Nike, Inc. is a major publicly traded sportswear and equipment supplier based in the United States. The company is headquartered in Beaverton, Oregon, which is part of the Portland metropolitan area. It is the world's leading supplier of athletic shoes and apparel and a major manufacturer of sports equipment with revenue in excess of $18.6 billion USD in its fiscal year 2008 (ending May 31, 2008). As of 2008, it employed more than 30,000 people worldwide. Nike and Precision Castparts are the only Fortune 500 companies headquartered in the state of Oregon, according to The Oregonian.
The company was founded on January 25, 1964 as Blue Ribbon Sports byBill Bowerman and Philip Knight, and officially became Nike, Inc. in 1978. The company takes its name from Nike 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. 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.
Origins and history
Nike, originally known as Blue Ribbon Sports, 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, making most sales at track meets out of Knight's automobile.
The company's profits grew quickly, and in 1966, 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 newly designed Swoosh.
The first shoe to carry this design that was sold to the public 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 Nike derived from the Greek goddess of victory. In 1978, BRS, Inc. officially renamed itself to Nike, Inc. Beginning with Ilie Nastase, the first professional athlete to sign with BRS/nike, the sponsorship of athletes became a key marketing tool for the rapidly growing company.
The company's first self-designed product was based on Bowerman's "waffle" design. After the University of Oregon resurfaced the track at Hayward Field, Bowerman began experimenting with different potential outsoles that would grip the new urethane track more effectively. His efforts were rewarded one Sunday morning when he poured liquid urethane into his wife's waffle iron. Bowerman developed and refined the so-called 'waffle' sole which would evolve into the now-iconic Waffle Trainer in 1974.
By 1980, Nike had reached a 50% market share in the United States athletic shoe market, and the company went public in December of that year. 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 1982.
Together, Nike and Wieden+Kennedy have created many indelible print and television ads and the agency continues to be Nike's primary today. It was agency co-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 the campaign has been enshrined in the Smithsonian Institution. San Franciscan Walt Stack was featured in Nike's first "Just Do It" advertisement that debuted on July 1, 1988.
Throughout the 1980s, Nike expanded its product line to include many other sports and regions throughout the world.
Acquisitions
- 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
- In July 2003, Nike paid US$305 million to acquire Converse Inc., makers of the iconic Chuck Taylor All Stars.
- On March 3, 2008, Nike acquired sports apparel supplier Umbro, known as the manufacturers of the England national football team's kits, in a deal said to be worth £285 million (about US$600 million).
- Other subsidiaries previously owned and subsequently sold by Nike include Bauer Hockey and Starter.
Products
Nike sells an assortment of products, including shoes and apparel for sports activities like association football[15], 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 as they supply urban fashion clothing. Nike recently teamed up with Apple Inc. to produce the Nike+ product which monitors a runner's performance via a radio device in the shoe which 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.
In 2004, they launched the SPARQ Training Program/division. It is currently the premier training program in the U.S.
Some of Nike's newest shoes contain Flywire and Lunarlite Foam. These are materials used to reduce the weight of many types of shoes.
In the video game Gran Turismo 4 there is a car by Nike called the NikeOne 2022, designed by Phil Frank.
Headquarters
This distinction, according to The Oregonian, has been a source of contention between the city of Beaverton and Nike since the company purchased 74 acres (0.3 km²) of nearby Beaverton land that soon fronted the Jared Co-operation. When Nike proposed expanding their headquarters in that direction, Beaverton at first wanted them to build housing near the MAX light rail station and criss-cross the property with two public roads, expectations defined by the zoning already in place when Nike bought the land. Beaverton's request was mostly consistent with Metro's transit-oriented development plans for the region. After a year, which included a threat by Nike to move 5,000 jobs out of the state, Beaverton backed down from the requirement for housing, but the lack of accommodation was something that Nike did not forget.
The annexation standoff soon led Beaverton to attempt a forcible annexation. That led to a lawsuit by Nike, and lobbying by the company that ultimately ended in Oregon Senate Bill 887 of 2005. Under that bill's terms, Beaverton is specifically barred from forcibly annexing the land that Nike and Columbia Sportswear occupy in unincorporated Washington County for 35 years, while Electro Scientific Industries and Tektronix get that same protection for 30 years.
The world headquarters is situated on approximately 200 acres (0.81 km2) of land. The first phase of construction was completed in 1990, followed by expansions in 1992, 1999, 2001 and 2008. There are 17 buildings, together providing approximately 2,000,000 square feet (190,000 m2) of office space. Each building is named for a legendary coach or athlete who has had a long affiliation with Nike, including Tiger Woods, Lance Armstrong, Mia Hamm, Michael Jordan, Pete Sampras, Joan Benoit Samuelson, John McEnroe and several others.
Two of the buildings are child development centers, named for Joe Paterno and C. Vivian Stringer, that together provide daily child care for approximately 500 children of Nike employees. A man-made lake, fed by a natural spring, covers 6 acres (24,000 m2) and is adjacent to a protected wetland area that runs through the center of the campus. The dirt from the lake was deposited around the perimeter of the grounds to create a 14-foot (4.3 m) tall, sloping berm that helps create a campus-like feel. Approximately 5,000 employees are based at the world headquarters, with another 2,000-2,500 in additional buildings in office complexes nearby.
Manufacturing
Nike has contracted with more than 700 shops around the world and has offices located in 45 countries outside the United States. Most of the factories are located in Asia, including Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, Philippines, and Malaysia. Nike is hesitant to disclose information about the contract companies it works with. However, due to harsh criticism from some organizations like CorpWatch, Nike has disclosed information about its contract factories in its Corporate Governance Report.
Human rights concerns
Nike has been criticized for contracting with factories in countries such as China, Vietnam, Indonesia and Mexico. Vietnam Labour Watch, an activist group, has documented that factories contracted by Nike have violated minimum wage and overtime laws in Vietnam as late as 1996, although Nike claims that this practice has been halted. 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 of this criticism include Naomi Klein's book No Logo and Michael Moore's documentaries.
Nike has been criticized about ads which referred to empowering women in the U.S. while engaging in practices in East Asian factories which some felt disempowered women.
During the 1990s, Nike faced criticism for 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 of child labor, they continue to contract their production to companies that operate in areas where inadequate regulation and monitoring make it hard to ensure that child labor is not being used.
In 2001 a BBC documentary uncovered occurrences of child labor and poor working conditions in a Cambodian factory used by Nike. In the documentary, six girls were focussed on, all of whom worked seven days a week, often 16 hours a day.
A July 2008 investigation by Australian Channel 7 News found a large number of cases involving forced labour in one of the biggest Nike apparel factories. The factory located in Malaysia was filmed by an undercover crew who found instances of squalid living conditions and forced labour. Nike have since stated that they will take corrective action to ensure the continued abuse does not occur.
Following Liu Xiang's withdrawal from the 2008 Olympics, Nike admitted seeking help from "relevant government departments" in the Chinese government to track down and identify an anonymous Internet poster.
Environmental record
The consistently growing textile industry often negatively impacts the environment. Because Nike is a large participant in this manufacturing, many of their processes negatively contribute to the environment. One way the expanding textile industry affects the environment is by increasing its water deficit, climate change, pollution, and fossil fuel and raw material consumption. In addition to this, today's electronic textile plants spend significant amounts of energy, while also producing a throw-away mindset due to trends founded upon fast fashion and cheap clothing. Although these combined effects can negatively alter the environment, Nike tries to counteract their influence with different projects. According to a New England-based environmental organisation Clean Air-Cool Planet, Nike ranks among the top 3 companies (out of 56) on a survey conducted about climate-friendly companies. Nike has also been praised for its Nike Grind program (which closes the product lifecycle) by groups like Climate Counts. In addition to this, one campaign that Nike began for Earth Day 2008 was a commercial that featured Steve Nash wearing Nike's Trash Talk Shoe, a shoe that had been constructed in February 2008 from pieces of leather and synthetic leather waste that derived from the factory floor. The Trash Talk Shoe also featured a sole composed of ground-up rubber from a shoe recycling program. Nike claims this is the first performance basketball shoe that has been created from manufacturing waste, but it only produced 5,000 pairs for sale. Another project Nike has begun is called Nike's Reuse-A-Shoe program. This program, started in 1993, is Nike's longest-running program that benefits both the environment and the community by collecting old athletic shoes of any type in order to process and recycle them. The material that is created from the recycled shoes is then used to help create sports surfaces, such as basketball courts, running tracks, and playgrounds.
Marketing strategy
Advertising
From 1972 to 1982, Nike relied almost exclusively on print advertising in highly vertical publications including Track and Field News. Most of the early advertising was focused on a new shoe release, essentially outlining the benefits of the running, basketball or tennis shoe. In 1976, the company hired its first outside ad agency, John Brown and Partners, who created what many consider Nike's first 'brand advertising' in 1977. A print ad with the tagline "There is no finish line" featured a lone runner on a rural road and became an instant classic. The success of this simple ad inspired Nike to create a poster version that launched the company's poster business.
In 1982, Nike aired its first national television ads, created by newly formed ad agency Wieden+Kennedy, during the New York Marathon. This would mark the beginning of a remarkably successful partnership between Nike and W+K that remains intact today. The Cannes Advertising Festival has named Nike its 'advertiser of the year' on two separate occasions, the first and only company to receive that honor twice (1994, 2003).
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 Y2K came to fruition. The second Emmy for advertising earned by Nike was for a 2002 spot called "Move," which featured a series of famous and everyday athletes in a stream of athletic pursuits.
In addition to garnering awards, Nike advertising has generated its fair share of controversy:
Kasky v. Nike
Consumer activist Marc Kasky filed a lawsuit in California in 2002 regarding newspaper advertisements and several letters Nike distributed in response to criticisms of labor conditions in its factories. Kasky claimed that the company made representations that constituted false advertising. Nike responded that the false advertising laws did not cover the company's expression of its views on a public issue, and that these were entitled to First Amendment protection. The local court agreed with Nike's lawyers, but the California Supreme Court overturned this ruling, claiming that the corporation's communications were commercial speech and therefore subject to false advertising laws.
The United States Supreme Court agreed to review the case (Nike v. Kasky) but sent the case back to trial court without issuing a substantive ruling on the constitutional issues. The parties subsequently settled out of court before any finding on the accuracy of Nike's statements, leaving the California Supreme Court's denial of Nike's immunity claim as precedent. The case drew a great deal of attention from groups concerned with civil liberties, as well as anti-sweatshop activists.
Beatles song
Nike was the focus of criticism for its use of the Beatles song "Revolution" in a 1987 commercial, against the wishes of Apple Records, the Beatles' recording company. Nike paid $250,000 to Capitol Records Inc., which held the North American licensing rights to the Beatles' recordings, for the right to use the Beatles' rendition for a year.
Apple sued Nike Inc., Capitol Records Inc., EMI Records Inc. and Wieden+Kennedy advertising agency for $15 million. 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: George Harrison, Paul McCartney, Ringo Starr; Yoko Ono; and Apple, EMI and Capitol Records. A spokesman for Yoko Ono noted, "It's such a confusing myriad of issues that even people who have been close to the principals have a difficult time grasping it. Attorneys on both sides of the Atlantic have probably put their children through college on this." Nike discontinued airing ads featuring "Revolution" in March 1988. Yoko Ono later gave permission to Nike to use John Lennon's "Instant Karma" in another ad.
Minor Threat ad
In late June 2005, Nike received criticism from Ian MacKaye, owner of Dischord Records, guitarist/vocalist for Fugazi & The Evens, and front-man of defunct punk band Minor Threat, for appropriating imagery and text from Minor Threat's 1981 self-titled album's cover art in a flyer promoting Nike Skateboarding's 2005 East Coast demo tour.
On June 27, Nike Skateboarding's website issued an apology to Dischord, Minor Threat, and fans of both and announced that they tried to remove and dispose of all flyers. They state that the people who designed it were skateboarders and Minor Threat fans themselves who created the ad out of respect and appreciation for the band. The dispute was eventually settled out of court between Nike & Minor Threat. The exact details of the settlement have never been disclosed.
Horror ad
In this ad, a parody of horror films, Olympic runner Suzy Favor-Hamilton is running a bath in a remote wilderness cabin when a chainsaw-wielding masked killer appears. Hamilton is obviously in much better shape than the would-be killer and, thanks to her Nike gear, sprints away. The final shot shows the killer out of breath, limping away and ends with the tagline, "Why Sport?" which is quickly answered with "You'll live longer."
First aired during the opening ceremony of the 2000 Summer Olympics (Friday), the ad titled "Horror" generated roughly 200 complaints (according to NBC) that caused the network to pull the ad by Sunday. ESPN followed suit, but the ad continued to air with little or no controversy on several other networks, including FOX, WB, UPN and Comedy Central.
Protesters argued that the ad made light of violence against women, while others claimed it was just too scary to watch, especially for children who enjoy watching the Olympics. Nike spokespeople retorted it was meant to be humorous, and to satirize the typical horror flick where a helpless woman was destined to be slashed. Hamilton herself stated the ad was inspirational, since it is the woman who defeats the man.
Chinese-themed ad
In 2004, an ad about LeBron James beating cartoon martial arts masters and slaying a Chinese dragon in martial arts offended Chinese authorities, who called the ad blasphemous and insulting to national dignity and the dragon. The ad was later banned in China. In early 2007 the ad was re-instated in China for unknown reasons.
Pretty
In the run up to the 2006 U.S. Open, Nike began running Pretty, a television advertisement featuring Maria Sharapova. The ad was a popular and critical success, and went on to win several of the industry's top awards, including two Cannes Gold Lions.
Place
Sponsorship
Nike pays top athletes in many different sports to use their products and promote/advertise their technology and design.
Nike's first professional athlete endorser was Romanian tennis player Ilie Năstase, and the company's first track endorser was distance running legend 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 sponsored many other successful track & field athletes over the years such as Carl Lewis, Jackie Joyner-Kersee and Sebastian Coe. However, it was 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/footwear sponsors for leading tennis players. Some of the more successful tennis players currently or formerly sponsored by Nike 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, Serena Williams.
Nike is also the official kit sponsor for the Indian cricket team for 5 years, from 2006 till end of 2010. Nike beat Adidas and Puma by bidding highest (US$43 Million total).
Nike also sponsors some of the leading clubs in world football, such as Manchester United, Arsenal, FC Barcelona, Inter Milan, Juventus, Shakhtar, Porto, Steaua, Borussia Dortmund, Red Star, Aston Villa, Celtic and PSV Eindhoven. Nike will also sponsor Dundee United from summer 2009.
Nike sponsors several of the world's top golf players, including Tiger Woods, Trevor Immelman and Paul Casey.
Nike also sponsors various minor events including Hoop It Up (high school basketball) and The Golden West Invitational (high school track and field). Nike uses web sites as a promotional tool to cover these events. Nike also has several websites for individual sports, including nikebasketball.com, nikefootball.com, and nikerunning.com.
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