FREE ESSAY ON NIKE

NIKE

SHORT CASE SUMMARY
Nike, Inc. (503-671-6453, www.nike.com) is the worlds #1 athletic shoe and apparel
seller. Nike currently employs 20,700 employees, with total sales of $8.78 billion. Nike
and the athletic shoe industry have evolved into one of the most competitive market in
recent years. But, analysts believe that athletic shoe sales will slow down over the next
few years. The slowdown will come with the change in consumer trends. For instance, the
younger market is beginning to buy more casual shoes and work boots. Another reason for
the slowdown is that people are buying more medium priced athletic shoes and not going
for the high price brand name shoes. As a result, this is bringing Nike a lot more
competition to surpass. In order for Nike to remain on top of the athletic shoe industry
they must establish an exceptional global strategy. If Nike penetrates the global market
successfully than this will give the company an overall competitive advantage. 
Nike doesn't only sell athletic shoes, but a wide variety of sporting goods and clothing.
They also design, develop, and market high quality active sports apparel, equipment, and
accessory products. Their huge lines of products are designed for just about every sport
in existence. Their products are made for men, women, and children of all ages. Nike has
20,000 retail accounts throughout the U. S. using independent distributors and also has
contracts with 110 other countries. The company also has agreements with Internet
companies and subsidiaries. Nike, Inc. has many retail outlets around the world,
including their famous outlet NIKETOWN located in major cities. NIKETOWN gives customers
the experience to become more educated on the company's goals and objectives for their
products. The store educates its customer while at same time entertaining them too. This
store gives customers a chance to become more brand loyal to Nike, Inc. 
Over the years Nike has gained an enormous amount of consumer awareness that they have
eliminated the company name from all other products. The swoosh logo is automatically
associated with the company name by just about anyone in the world. The meaning for Nike
has lived up to the company's expectations. Nike means the goddess of victory, which is
exactly what the company has had since its creation. 
HISTORY
A competitive runner, Phil Knight, incorporated Blue Ribbon Sports in Oregon in 1968.
Blue Ribbon Sports was the first to receive the swoosh logo, but changed its name to Nike
in 1978. Nike's research and development department used technological expertise to
produce several different athletic shoes, which changed the whole outlook on the
industry. After being in business for five years Nike, Inc. had a 44% annual growth.
Shortly after Nike didn't pay attention to the sale of aerobic shoes, which hurt them
slightly. International operations were the main focus for Nike, Inc. in the early
1980's. An excess of inventory in 1985 caused Nike to reduce prices and lose
manufacturing contract in the Far East. This pushed Nike from the top spot in the market.
As a result, Nike had to lay off 350 employees in 1986. Nike began their climb back in
1988 with the introduction new advertising strategies and the development of the new
footwear. The main focus was on the customer's wants and needs their purchase of Nike's
athletic shoes. In 1988, Nike bought a subsidiary called Cole Haan based in New
Hampshire. The company Cole Haan cost Nike $64 million, but was worth every cent. The
Cole Haan subsidiary manufactures casual footwear, something Nike was lacking for years.
This purchase helped Nike's casual footwear operations grow 16% within the year. In 1990,
Nike, Inc. purchased Cole Haan Company Accessories, which distributes top quality braces,
belts, and small leather goods. As Nike grew in 1990 they opened their first retail store
NIKETOWN. In 1991, the company purchased Tetra Plastics, which was used for the
development of the air sole shoes. In 1993, they then bought a cap-making company named
Sports Specialties. Then in 1994, Nike introduced a new line of air sandals called Air
Mada. Nike acquired Canstar Sports, Inc. the world largest hockey equipment manufacture
in 1995. Throughout Nike's history their international sales have lagged due to strong
overseas competition. 
COMPETITION 
Nike's major competitor is Reebok, which also designs and develops athletic shoes and
apparel. These two companies compete in the U.S. and internationally. Each company uses
their own type of advertising strategy to reach their target customers. Many of the
advertisements feature athletic stars and commercials that relate to the customers. Nike
and Reebok are major competitors, but also have to worry other national and international
competitors. Nike's other competitors are Callaway Golf, Converse, Deckers Outdoor, FUBU,
Fila, Fortune Brands, Fruit of the Loom, Hi-Tec Sports, Levi Strauss, Nautica, New
Balance, Polo, Puma, Rawlings, Rollerblade, Russell Corp., Sara Lee, Skechers, Spalding,
Stride Rite, Timberland, Tommy Hilfiger, Wolverine, and Adidas. 
In Europe the competition is growing and is a major area for Nike to strike. Nike is
second in sales in Europe, just behind Adidas. International sales for Nike have been
increasing but are losing other opportunities by competitors signing large contracts with
sports figures and teams. These contracts are giving competitors an edge nationally and
internationally. In 1998, 1,200 jobs were cut due to falling sales and the reduction of
costs in Asia.
CHANGES IN THE ATHLETIC SHOE INDUSTRY
The growth of athletic shoe and apparel industry is the direct result from consumer
changes for the better. The baby boomer generation is becoming more health conscious and
living much more active lifestyles. Along with Generation X's interest in living a
healthy life. Also, there is more women playing sports than ever, which means more shoes
to buy. The more sports these kids and young adults play throughout their life the more
accessories and equipment they will need to compete. Nike gives their customers the
feeling of self-confidence and the advantage over their competition. The only problem
Nike has is the aging adults who do not participate in any sports or fitness programs.
Adults aged 25-55 only one in five exercise up to two times a week. Also, the growing
obesity problem that is affecting Americans more and more each year. 
Nike has established many contracts with international countries for manufacturing their
products. Even with changing exchange rates and tariffs Nike feels its still cost
effective to manufacture their shoes internationally. Another reason for these contracts
is the labor costs and benefits, which makes it cheaper to manufacture the products.
There are some problems with the idea of these types of contracts. For example, some
countries are becoming less interested in manufacturing shoes and starting to produce
their own electronics. There may also be problems with labor situations, shipping and
unreliable quota systems. Nike must also consider the many legal restrictions that the
global market may pose. 
INTERNAL FACTORS
Nike's research and development expenses for 1999 were $97.50 million, which only
represented 1.1% of sales. R & D in the athletic industry are based on innovation and
does not cost a company a lot of money on equipment. Nike continues to depend on
developments to modify its products from competitors. The company presently sells roughly
300 models of athletic shoes in 900 styles for 25 different sports. Nike's target market
for their shoes are males and females between 18 and 35 years old. The product are
altered and improved frequently. Nike distributes one new shoe style every single day.
Nike advertises its products in a variance of ways and targets its ads to particular
groups or types of people. The company continues to disburse advertising cash on TV ads
during professional and college sports events, prime-time programs, and late-night TV
programs. Many or most of their ads feature professional sports figures that are role
models for Nike customers. Advertising cost Nike $978.2 million in 1997. Along with
endorsement fees of $100 million for those sports stars everyone loves. 
Nike has been criticized for its social responsibility throughout its lustrous history.
Nike was known to have 6,700 Indonesian employees from Asia working 100-degree factories.
These factories were poorly vented and the workers were forced to inhale toxic fumes
while working. There was also evidence of abuse by Nike a factory manager on Vietnamese
production workers. Nike has developed many programs to show their improving social
responsibility issues. For example, Nike and the Boys and Girls Clubs of America began a
program called Kids Movement. This program teaches young people about fitness awareness.
Nike, Inc. also provides funds for the Children's Television Workshop for literacy TV
programs. The company firmly incorporated the N.E.A.T. (Nike Environmental Action Team)
in 1993. This program was implemented to maintain environmental initiatives by recycling
old shoes and utilizing them to make new shoes.
Nike, Inc. happens to employ mostly health-conscious corporate employees. About 40% of
Nike's employees are under the age of 30. The corporate campus helps apply this type of
culture with the benefits it offers their employees. For instance, the company has wooded
areas, running trails and fitness centers for their active employees. This is a major
part of Nike's corporate culture, which then trickles down to Nike's management styles.
Nike lets manager's keep lines of communication open and lets them determine their own
decision making. The company also offers their employees something called LifeTrek. This
is a benefit and compensation program that gives their employees a sense caring and
trust. 
THE FUTURE
With the increase in competition and limit of growth the U.S. athletic shoe industry,
Nike is still slated to be a major leader in the market. The advertising and innovative
marketing in the industry should still leave it extremely competitive. The only problem
that Nike worries about are customers becoming less brand-loyal and buying cheaper
athletic shoe brands. Nike is trying to make the point that it is worth spending more
money on better quality made shoe, than buying a cheap shoe that will only last a little
while. One major area that brings unlimited opportunities to Nike is the international
market. In the United Sates, there are 4 people for every pair of Nikes, France has 11,
Japan has 50, and China has 11,821. These figures show that the greatest growth for Nike
is overseas.