UNIVERSITY OF TEXAS AT TYLER
College of Business and Technology
Nike: Can They Stay On Top
Meredith Houston • Lindsay Huff • Sarah Van Cleef • Hollie Youngblood
Sally, a public relations executive at Nike, Inc., sits in a conference room at the company headquarters in
Oregon with other senior executive team members discussing Nike’s brand image and sustainability. Nike’s
five-year strategic plan regarding branding and growth was the hot topic for the afternoon. While becoming
a global company had allowed Nike to grow and profit, Sally knew that maintaining their reputation as the
world’s leading supplier of athletic shoes and apparel would require constant attention. The executive team
knew that it was critical for Nike to have positive press coverage so that their strong company image stayed
intact. Nike’s brand and image were some of its strongest resources that had to be protected.
As she sips her coffee, Sally is hopeful that the other executives remember how damaging the negative cov-
erage of Tiger Woods and Michael Vick could have been to Nike if their brand image had not already been so
strong at the time. The flack that the company had received regarding their labor practices in other countries
was another factor that Sally felt the executives should keep in mind as they continued planning how to main-
tain and boost their brand.
Sally felt content in the unanimous decision the executive group had made the to give $1 million to relief
efforts in Japan plus $250,000 of footwear apparel to disaster victims1. She knew that this was a strategic busi-
ness decision for Nike, since they do business in and with Japan and this would boost their image while also
helping a country in need. Sally also knew that this decision would keep Nike a step ahead of their competi-
tors in terms of social responsibility. Maintaining an edge over the fierce competition in the athletic shoe and
apparel industry was vital.
The executive team breaks for lunch with plans to continue the meeting later that afternoon. Sally knows
that there will be much discussion about how to handle competition, brand placement, and labor practice is-
sues and how these items will affect Nike. How critical is Nike’s brand and image to the sustainability of their
competitive advantage and their ability to remain on top of their industry?
Nike: Can They Stay On Top
Nike’s company history can be traced back to 1964 when the first order for Tiger running shoes was placed by
partners Bill Bowerman and Phillip Knight. Bowerman was a successful track and field coach at the University
of Oregon; while Knight was a runner for Bowerman’s program in the late 1950s. In the 1950s, Germany was
known as the primary athletic shoe manufacturing country, but Knight believed that quality shoes could be
made in Japan and shipped to the United States to compete with the German products. Knight took a chance
and called the Onitsuka Co., a Japanese shoe company, and asked to sell their Tiger brand shoes in the U.S.2
Both Knight and Bowerman were visionaries when it came to running shoes. They decided to join forces
when they discovered that they shared a similar desire to create an innovative and quality shoe. In 1964, they
teamed up and formed Blue Ribbon Sports where Knight sold Tiger shoes out of the back of a truck and Bow-
erman tore apart Tiger shoes to see how he could make them better for runners. This collaboration laid the
foundation for what would eventually become Nike.
The name Nike was established in 1971. In 1972, Bowerman and Knight chose to stop distributing Tiger
shoes so that they could manufacture and sell their own brand of athletic shoes. Blue Ribbon Sports debuted
the new Nike line of footwear, called the Moon Shoe, in 1972. The shoes featured a new innovation that Bow-
erman drew from his wife’s waffle iron – an outsole that had waffle-type nubs for traction but were lighter than
traditional training shoes.2 This marked a pivotal moment for Nike and gave the business a “running start” in
the athletic shoe industry. New designs and innovation allowed for growth and prosperity for Nike. Important
dates and milestones for Nike can be found in Exhibit C of the Appendix3. Particularly notable events for Nike
include: adopting the “Just Do It” ad in 1988, starting an endorsement deal with Tiger Woods in 1996, and
international sales exceeding sales in the United States for the first time in 2003.
Nike’s history is robust and impressive. Today, Nike products are sold in 170 countries, they employ over
30,000 people worldwide, and they offer thousands of products to millions of consumers4. They design and sell
shoes and apparel for a variety of sports, including baseball, cheerleading, golf, soccer, volleyball, hiking, ten-
nis, and football. From two men’s desire to simply make a better running shoe nearly 60 years ago, to becoming
today’s world leader in athletic shoe sales, Nike has made a name for themselves and obtained a reputation that
they plan to defend in order to maintain their competitive advantage.
The demand for athletic shoes gained momentum after World War I when the American society turned to
sports and athletics to exhibit patriotism as well as moral and physical strength5. Since then, the shoe industry
has become saturated and is in the mature cycle, yet competition is still fierce. Barriers to entry are relatively
low because newcomers with a fresh product idea can take market share from even established companies, like
Nike. Advertising dollars are important in this industry since consumers can be swayed by the latest fashions
The shoe industry is segmented into three broad product categories: athletic shoes, casual and dress shoes,
and fad designs that boom and bust (ie. Crocs, platforms, etc). The athletic shoes segment is highly concen-
trated and the larger players in the industry with the most marketing dollars to spend dominate the industry.
Leaders like Nike, Adidas (who acquired Reebok in 2005), and New Balance compete for contracts with profes-
sional athletes to gain recognition within the sports community, both professional and amateur6. Focusing on
comfort, performance, and aesthetic appeal are key ingredients to success for athletic shoe producers.
Labor and materials create most of the cost in the shoe and apparel industry. There are many manual steps
involved in the assembly process of shoes and even technology cannot completely close the gap in labor costs
between the United States and the developing countries. For this reason, companies seek to use subcontractors
and move their operations to where their products can be obtained and produced at lower costs. Nike’s pro-
duction takes place primarily in foreign countries like China, Vietnam, and Indonesia. Nike is able to obtain
a competitive edge and cut costs by not having domestic factories. Their practice of employing third-world
country labor has received criticism7, which will be explored later.
THE NIKE SWOOSH
Global Brand Recognition and Image
Nike currently operates in more than 160 countries across six continents where they work to fulfill their mis-
sion of bringing “inspiration and innovation to every athlete”. Maintaining a unified company image across
the borders is of the upmost important for Nike’s success and continued growth. Over time, the Swoosh logo
has become synonymous with Nike. It is one of the most recognized symbols in the world and the brand it
represents is Nike’s strongest asset. The “Swoosh” design was created in 1971 by Carolyn Davidson, a graphic
design student at Portland State University, and she charged $35 for her work. The Swoosh is a prime example
of how a simple intangible symbol can create an exuberant amount of value if placed properly in the market.
The image it portrays upon Nike has been key to the company’s level of recognition and success.
Nike’s “Just Do It” slogan, which first debuted in a Nike advertisement on July 1, 1988, is another tool that
allowed Nike to gain global brand recognition and expand market share. The ad’s success can be illustrated by
the estimate that 80 percent of the sneakers sold in the United States are never used for the activities for which
they were primarily designed. The “Just Do It” campaign captured “the corporate philosophy of grit, determi-
nation, and passion”, and this translated into sales, global awareness, and customer loyalty8. Nike utilized their
logo and advertising campaigns to create value and maintaining this value is fundamental for them to remain
an industry leader.
Celebrity and Professional Endorsements
The Nike brand is endorsed by several well-known professional athletes and Nike uses these relationships as
part of their main advertising plan. When consumers see athletes wear Nike products and perform well, they
are inclined to purchase the products themselves in hopes of achieving enhanced athletic ability and success.
Nike’s professional endorsements increase demand for Nike shoes and apparel since amateur athletes attribute
part of the athletes’ success to the shoes that got them across the finish line. Many of Nike’s professional athletes
are, or were, the most successful participants in their particular professional sport. Some of the well known
endorsers include Michael Jordan, Tiger Woods, Serena Williams, Lance Armstrong, and Michael Vick.
Michael Jordan Brings an Air to Nike. Michael Jordan and Nike are as closely linked as an athlete and prod-
uct could possibly be. In 1984, Nike signed Jordan to a $2.5 million deal for 5 years. The introduction of the Air
Jordan in 1985 changed the athletic shoe industry forever. Before the Air Jordan I, most basketball shoes were
white, but the daring black and red design of the Jordan defied convention. The NBA banned the shoe from
the league in response, but Jordan wore them anyway, racking up serious fines of up to $5000 a game. Nike, of
Nike: Can They Stay On Top
course, was more than happy to pay these fines to keep the shoes on Jordan’s feet and in the public eye. All this
controversy and Jordan’s spectacular numbers that year served to put the Air Jordan line on the road to becom-
ing a household name9. Interestingly, Michael Jordan is one of the few athletes who has his own Nike Product
line. His contribution to Nike has been so large that his Jordan Brand remains one of top divisions within Nike
and has translated into over a billion in sales10. Being associated with Michael Jordan was a strategic move for
Nike that boosted their numbers and their brand.
Tiger’s Boom & Bust. Tiger Woods is another athlete with his own Nike division. Over his lifetime, it has
been said that Tiger’s Nike golf division will generate more revenue for Nike than the Jordan Brand, because
it has a larger product line that spans from shoes, apparel, and clubs11. In 2000, Nike and Woods agreed to
a multi-year deal. This deal extended an earlier multi-million dollar deal that originated in 1996, which was
the year Woods went pro. Nike purchased almost every aspect of the Tiger Woods brand, and portion of the
revenue earned from all of Wood’s marketing appearances belongs to Nike. This meant that even when Woods
did a marketing campaign for another product, such as American Express, he would be wearing Nike products,
with the Swoosh logo clearly visible12.
Woods seemed to be the perfect choice for an endorsement; he had the appeal of the good looking, clean-
cut, articulate, scandal-free golf pro. That is until he was embroiled in a huge domestic scandal in 2009. His
image was undeniably tarnished and Tiger Woods, the brand, took a hit. Many speculated that Nike would
drop Woods from their list of endorsers; however, Nike chose to stand behind the golfer. “I think he’s been
really great,” Nike Chairman and co-founder Phil Knight once said in an interview. “When his career is over,
you’ll look back on these indiscretions as a minor blip, but the media is making a big deal out of it right now13.”
Knight also said the scandal surrounding Tiger Woods is “part of the game” in signing endorsement deals with
professional athletes. From these quotes, it appears that Nike executives felt that Tiger’s personal indiscretions
would not have enough of a negative impact on the Nike brand to rid themselves of Tiger.
Michael Vick in the Doghouse. Michael Vick had a Nike endorsement contract when he played for the
Atlanta Falcons. In 2007, it was discovered that he served as the ringleader of Bad Newz Kennels, a Virginia
compound where 70 dogs, mostly pit bull terriers showing signs of abuse, were seized. Vick had funded and
organized dogfighting games where attendees abused drugs and bet on the animals, resulting in many animal
deaths and injuries14. Vick pled guilty to charges brought against him and served 20 months in prison. Nike
chose to drop Vick in response to public outrage and released the statement that “Nike is concerned by the
serious and highly disturbing allegations made against Michael Vick, and we consider any cruelty to animals
inhumane and abhorrent15.” However, in March 2011 it was confirmed that Vick had once again signed an en-
dorsement deal with the company when he resumed playing professional football. This suggests that perhaps
Nike is primarily concerned with an athlete’s ability to generate “profits, ratings and championships16,” rather
than their moral compass.
When asked the question, “Does a company like Nike or another company run a risk in building brands
around athletes?” Phil Knight responded:
“There’s always a risk. One of the things we always try to do when we have a big endorsement is check out
the character and the pattern of the individual. But you’re not going to get it right all the time, and if you’re
going to be in the business you have to recognize that17.”
Positive endorsement deals with professional athletes, although expensive, can allow for substantial increas-
es in revenue, but a negative deal can have the opposite effect just as quickly. It’s somewhat of a gamble since
a person’s personal life usually coincides with their professional endeavors; therefore Nike’s endorsement deci-
sions are made carefully to protect Nike’s image and their bottom line.
In 2006, Nike paired with Apple to come up with Nike+iPod product. The product monitors a runner’s per-
formance through a separate radio device in the Nike shoe which links to the runner’s iPod. The Nike+iPod
Sport Kit allows runners to listen to songs and to record, store, and share information (such as speed, distance
covered, and calories burned) with others about their exercise sessions. The system also “talks” to runners in
real time, providing information as they jog along. A runner using a Nike+iPod Sport Kit explained, “It’s got
a good beat, I can run to it, and I can compile and share important data about my exercise regimen, too18.”
The strategic business alliance with Apple provided another way for Nike to reach customers and satisfy their
athletic needs more completely.
Nike’s sponsorship of the Olympics has also been a strategy that has helped advertise and promote the brand
worldwide. Nike signed-on to be a sponsor for the U.S. Olympic Committee, making them a participating
sponsor/advertiser at the 2006 Winter Olympics in Torino, Italy, and in the 2008 Beijing Summer Olympics.
Under the deal, Nike was allowed to outfit all U.S. medal winners. It also allowed them to hold the official
rights to apparel, headwear, footwear, and bags with the U.S. Olympic logo19. This alliance allowed Nike to
place their brand on the best athletes in the world and further enhance their reputation.
Nike Believes in Teams. Nike not only endorses individual professional athletes; they also sponsor profes-
sional teams. Nike recently acquired the National Football League apparel license and, starting in 2012, will
make all apparel and uniforms for the NFL teams. They outbid Reebok, who had held the license since 2001,
for the spot, putting Nike in another prime position within their market20. Nike is also the sponsor of sev-
eral professional and collegiate sports teams that compete in countries around the globe. Well known teams
include the Boston Red Sox, Atlanta Braves, LSU Tigers, and the Alabama Crimson Tide. Because of Nike’s
support of these team sports, amateur and little league teams have purchased Nike equipment, uniforms, and
products so that their young athletes can “be like Mike”.
Comparative Data with Competitors
The athletic shoe industry is saturated and there are a few key players that dominate the industry; Nike is
currently at the helm with no plans to relinquish. Their unique designs and the quality and athleticism that the
Nike brand exudes has allowed them to be financially superior to their current competitors. When comparing
Nike’s financial statements to those of some of their competitors, as can be seen in Exhibit D, it is clear that
Nike dominated in 2010 by earning almost double the revenue of Adidas (who acquired Reebok in 2005) and
approximately ten times the revenue of Puma, one of their smaller competitors. Nike’s cost of sales by percent-
age of revenue was 46%, in comparison to Adidas at 47% and Puma at 49%21. Nike’s ability to keep their costs
lower than their competitors has been beneficial for the company. They have been able to remain financially
stable so that their company image is stable as well.
How Nike Stays Lean. Nike builds their financial model on expanding profit margins and increasing capital
productivity. Expanding profit margin starts with gross margins and Nike has made every effort to reduce
product costs by limiting the number of unnecessary styles, eliminating waste, and streamlining their sourc-
Nike: Can They Stay On Top
ing base22. They manage their supply chain carefully to reduce closeouts and improve profitability. Nike has
put much emphasis on managing their SG&A expenses and this has allowed them to achieve industry-leading
growth in revenue, market share, and profitability consistently. Nike tightly manages working capital by keep-
ing inventories lean and they proactively manage accounts receivable to deliver a solid return on capital. These
tactics have allowed Nike to be strong internally so that their brand is secure and their public reputation as a
leader in the athletic shoe and apparel industry is maintained.
Designs and Innovation
Shoes are a necessity; designer or specialty shoes are a commodity. Nike acknowledges this and takes the
different markets into account when designing shoes by creating brands capable of reaching across “multiple
sports, lifestyle categories, and price points23”. A large part of Nike’s competitive strategy focuses on innova-
tion; it’s what sets the Nike brand apart.
Designs with Shox Value.
Nike’s traditional trademark designs include the well-known Nike Shox, Nike Air, and Nike Free athletic
shoes. In addition, in 1999 Nike launched a service called NIKEiD that allowed customers to personalize
their own shoes and pick their own materials, colors, fits, laces, lining, and stitching designs (see Exhibit E).
It allowed the customer to become the designer and provided customers with exactly what they wanted in an
athletic shoe24. Other Nike innovations like the “Nike Flywire support system, Lunarlite foam cushioning, Hy-
perdunk basketball shoe, new generations of Free footwear, and the new Trainer 1 shoe” continue to set Nike’s
brand image apart in the athletic shoe industry25.
It Starts in the Lab. “Nike is a growth company.” They consider innovation to be a priority and in order to
determine the best ways to make the superior shoe, they go directly to the runners and athletes who will be
wearing them. This insight is put to use at the Nike Sport Research Lab, which is located at the Nike World
Headquarters campus in Oregon. They perform research and development in biomechanics, exercise physiol-
ogy, engineering, and industrial design. Former athletes, coaches, podiatrists, and other experts work in the
Lab to research and review design possibilities24. Different designs, materials, and fits equate to a lot of testing
and trials. The Research Lab enables Nike to remain innovative and the facility is an asset in maintaining their
product and brand quality.
Over the past decade, Nike has acquired several subsidiary brands to strengthen their ability to reach dif-
ferent markets and to maximize their reach within the apparel industry. In addition to their trademark Nike
and Jordan brands, Nike’s wholly-owned subsidiaries include Cole Haan, Converse, Hurley International, Nike
Golf, and Umbro (see Exhibit F)25.
Cole Haan, which includes luxury shoes, handbags, accessories, and coats, draws in customers that are in
need of a professional look. Cole Haan is seen across the world in business and corporate settings because
of its “businesslike casual” designs that are both comfortable and appropriate for the work place. They have
over 180 store locations throughout the United States, Canada, the Middle East, and Asia. Converse, known
as America’s Original Sports Company, began as athletic footwear, but has transformed into everyday shoes,
apparel, and accessories. Converse attracts people of all ages and styles that are looking for comfort and the
ability to choose from many colors and designs. There are 160 countries that have Converse retailers and over
40 stores within the United States. Hurley targets a more youthful market that enjoys action sports and offers
footwear, apparel, and accessories. Hurley has developed street wear that is seen daily, as well as throughout
major sports such as BMX riding, Professional Skateboarding, and Professional Surfing. Lastly, Umbro is the
leading U.K.-based football and soccer brand that targets those who are interested in these sports throughout
the world.25 Each of these brands that Nike has strategically acquired further enhances the Nike name and has
allowed Nike to branch into new segments of their industry.
Nike is committed to optimizing stockholder returns and has worked to boost revenue through the acquisi-
tions of their affiliate companies. By the end of 2010, these affiliate brands contributed $2.5 billion of the Nike’s
$19.0 billion in total revenue26.
In 1984, the last Nike factory in the United States was shut down. The manufacturing was moved to countries
like Indonesia, China, Vietnam, Pakistan, and Thailand. Nike, like its competitors, does not manufacture its
own products. Rather, it employs subcontractors in the various countries to manufacture its shoes. Over the
years, there have been countless stories and exposes making accusations that Nike’s products are manufactured
in “sweatshops” where workers, including children, have been subjected to hazardous working conditions and
paid below the subsistence level. Shows like CBS’s 48 Hours brought much attention to the allegations in 1996.
Nike’s reaction to the critics has been that the factory workers are employed by the subcontractors in the
various countries; the factories are not owned by Nike. Working to protect the image of Nike worldwide, Nike’s
management implemented numerous initiatives. The first of the initiatives was to establish the Nike Code of
Conduct for contract factories. The following are the main elements of the Code of Conduct and the full Code
of Conduct27 can be found in Exhibit G in the appendix:
• Employment is voluntary
• Employees are age 16 or older
• Contractor does not discriminate
• Freedom of Association and Collective Bargaining are Respected
• Compensation is timely paid
• Harassment and abuse are not tolerated
• Working hours are not excessive
• Regular employment is provided
• The workplace is healthy and safe
• Environmental impact is minimized
• The code is fully implemented
Factories would be audited by external auditors to verify compliance with the Code of Conduct.
Nike Management continued in its efforts to address the working conditions in the contract factories. They
used an approach that did not just “focus on monitoring compliance with legal and Nike requirements.” It
required “action if shortcomings are found28. Monitoring is conducted for both management and labor is-
sues, and also for environmental, safety, and health issues. Additionally, visits are conducted to discuss any
remediation that might be needed. On average, Nike “visits factories in their supply chain 1.77 times per year,
though the exact number of visits per individual factory depends on a factory’s rating, its strategic importance,
Nike: Can They Stay On Top
and its performance history28.” Subcontracted factories are graded based on the Nike Monitoring Letter Grade
Assessment Criteria. The following are the grades contract factories can receive; a full description of the Nike
Monitoring Letter Grade Assessment Criteria can be found in Exhibit H in the appendix:
A. Fully Compliant
B. Mostly Compliant
C. Noncompliant – serious system failures, etc.
D. Noncompliant – disregard for Nike codes and standards, unwillingness to change, etc.
E. Not enough current information to measure compliance performance.
If a factory receives a C or a D and does not make progress, even after time is spent on a remediation plan,
then the business relationship is reviewed.
In addition to the Code of Conduct and the Assessment Criteria, Nike has gone even further to solidify its
stance on sound working conditions and ethical treatment of factory workers by instituting the HRM or Hu-
man Resource Management training. This is training that is implemented at the contract factories to strength-
en their existing systems. The Nike HRM Training Program can be found in Exhibit I in the appendix. Ac-
cording to Nike,
“the real measure of success will be the HRM training’s ability to drive systemic and lasting improvement
in working conditions. Nike is working closely with contract factories in their implementation of action plans
and ongoing efforts to monitor workers’ experience29.”
Nike’s implementation of these tools to combat the negative publicity and allegations that they have received
in regard to their subtracted labor shows that the company is proactive in ensuring that their brand remains
powerful. Nike’s ability to work with subcontractors around the world while remaining in control of their com-
pany in Oregon depends almost entirely on their ability to maintain their brand and reputation.
As stated earlier with regard to competition, Nike has built their financial model on expanding profit mar-
gins and increasing capital productivity. One way to achieve expanded profit margins and increased capital
productivity is to reduce cost. Labor is a critical component of lean manufacturing. According to Nike, “We
are working with contract manufacturers to apply lean manufacturing, an approach that delivers the highest-
quality product while eliminating all types of waste, including lost time and material30.”
Worker empowerment is a key to Nike’s method of lean manufacturing. This worker empowerment “gives
factory workers the skills and abilities needed to manage production and immediately address issues as they
arise, such as quality or process improvements30.” Nike’s advocacy of lean manufacturing is part of their plan to
build up their capacity for self-management. The company believes this will “ultimately be a more successful
and sustainable approach to stimulating systemic change and improving the lives of workers.”
Nike incorporates its HRM (Human Resource Management) training as a key component to implementing
its lean manufacturing model. This is an innovative approach, as it addresses both the needs of the factory
workers in the contracted factories, as well as the business conducted therein. The HRM Program Evolution
(Exhibit J, in the Appendix) describes the methodology used by Nike to ensure buy-in by the contracted fac-
tories and that all the needs of the stakeholders were met. The tasks associated with the evolution involved:
strategize, develop, finalize, integrate learning, and finally implement.
Nike’s comments on the HRM/lean manufacturing approach is that,
“by working with contract manufacturing management, we aim to create a sustainable framework for
improving working conditions by identifying and addressing the root cause of issues as they arise. We also
address manufacturing management buy in, cultivating a more skilled and competent work force and achiev-
ing a consistent approach to human resource management across all factories30.”
Human resource management is a key tool to the success of a lean manufacturing system. By putting the
control of the human resource management in the hands of the contract factories, the ability for each of the fac-
tories to be successful with the implementation of lean manufacturing is increased. Nike has created a system
whereby performance of the contract factories can be monitored and evaluated. If factories cannot or do not
show improvement, then Nike has commented that they “will have to reevaluate our relationships to determine
feasibility of continuing to work with them”. Maintaining a lean manufacturing system is paramount to the
financial model that Nike has in place of expanding profit margins and increasing capital productivity.
NIKE’S 5 YEAR PLAN
Back at Nike’s headquarters, the executive team reenters the conference room after their lunch break. Sally
strongly believes that Nike’s brand and image is the main determinant of the company’s ability to sustain their
competitive advantage. Scott Bedbury, an advertising executive for Nike, made the following statement that
summed up the team’s goal for the company:
“A great brand taps into emotions. Emotions drive most, if not all, of our decisions. A brand reaches out
with a powerful connecting experience. It’s an emotional connecting point that transcends the product.”
Nike’s brand and image is their greatest asset. Their ability to protect these assets will determine if Nike can
remain on top in their industry. Sally and the executive team plans to do all that they could to make sure that
Nike: Can They Stay On Top
Primary Focus/Conflict: How critical is Nike’s brand and image to the sustainability of their competitive
advantage and their ability to remain on top of their industry?
1. What differentiates Nike from competitors in the industry and how did they use their resources to be-
come successful globally?
2. How have Nike’s labor practices affected their profitability and their reputation? What are the pros and
cons for the company’s labor choices?
3. How did Nike’s brand placement decisions and community involvement affect their company image?
4. How did Nike expand the breadth of their product lines? Were these strategic decisions?
Tools, Theoretical Approaches and Analytical Perspectives that
Readers Can Utilize:
1. Porter’s Five Forces Model. 2. Value Chain Analysis
3. S.W.O.T Analysis 4. Annual Reports
5. Sales comparison charts showing 6. Customer Surveys
Nike versus competitors 8. Evaluate Nike’s competitive and functional strategies
7. Analysis of Nike’s resources
9. Industry Life Cycle Analysis
1973: American record holder Steve Prefontaine becomes the first major track athlete to wear Nike Brand
shoes and converted many of his competitors to the Nike brand.
1978: Blue Ribbon Sports officially changes its name to NIKE, Inc, after the Greek goddess of victory. Also,
the first Nike children’s shoes are introduced.
1979: Nike releases the first running shoe with Nike Air, the technologically advanced patented air-sole
1980: The first athlete to medal while wearing Nike shoes is British runner, Steve Ovett.
1985: The first Air Jordan basketball shoes debut at retail stores, endorsed by Chicago Bulls rookie Michael
1986: Revenues top the landmark billion dollar mark.
1988: Nike adopts the “Just Do It” ad.
1996: Tiger Woods signs a contract to endorse Nike. At the same time, Nike develops a line of golf apparel
in his name.
1999: Nike co-founder Bill Bowerman steps down from Nike’s board of directors and passes away on De-
2000: After 16 years of research and development, Nike Shox are released.
2002: Nike acquires Hurley International, LLC, a surf, skate, and snowboard apparel brand.
2003: International sales exceed U.S. sales for the first time; Nike acquires Converse Inc. in September.
2008: Nike acquires Umbro Ltd. to expand their global leadership in football apparel.
2009: Nike opens its first retail store where three of their brands, Nike, Hurley, and Converse, can all be
found in one location. Also, the store offers on-the-spot product customization in-house with the help of art-
ists and designers.
Values in Millions Nike Adidas/Reebok Puma
Period End Date 5/31/2010 12/31/2010 12/31/2010
Period Length 12 Months 12 Months 12 Months
Stmt Source 10-K ARS ARS
Stmt Source Data 7/20/2010 3/2/2011 2/15/2011
Revenue 19,014.00 11,990.00 2,706.40
Total Revenue 19,014.00 11,990.00 2,706.40
Cost of Revenue, Total 10,213.60 6,260.00 1,361.60
Gross Profit 8,800.40 5,730.00 1,344.80
Selling/General/ 6,326.40 0 991.1
Research & Development 0 0 0
Depreciation/ 0 260 66
Interest Expense (Income) 0 0 0
Unusual Expense 0 -23 0
Other Operating -12.8 4,599.00 -19.1
Operating Income 2,516.90 894 306.8
Interest Income (Expense), 0 0 0
Gain (Loss) on Sale Assets 0 0 0
Other, Net 0 1 -5.6
Income Before Tax 2,516.90 806 301.5
Nike: Can They Stay On Top
Income Tax-Total 610.2 238 99.3
Income After Tax 1,906.70 568 202.2
Minority Interest 0 -1 0
Equity In Affiliates 0 0 0
U.S. GAAP Adjustment 0 0 0
Net Income Before Extra 1,906.70 567 202.2
Total Extraordinary Items 0 0 0
Net Income 1,906.70 567 202.2
Nike: Can They Stay On Top
Nike: Can They Stay On Top
Nike: Can They Stay On Top
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