished fiscal 1998 with excess footwear inventory, which impacted the ability to sell in new footwear in the first half of fiscal 1999, which led to a double-digit sales decline. Some cool new shoes and a more positive retail environment helped to get U.S. footwear back on the beam by the fiscal year-end. Since the beginning of 2000, future orders for U.S. footwear has been up three percent. The apparel line, which explodes from a $424 million in fiscal 1995 to $1.56 billion in 1998, saw a decline for the firs time since 1994. The growth with in that three-year period put Nike at the forefront of the U.S. athletic apparel market: but at the same time it severely

Barker 7

taxed the company?s organizational resources. Throughout 1999 the apparel market was negatively affected by the strong demand for a number of more fashioned-oriented brands. USA is currently realigning their organization, so that the company will be more in sync with how consumers buy athletic apparel, so that the coming year will be more challenging.

Asia Pacific

Asia Pacific suffered a dramatic fall in 1998 so 1999 was looking bad for this region. The economic crisis in Asia weighed heavily on consumers as wells as inventory especially in Japan. The 2000 Olympics in Sidney and the 2002 World Cup in Japan and Korea will be held in this region, and there is a great opportunity for these events to raise regional consumer interest in sport. The Nike Company decided to consolidate the Asia Pacific management team to their world headquarters, which would take a chunk out of the regional structure. The cost was reduced to $150 million in the region but retained an organizational excellence that will enable them to grow in the years to come.

Americas

For the first time since the early ?90s, The Americas region showed a decline in revenues, half of that decrease came in Canada. In addition, the wobbly economic environment in Latin America hampered growth, particularly in Brazil where the independent distributor was forced into bankruptcy. Nike accelerated their plans to create a wholly owned subsidiary in Brazil. Plans were developed to introduce locally sourced, lower-priced footwear into key Latin America markets. Nike is also working on energizing the brand in Canada.

Barker 8

Europe

The results in Europe over the past several years have been satisfying for Nuke. Compounded annual revenues has grown 23 percent in the past four years, which indicates how much growth potential remains in the core business. The growth in Europe is due mainly to its sales in apparel. For 1999 this region cracked the $1 billion dollar mark in apparel, which is larger than Europe?s total revenue four years ago. With revenues topping the $2.2 billion mark, it is more challenging than ever to grow the Nike business there. The size provides opportunity for leverage through integrated pan-European campaigns, inspiring consumers at new Niketowns in London and Berlin, more efficient use of the Laakdal warehouse, or using the euro to move towards price harmonization throughout the region. On the consumer front, the challenge is to keep their brands fresh and relevant to young consumers. Europe intends to continue their ?City Attack? campaigns with focused advertising in key European markets.

Major Products

If one were to take a look around college campuses, shopping malls, or any group in the general population, one would see the affect that Nike has on society. Everyone from toddlers to a senior citizen has owned or at least worn a Nike product. Nike began with just running shoes however over the years they have introduced numerous of selling merchandise. I can remember when the ?Just Do It? campaign was introduced it appeared as though everyone had on a t-shirt baring the words ?Just Do It.? The most prominent product of Nike would be the shoes. As we look advertisements for any type

Barker 9

sport, whether it is basketball or golf, there will definitely be an athlete wearing a Nike logo. Nike as made a lot of athletes famous. They have created shoes and clothes for athletes like Michael Jordan (basketball), John McEnroe (tennis), Alberto Salazar (track), Joan Benoit (women?s marathon runner), Nolan Ryan (baseball), Tiger Woods (golf), and many more including hockey, softball, and soccer. In addition to clothing Nike also represents a variety of other products like hockey skates, in-line skates, protective gear, sports balls, eyewear and watches.

Competition in the Market and Strategy

Nike is one of the leading company?s among athletics. However, there are a few other company?s Nike may have to worry about: Reebok, Adidas, Filas, New Balance and many more. Some of these company?s have endorsed athletes as well as Nike as but Nike seems to remain on top.

The main strategy for Nike is growth, growth that is profitable and substantial. Nike has put a lot of effort in establishing a line of shoes and apparel that will accommodate the athlete. The Nike Alpha Project is an attempt to accomplish this successful line, with its focus on design excellence. This project symbolizes Nikes commitment to create products that perform better than they did before. Their designers work with athletes to gain insight on their performance needs. The Nike Alpha Project, encompasses the top of the line footwear, equipment, and apparel protecting the athlete, and enhancing performance from head to toe.

Barker10

Financial Performance

In the introduction, I tried to provide you with some background into Nikes revenues each year. By the end of the FY?99 the shareholders? equity had reached $3334.6 million with a market capitalization of $17,202.2 million. The financial ratios were good for the year with a 13.7% return of equity, 8.5% on the return of assets, and the earnings ratio (diluted) was 38.8 %.

Conclusion

Nike?s mission for corporate responsibility is to lead in corporate citizenship through programs that reflect caring the world family of Nike, the teammates, the consumers and those who provide services to Nike. Nike is the number one leader in sportswear. Nike designs, develops and markets footwear, apparel, equipment and accessory products. The products include running, basketball, children?s, cross training and women?s shoes. The company also produces and markets shoes designed for outdoor activities like tennis, golf, soccer, baseball, football, bicycling, volleyball, wrestling, cheerleading, aquatic activities and other recreational uses. Nike has achieved its excellence through taking chances. Those of us that like the quality of Nike products and the diversity in styles can appreciate the hard work of Bill Bowerman and Phil Knight over the past years for bringing us a company that appreciates the gift of recreation and sports.

Barker11

Bibliography

?Our Chronology.? Nikebiz. @Yahoo. 6 March 2000.1-4.

?Year In Review.? Nikebiz. @ Yahoo. 20 January 2000. 1-4.

?Financial History.? Nikebiz. @ Yahoo. 6 April 2000. 1-2.

?Corporate Responsibility.? Nikebiz. @ Yahoo 6 March 2000. 1-4.

Barker 1

Table of Contents

Introduction 2-6

Nike Company History: Beginning to Present

Nike6

Management Culture6-8

Major Products8

Competition in the Market and Strategy9

Financial Performance10

Conclusion10

Bibliography11

Inside Nike

By

Brian O. Barker

CIS 206 Micro Computers

Ms. Chan

Aug. 2, 2000

Barker 2

Inside Nike

Introduction

The Nike Company History; Beginning to the Present

For more than 25 years, Nike has been committed to giving people who compete and recreate the very best performance product. The company that we know today as Nike (received this name in 1972) was formally known as ?Blue Ribbon Sports.? Between 1957-1960, Bill Bowerman, a coach at the University of Oregon was handcrafting shoes for his runners, when he met Phil Knight an athlete at Stanford Business school. Knight, interested in breaking the domination of Germany over the United States athletic shoe industry, thought it would be logical to do so with high-tech exports from Japan. In 1962, Knight traveled to Japan to meet with the Onitsuka Tiger Company. By 1963, Knight was receiving his first shipment of 200 Tiger shoes.

Barker 3

In 1964, Knight and Bowerman both contributed $500 to start the BRS co. Knight was responsible for the accounting and the delivery of shoes at local track meets. Bowerman focused on the foot wear design. That year they sold 1,300 pairs of tiger shoes and gained $8,000 in revenues. By 1965, a former track rival of Knights became his first employee, Jeff Johnson. The next year Johnson opened the company?s first retail outlet. At the end of the sixties, BRS had twenty employees and several retail outlets and approached $300,000 in revenues.

As BRS entered into the seventies, the company was introduced to Nissho Iwai, a trading company, to subcontract BRS their own shoe line. The Cortez (designed by Bowerman) and the Swoosh (designed by student Carolyn Davidson) became Tiger and BRS largest selling models. Tiger and BRS broke up in 1972, and BRS launched the ?Nike? brand at the U.S. Olympic Trials. That same year Canada became BRS? first foreign market. Steve Prefontaine was the first major track athlete to wear Nike shoes in 1973. As the next year approached Bowerman introduced his new ?Waffle Trainer? training shoe, which was a famous outsole design that became America?s bets-selling training shoe. Nike expanded to Australia, and opened its first American factory at Exeter, New Hampshire. By 1974, Nike had 250 employees and $4.8 million in revenues. The seventies, approaching its end, Nike established the first U.S. track-and-field training club for elite athletes, known as Athletics West. By 1977 Nike was selling shoes in Asia and subcontracting factories in Taiwan and Korea. Nike added South America and Europe to its list of sellers in 1978, with nearly 50 percent of the U.S.

Barker 4

market revenues, Nike introduced its apparel line by 1979. At the end of that decade

Nike offered 2 million shares of common stock to the public.

By 1980, Nike Sport research Lab opened in Exeter, N.H., Nike now had 2,700 employees and revenues topped $269 million. No more than a year later Nissho Iwai and Nike form ?Nike-Japan.? By 1982 Nike was undergoing massive growth. The apparel line soared to 200 styles bringing Nike in $70 million. Nike now employed 3,000 people and revenues of $457.7 million. When the mid-eighties hit, Nike was sponsoring 58 athletes that took home 65 medals. Revenues had reached $919.8 million by 1985, which is a $462.1 million increase in two years. The success did not end hear. Michael Jordan, a rookie at the time, endorsed a line with ?Nike,? by the end of 1986 revenues had reached $1.07 billion. However, by 1987 Nike revenues had dropped to &877 million, but Nike-Air shoes re-established ?Nike? as the technological leader in the industry. The slump did not last long. By the end of that decade Nike introduced its ?Just Do It? campaign along with its ?Air Jordan? shoe line Nike?s Net income reached a high of $167 million.

At the beginning of the nineties, the burgeoning international market helped Nike surpass $2 billion in consolidated revenue. Their employees numbered at 5,300 worldwide. The ?Nike World? campus opened in Beaveron, Oregon, Its seven buildings named after athletes, and the first ?Nike Town? opened in Portland, Oregon. By the entrance of 1991, Nike was the world?s first sport company to surpass $3 billion in total revenues, and international revenues increase by 80 percent, topping $860 million. The next year international revenues increased 32 percent to more than $1 billion for the first,

Barker 5

making up 33 percent of total Nike revenues. By the end of 1992, through an agreement through Nike and the U.S. Track and Field, every U. S track competitor wore Nike apparel. The ?Nike Environmental Action? team was formed by 1993 and revenues reached $3.9 billion in the company?s sixth consecutive year. 1994 was a year full of good fortune for Nike. It launched Participate in the Lives of America?s Youth (P.L.A.Y.), a multi-million dollar initiative addressing the need for recreation for kids. P.L.A.Y. included ?Reuse-A-Shoe,? a program that diverts more than 1 million shoes from landfills, grinds them up, and reconstitutes them into new court surfaces. Nike sponsored 10 members of the World Cup winning Brazilian team, as well as runners ?up Italy, the U.S. National Men?s and Women?s Teams and the Chinese National Team. In Australia, Shane Warne became the first cricket superstar to sign with Nike. In Europe, Nike centralized distribution at the $138 million Laakdal Customer Service Center. In 1995, Nike broke industry records again, reporting $4.8 billion in revenues. ?Nike Town New York? opened in 1996, drafting off the success of the 1994 purchase of Canstar Sports Inc. (renamed Bauer). Nike?s Equipment Division produced hockey skates, in-line skates, protective gear, sport balls, eyewear and watches. The high-performance apparel led another banner year, accounting for nearly 31 percent of the $6.5 billion in revenues. ?Nike Asia? took off, pushing revenues from $300 million in ?96 to $800 million in ?97. Between 1997 up to the present Nike has had two major Customer Service Centers to open outside Seoul, Korea and Tokyo, Japan. China became both a

Barker 6

source country and a vital market for Nike. The expansion of the ?World Campus? continued with plans to house 7,100 of its 16,000 employees. Industry analyst predicted that Nike revenues would reach more than $9 billion in the beginning of the 21st century.

Nike

Management Culture

Nike has more than 500 contract factories around the world in about 45 countries. The Nike market has been broken into four regions: USA, Asia Pacific, Americas, and Europe. Three of the four regions were down in revenues with the exception of Europe. Revenues decreased for the first time since 1994. Below is the four regions of Nike, focusing on each regions overall performance and contributions to the company as a whole.

USA

Nike and its retail partners finished fiscal 1998 with excess footwear inventory, which impacted the ability to sell in new footwear in the first half of fiscal 1999, which led to a double-digit sales decline. Some cool new shoes and a more positive retail environment helped to get U.S. footwear back on the beam by the fiscal year-end. Since the beginning of 2000, future orders for U.S. footwear has been up three percent. The apparel line, which explodes from a $424 million in fiscal 1995 to $1.56 billion in 1998, saw a decline for the firs time since 1994. The growth with in that three-year period put Nike at the forefront of the U.S. athletic apparel market: but at the same time it severely

Barker 7

taxed the company?s organizational resources. Throughout 1999 the apparel market was negatively affected by the strong demand for a number of more fashioned-oriented brands. USA is currently realigning their organization, so that the company will be more in sync with how consumers buy athletic apparel, so that the coming year will be more challenging.

Asia Pacific

Asia Pacific suffered a dramatic fall in 1998 so 1999 was looking bad for this region. The economic crisis in Asia weighed heavily on consumers as wells as inventory especially in Japan. The 2000 Olympics in Sidney and the 2002 World Cup in Japan and Korea will be held in this region, and there is a great opportunity for these events to raise regional consumer interest in sport. The Nike Company decided to consolidate the Asia Pacific management team to their world headquarters, which would take a chunk out of the regional structure. The cost was reduced to $150 million in the region but retained an organizational excellence that will enable them to grow in the years to come.

Americas

For the first time since the early ?90s, The Americas region showed a decline in revenues, half of that decrease came in Canada. In addition, the wobbly economic environment in Latin America hampered growth, particularly in Brazil where the independent distributor was forced into bankruptcy. Nike accelerated their plans to create a wholly owned subsidiary in Brazil. Plans were developed to introduce locally sourced, lower-priced footwear into key Latin America markets. Nike is also working on energizing the brand in Canada.

Barker 8

Europe

The results in Europe over the past several years have been satisfying for Nuke. Compounded annual revenues has grown 23 percent in the past four years, which indicates how much growth potential remains in the core business. The growth in Europe is due mainly to its sales in apparel. For 1999 this region cracked the $1 billion dollar mark in apparel, which is larger than Europe?s total revenue four years ago. With revenues topping the $2.2 billion mark, it is more challenging than ever to grow the Nike business there. The size provides opportunity for leverage through integrated pan-European campaigns, inspiring consumers at new Niketowns in London and Berlin, more efficient use of the Laakdal warehouse, or using the euro to move towards price harmonization throughout the region. On the consumer front, the challenge is to keep their brands fresh and relevant to young consumers. Europe intends to continue their ?City Attack? campaigns with focused advertising in key European markets.

Major Products

If one were to take a look around college campuses, shopping malls, or any group in the general population, one would see the affect that Nike has on society. Everyone from toddlers to a senior citizen has owned or at least worn a Nike product. Nike began with just running shoes however over the years they have introduced numerous of selling merchandise. I can remember when the ?Just Do It? campaign was introduced it appeared as though everyone had on a t-shirt baring the words ?Just Do It.? The most prominent product of Nike would be the shoes. As we look advertisements for any type

Barker 9

sport, whether it is basketball or golf, there will definitely be an athlete wearing a Nike logo. Nike as made a lot of athletes famous. They have created shoes and clothes for athletes like Michael Jordan (basketball), John McEnroe (tennis), Alberto Salazar (track), Joan Benoit (women?s marathon runner), Nolan Ryan (baseball), Tiger Woods (golf), and many more including hockey, softball, and soccer. In addition to clothing Nike also represents a variety of other products like hockey skates, in-line skates, protective gear, sports balls, eyewear and watches.

Competition in the Market and Strategy

Nike is one of the leading company?s among athletics. However, there are a few other company?s Nike may have to worry about: Reebok, Adidas, Filas, New Balance and many more. Some of these company?s have endorsed athletes as well as Nike as but Nike seems to remain on top.

The main strategy for Nike is growth, growth that is profitable and substantial. Nike has put a lot of effort in establishing a line of shoes and apparel that will accommodate the athlete. The Nike Alpha Project is an attempt to accomplish this successful line, with its focus on design excellence. This project symbolizes Nikes commitment to create products that perform better than they did before. Their designers work with athletes to gain insight on their performance needs. The Nike Alpha Project, encompasses the top of the line footwear, equipment, and apparel protecting the athlete, and enhancing performance from head to toe.

Barker10

Financial Performance

In the introduction, I tried to provide you with some background into Nikes revenues each year. By the end of the FY?99 the shareholders? equity had reached $3334.6 million with a market capitalization of $17,202.2 million. The financial ratios were good for the year with a 13.7% return of equity, 8.5% on the return of assets, and the earnings ratio (diluted) was 38.8 %.

Conclusion

Nike?s mission for corporate responsibility is to lead in corporate citizenship through programs that reflect caring the world family of Nike, the teammates, the consumers and those who provide services to Nike. Nike is the number one leader in sportswear. Nike designs, develops and markets footwear, apparel, equipment and accessory products. The products include running, basketball, children?s, cross training and women?s shoes. The company also produces and markets shoes designed for outdoor activities like tennis, golf, soccer, baseball, football, bicycling, volleyball, wrestling, cheerleading, aquatic activities and other recreational uses. Nike has achieved its excellence through taking chances. Those of us that like the quality of Nike products and the diversity in styles can appreciate the hard work of Bill Bowerman and Phil Knight over the past years for bringing us a company that appreciates the gift of recreation and sports.

Barker11

Bibliography

?Our Chronology.? Nikebiz. @Yahoo. 6 March 2000.1-4.

?Year In Review.? Nikebiz. @ Yahoo. 20 January 2000. 1-4.

?Financial History.? Nikebiz. @ Yahoo. 6 April 2000. 1-2.

?Corporate Responsibility.? Nikebiz. @ Yahoo 6 March 2000. 1-4.

Barker 1

Table of Contents

Introduction 2-6

Nike Company History: Beginning to Present

Nike6

Management Culture6-8

Major Products8

Competition in the Market and Strategy9

Financial Performance10

Conclusion10

Bibliography11

Inside Nike

By

Brian O. Barker

CIS 206 Micro Computers

Ms. Chan

Aug. 2, 2000

?Our Chronology.? Nikebiz. @Yahoo. 6 March 2000.1-4.

?Year In Review.? Nikebiz. @ Yahoo. 20 January 2000. 1-4.

?Financial History.? Nikebiz. @ Yahoo. 6 April 2000. 1-2.

?Corporate Responsibility.? Nikebiz. @ Yahoo 6 March 2000. 1-4.