Skip to main content
Select Source:

NIKE, Inc.

NIKE, Inc.

One Bowerman Drive
Beaverton, Oregon 97005-6453
U.S.A.
Telephone: (503) 671-6453
Toll Free: (800) 344-6453
Fax: (503) 671-6300
Web site: http://www.nike.com

Public Company
Incorporated:
1968 as BRS, Inc.
Employees: 26,000
Sales: $13.74 billion (2005)
Stock Exchanges: New York Pacific
Ticker Symbol: NKE
NAIC: 316219 Other Footwear Manufacturing; 339920
Sporting and Athletic Goods Manufacturing; 422340 Footwear Wholesalers; 448190 Other Clothing Stores; 448210 Shoe Stores

Founded as an importer of Japanese shoes, NIKE, Inc. (Nike) has grown to be the world's largest marketer of athletic footwear, holding a global market share of approximately 37 percent. In the United States, Nike products are sold through about 22,000 retail accounts; worldwide, the company's products are sold in more than 160 countries. Both domestically and overseas Nike operates retail stores, including NikeTowns and factory outlets. Nearly all of the items are manufactured by independent contractors, primarily located overseas, with Nike involved in the design, development, and marketing. In addition to its wide range of core athletic shoes and apparel marketed under the flagship Nike brand, the company also sells footwear under the Converse, Chuck Taylor, All Star, and Jack Purcell brands through wholly owned subsidiary Converse Inc. and sells under the brands Starter, Shaq, and Asphalt in the discount retailer channel through another subsidiary, Exeter Brands Group LLC. The firm also sells Nike and Bauer brand athletic equipment; Hurley surfing, skateboarding, and snowboarding apparel and footwear; and Cole Haan brand dress and casual footwear. Nike has relied on consistent innovation in the design of its products and heavy promotion to fuel its growth in both U.S. and foreign markets. The ubiquitous presence of the Nike brand and its Swoosh trademark led to a backlash against the company by the late 20th century, particularly in relation to allegations of low wages and poor working conditions at the company's Asian contract manufacturers.

BRS Beginnings: 1960s

Nike's precursor originated in 1962, a product of the imagination of Philip H. Knight, a Stanford University business graduate who had been a member of the track team as an undergraduate at the University of Oregon. Traveling in Japan after finishing business school, Knight got in touch with a Japanese firm that made athletic shoes, the Onitsuka Tiger Co., and arranged to import some of its products to the United States on a small scale. Knight was convinced that Japanese running shoes could become significant competitors for the German products that then dominated the American market. In the course of setting up his agreement with Onitsuka Tiger, Knight invented Blue Ribbon Sports to satisfy his Japanese partner's expectations that he represented an actual company, and this hypothetical firm eventually grew to become Nike, Inc.

At the end of 1963, Knight's arrangements in Japan came to fruition when he took delivery of 200 pairs of Tiger athletic shoes, which he stored in his father's basement and peddled at various track meets in the area. Knight's one-man venture became a partnership in the following year, when his former track coach, William Bowerman, chipped in $500 to equal Knight's investment. Bowerman had long been experimenting with modified running shoes for his team, and he worked with runners to improve the designs of prototype Blue Ribbon Sports (BRS) shoes. Innovation in running shoe design eventually would become a cornerstone of the company's continued expansion and success. Bowerman's efforts first paid off in 1968, when a shoe known as the Cortez, which he had designed, became a big seller.

BRS sold 1,300 pairs of Japanese running shoes in 1964, its first year, to gross $8,000. By 1965 the fledgling company had acquired a full-time employee and sales had reached $20,000. The following year, the company rented its first retail space, next to a beauty salon in Santa Monica, California, so that its few employees could stop selling shoes out of their cars. In 1967 with fast-growing sales, BRS expanded operations to the East Coast, opening a distribution office in Wellesley, Massachusetts.

Bowerman's innovations in running shoe technology continued throughout this time. A shoe with the upper portion made of nylon went into development in 1967, and the following year Bowerman and another employee came up with the Boston shoe, which incorporated the first cushioned midsole throughout the entire length of an athletic shoe. Also in 1968 the company was incorporated as BRS, Inc.

Emergence of Nike: 1970s

By the end of the decade, Knight's venture had expanded to include several stores and 20 employees and sales were nearing $300,000. The company was poised for greater growth, but Knight was frustrated by a lack of capital to pay for expansion. In 1971, using financing from the Japanese trading company Nissho Iwai Corporation, BRS was able to manufacture its own line of products overseas, through independent contractors, for import to the United States. At this time, the company introduced its Swoosh trademark and the brand name Nike, the Greek goddess of victory. These new symbols were initially affixed to a soccer shoe, the first Nike product to be sold.

A year later, BRS broke with its old Japanese partner, Onitsuka Tiger, after a disagreement over distribution, and kicked off promotion of its own products at the 1972 U.S. Olympic Trials, the first of many marketing campaigns that would seek to attach Nike's name and fortunes to the careers of well-known athletes. Nike shoes were geared to the serious athlete, and their high performance carried with it a high price.

In their first year of distribution, the company's new products grossed $1.96 million and the corporate staff swelled to 45. In addition, operations were expanded to Canada, the company's first foreign market, which would be followed by Australia, in 1974.

Bowerman continued his innovations in running-shoe design with the introduction of the Moon shoe in 1972, which had a waffle-like sole that had first been formed by molding rubber on a household waffle iron. This sole increased the traction of the shoe without adding weight.

In 1974 BRS opened its first U.S. plant, in Exeter, New Hampshire. The company's payroll swelled to 250, and world-wide sales neared $5 million by the end of 1974. This growth was fueled in part by aggressive promotion of the Nike brand name. The company sought to expand its visibility by having its shoes worn by prominent athletes, including tennis players Ilie Nastase and Jimmy Connors. At the 1976 Olympic Trials these efforts began to pay off as Nike shoes were worn by rising athletic stars.

The company's growth had truly begun to take off by this time, riding the boom in popularity of jogging that took place in the United States in the late 1970s. BRS revenues tripled in two years to $14 million in 1976, and then doubled in just one year to $28 million in 1977. To keep up with demand, the company opened new factories, adding a stitching plant in Maine and additional overseas production facilities in Taiwan and Korea. International sales were expanded when markets in Asia were opened in 1977 and in South America the following year. European distributorships were lined up in 1978.

Nike continued its promotional activities with the opening of Athletics West, a training club for Olympic hopefuls in track and field, and by signing tennis player John McEnroe to an endorsement contract. In 1978 the company changed its name to Nike, Inc. The company expanded its line of products that year, adding athletic shoes for children.

By 1979 Nike sold almost half the running shoes bought in the United States, and the company moved into a new world headquarters building in Beaverton, Oregon. In addition to its shoe business, the company began to make and market a line of sports clothing, and the Nike Air shoe cushioning device was introduced.

1980s Growth Through International Expansion and Aggressive Marketing

By the start of the 1980s, Nike's combination of ground-breaking design and savvy and aggressive marketing had allowed it to surpass the German athletic shoe company adidas AG, formerly the leader in U.S. sales. In December 1980, Nike went public, offering two million shares of stock. With the revenues generated by the stock sale, the company planned continued expansion, particularly in the European market. In the United States, plans for a new headquarters on a large, rural campus were inaugurated, and an East Coast distribution center in Greenland, New Hampshire, was brought on line. In addition, the company bought a large plant in Exeter, New Hampshire, to house the Nike Sport Research and Development Lab and also to provide for more domestic manufacturing capacity. The company had shifted its overseas production away from Japan at this point, manufacturing nearly four-fifths of its shoes in South Korea and Taiwan. It established factories in mainland China in 1981.

By the following year, when the jogging craze in the United States had started to wane, half of the running shoes bought in the United States bore the Nike trademark. The company was well insulated from the effects of a stagnating demand for running shoes, however, because it gained a substantial share of its sales from other types of athletic shoes, notably basketball shoes and tennis shoes. In addition, Nike benefited from strong sales of its other product lines, which included apparel, work and leisure shoes, and children's shoes.

Company Perspectives:

The Nike Mission: "To bring inspiration and innovation to every athlete in the world."

If you have a body, you are an athlete.

Given slowing growth in the U.S. market, however, the company turned its attention to foreign markets, inaugurating Nike International, Ltd. in 1981 to spearhead the company's push into Europe and Japan, as well as into Asia, Latin America, and Africa. In Europe, Nike faced stiff competition from adidas and Puma, which had a stronghold on the soccer market, Europe's largest athletic shoe category. The company opened a factory in Ireland to enable it to distribute its shoes without paying high import tariffs, and in 1981 bought out its distributors in England and Austria, to strengthen its control over marketing and distribution of its products. In 1982 the company outfitted Aston Villa, the winning team in the English and European Cup soccer championships, giving a boost to promotion of its new soccer shoe.

In Japan, Nike allied itself with Nissho Iwai, the sixth largest Japanese trading company, to form Nike-Japan Corporation. Because Nike already held a part of the low-priced athletic shoe market, the company set its sights on the high-priced end of the scale in Japan.

By 1982 the company's line of products included more than 200 different kinds of shoes, including the Air Force I, a basketball shoe, and its companion shoe for racquet sports, the Air Ace, the latest models in the long line of innovative shoe designs that had pushed Nike's earnings to an average annual increase of almost 100 percent. In addition, the company marketed more than 200 different items of clothing. By 1983, when the company posted its first ever quarterly drop in earnings as the running boom peaked and went into a decline, Nike's leaders were looking to the apparel division, as well as overseas markets, for further expansion. In foreign sales, the company had mixed results. Its operations in Japan were almost immediately profitable, and the company quickly jumped to second place in the Japanese market, but in Europe, Nike fared less well, losing money on its five European subsidiaries.

Faced with an 11.5 percent drop in domestic sales of its shoes in the 1984 fiscal year, Nike moved away from its traditional marketing strategy of support for sporting events and athlete endorsements to a wider-reaching approach, investing more than $10 million in its first national television and magazine advertising campaign. This followed the "Cities Campaign," which used billboards and murals in nine American cities to publicize Nike products in the period before the 1984 Olympics. Despite the strong showing of athletes wearing Nike shoes in the 1984 Los Angeles Olympic games, Nike profits were down almost 30 percent for the fiscal year ending in May 1984, although international sales were robust and overall sales rose slightly. This decline was a result of aggressive price discounting on Nike products and the increased costs associated with the company's push into foreign markets and attempts to build up its sales of apparel.

Earnings continued to fall in the next three quarters as the company lost market share, posting profits of only $7.8 million at the end of August 1984, a loss of $2.2 million three months later, and another loss of $2.1 million at the end of February 1985. In response, Nike adopted a series of measures to change its sliding course. The company cut back on the number of shoes it had sitting in warehouses and also attempted to fine-tune its corporate mission by cutting back on the number of products it marketed. It made plans to reduce the line of Nike shoes by 30 percent within a year and a half. In addition, leadership at the top of the company was streamlined, as founder Knight resumed the post of president, which he had relinquished in 1983, in addition to his duties as chairman and chief executive officer. Overall administrative costs were also reduced. As part of this effort, Nike also consolidated its research and marketing branches, closing its facility in Exeter, New Hampshire, and cutting 75 of the plant's 125 employees. Overall, the company laid off about 400 workers during 1984.

Key Dates:

1962:
Philip H. Knight founds Blue Ribbon Sports (BRS) to import Japanese running shoes.
1963:
BRS takes its first delivery of 200 shoes from Onitsuka Tiger Co.
1964:
BRS becomes partnership between Knight and William Bowerman.
1966:
The company's first retail outlet opens.
1968:
Company is incorporated as BRS, Inc.; the Bowerman-designed Cortez shoe becomes a big seller.
1971:
BRS begins manufacturing its own products overseas, through subcontractors; the Swoosh trademark and the Nike brand are introduced.
1972:
At the U.S. Olympic Trials, the Nike brand is promoted for the first time; company enters its first foreign market, Canada.
1978:
Company changes its name to Nike, Inc.
1979:
First line of clothing is launched and the Nike Air shoe cushioning device debuts.
1980:
Nike goes public.
1981:
Nike International, Ltd. is created to spearhead overseas push.
1985:
Company signs Michael Jordan to endorse a version of its Air shoe, the "Air Jordan."
1988:
Cole Haan, maker of casual and dress shoes, is acquired; "Just Do It" slogan debuts.
1990:
First NikeTown retail outlet opens in Portland, Oregon.
1994:
Company acquires Canstar Sports Inc., the leading maker of skates and hockey equipment in the world, later renamed Bauer Nike Hockey Inc.
1995:
Company signs golfer Tiger Woods to a $40 million endorsement deal.
1996:
The Nike equipment division is created.
1999:
Company begins selling its products directly to consumers via its web site.
2003:
Converse Inc. is acquired for $305 million.

Faced with shifting consumer interests (i.e., the U.S. market move from jogging to aerobics), the company created a new products division in 1985 to help keep pace. In addition, Nike purchased Pro-form, a small maker of weightlifting equipment, as part of its plan to profit from all aspects of the fitness movement. The company was restructured further at the end of 1985 when its last two U.S. factories were closed and its previous divisions of apparel and athletic shoes were rearranged by sport. In a move that would prove to be the key to the company's recovery, in 1985 the company signed basketball player Michael Jordan to endorse a new version of its Air shoe, introduced four years earlier. The new basketball shoes bore the name "Air Jordan."

In early 1986 Nike announced expansion into a number of new lines, including casual apparel for women, a less expensive line of athletic shoes called Street Socks, golf shoes, and tennis gear marketed under the name "Wimbledon." By mid-1986 Nike was reporting that its earnings had begun to increase again, with sales topping $1 billion for the first time. At that point, the company sold its 51 percent stake in Nike-Japan to its Japanese partner; six months later, Nike laid off 10 percent of its U.S. employees at all levels in a major cost-cutting strategy.

Following these moves, Nike announced a drop in revenues and earnings in 1987, and another round of restructuring and budget cuts ensued, as the company attempted to come to grips with the continuing evolution of the U.S. fitness market. Only Nike's innovative Air athletic shoes provided a bright spot in the company's otherwise erratic progress, allowing the company to regain market share from rival Reebok International Ltd. in several areas, including basketball and cross-training.

The following year, Nike branched out from athletic shoes, purchasing Cole Haan, a maker of casual and dress shoes, for $80 million. Advertising heavily, the company took a commanding lead in sales to young people to claim 23 percent of the overall athletic shoe market. Profits rebounded to reach $100 million in 1988, as sales rose 37 percent to $1.2 billion. Later that year, Nike launched a $10 million television campaign around the theme "Just Do It" and announced that its 1989 advertising budget would reach $45 million.

In 1989 Nike unveiled several new lines of shoes and led its market with $1.7 billion in sales, yielding profits of $167 million. The company's product innovation continued, including the introduction of a basketball shoe with an inflatable collar around the ankle, sold under the brand name Air Pressure. In addition, Nike continued its aggressive marketing, using ads featuring Michael Jordan and actor-director Spike Lee, the ongoing "Just Do It" campaign, and the "Bo Knows" television spots featuring athlete Bo Jackson. At the end of 1989, the company began relocation to its newly constructed headquarters campus in Beaverton, Oregon.

Market Dominance in the Early to Mid-1990s

In 1990 the company sued two competitors for copying the patented designs of its shoes and found itself engaged in a dispute with the U.S. Customs Service over import duties on its Air Jordan basketball shoes. In 1990 the company's revenues hit $2 billion. The company acquired Tetra Plastics Inc., producers of plastic film for shoe soles. That year, the company opened NikeTown, a prototype store selling the full range of Nike products, in Portland, Oregon.

By 1991 Nike's Visible Air shoes had enabled it to surpass its rival Reebok in the U.S. market. In the fiscal year ending May 31, 1991, Nike sales surpassed the $3 billion mark, fueled by record sales of 41 million pairs of Nike Air shoes and a booming international market. Its efforts to conquer Europe had begun to bear fruit; business there grew by 100 percent that year, producing more than $1 billion in sales and gaining the second place market share behind Adidas. Nike's U.S. shoe market had, in large part, matured, slowing to 5 percent annual growth, down from 15 percent annual growth from 1980 and 1988. The company began eyeing overseas markets and predicted ample room to grow in Europe. Nike's U.S. rival Reebok, however, also saw potential for growth in Europe, and by 1992 European MTV was glutted with athletic shoe advertisements as the battle for the youth market heated up between Nike, Reebok, and their European competitors, Adidas and Puma.

Nike also saw growth potential in its women's shoe and sports apparel division. In February 1992 Nike began a $13 million print and television advertising pitch for its women's segment, built upon its "Dialogue" print campaign, which had been slowly wooing 18- to 34-year-old women since 1990. Sales of Nike women's apparel lines Fitness Essentials, Elite Aerobics, Physical Elements, and All Condition Gear increased by 25 percent in both 1990 and 1991 and jumped by 68 percent in 1992.

In July 1992 Nike opened its second NikeTown retail store in Chicago. Like its predecessor in Portland, the Chicago NikeTown was designed to "combine the fun and excitement of FAO Schwartz, the Smithsonian Institute and Disneyland in a space that will entertain sports and fitness fans from around the world" as well as provide a high-profile retail outlet for Nike's rapidly expanding lines of footwear and clothing.

Nike celebrated its 20th anniversary in 1992, virtually debt free and with company revenues of $3.4 billion. Gross profits jumped $100 million in that year, fueled by soaring sales in its retail division, which expanded to include 30 Nike-owned discount outlets and the two NikeTowns. To celebrate its anniversary, Nike brought out its old slogan "There is no finish line." As if to underscore that sentiment, Nike Chairman Philip Knight announced massive plans to remake the company with the goal of being "the best sports and fitness company in the world." To fulfill that goal, the company set the ground plans for a complicated yet innovative marketing structure seeking to make the Nike brand into a worldwide megabrand along the lines of Coca-Cola, Pepsi, Sony, and Disney.

Nike continued expansion of its high-profile NikeTown chain, opening outlets in Atlanta, Georgia, in the spring of 1993 and Costa Mesa, California, later that year. Also in 1993, as part of its long-term marketing strategy, Nike began an ambitious venture with Mike Ovitz's Creative Artists Agency to organize and package sports events under the Nike name, a move that potentially led the company into competition with sports management giants such as ProServ, IMG, and Advantage International.

Nike also began a more controversial venture into the arena of sports agents, negotiating contracts for basketball's Scottie Pippin, Alonzo Mourning, and others in addition to retaining athletes such as Michael Jordan and Charles Barkley as company spokespersons. Nike's influence in the world of sports grew to such a degree that in 1993 Sporting News dubbed Knight the most powerful man in sports.

Critics contended that Nike's influence ran too deep, having its hand in negotiating everything in an athlete's life from investments to the choice of an apartment. But Nike's marketing executives saw it as part of a campaign to create an image of Nike not just as a product line but as a lifestyle, a "Nike attitude."

Nearly everyone agreed, however, that Nike was the dominant force in athletic footwear in the early to mid-1990s. The company held about 30 percent of the U.S. market by 1995, far outdistancing the 20 percent of its nearest rival, Reebok. Overseas revenues continued their steady rise, reaching nearly $2 billion by 1995, about 40 percent of the overall total. Not content with its leading position in athletic shoes and its growing sales of athletic apparel, which accounted for more than 30 percent of revenues in 1996, Nike branched out into sports equipment in the mid-1990s. In 1994 the company acquired Canstar Sports Inc., the leading maker of skates and hockey equipment in the world, for $400 million. Canstar was renamed Bauer Nike Hockey Inc., Bauer being Canstar's brand name for its equipment. Two years later Bauer Nike became part of the newly formed Nike equipment division, which aimed to extend the company into the marketing of sport balls, protective gear, eyewear, and watches. Also during this period, Nike signed its next superstar spokesperson, Tiger Woods. In 1995, at the age of 20, Woods agreed to a 20-year, $40 million endorsement contract. The golf phenom went on to win an inordinate number of tournaments, often shattering course records, and was on pace to eclipse golf legend Jack Nicklaus's illustrious lifetime record of winning 18 majors, more than validating the blockbuster contract.

Late 1990s Slippage

For the fiscal year ending in May 1997, Nike earned a record $795.8 million on record revenues of $9.19 billion. Overseas sales played a large role in the 42 percent increase in revenues from 1996 to 1997. Sales in Asia increased by more than $500 million (to $1.24 billion), while European sales surged ahead by $450 million. Back home, Nike's share of the U.S. athletic shoe market neared 50 percent. The picture at Nike soon turned sour, however, as the Asian financial crisis that erupted in the summer of 1997 sent sneaker sales in that region plunging. By 1999, sales in Asia had dropped to $844.5 million. Compounding the company's troubles was a concurrent stagnation of sales in its domestic market, where the fickle tastes of teenagers began turning away from athletic shoes to hiking boots and other casual "brown shoes." As a result, overall sales for 1999 fell to $8.78 billion. Profits were falling as well, including a net loss of $67.7 million for the fourth quarter of 1998, the company's first reported loss in more than 13 years. The decline in net income led to a cost-cutting drive that included the layoff of 5 percent of the work-force, or 1,200 people, in 1998, and the slashing of its budget for sports star endorsements by $100 million that same year.

Nike was also dogged throughout the late 1990s by protests and boycotts over allegations regarding the treatment of workers at the contract factories in Asia that employed nearly 400,000 people and that made the bulk of Nike shoes and much of its apparel. Charges included abuse of workers, poor working conditions, low wages, and use of child labor. Nike's initial reaction, which was highlighted by Knight's insistence that the company had little control over its suppliers, resulted in waves of negative publicity. Protesters included church groups, students at universities that had apparel and footwear contracts with Nike, and socially conscious investment funds. Nike finally announced in mid-1998 a series of changes affecting its contract workforce in Asia, including an increase in the minimum age, a tightening of air quality standards, and a pledge to allow independent inspections of factories. Nike nonetheless remained under pressure from activists into the 21st century. Nike, along with McDonald's Corporation, the Coca-Cola Company, and Starbucks Corporation, among others, also became an object of protest from those who were attacking multinational companies that pushed global brands. This undercurrent of hostility burst into the spotlight in late 1999 when some of the more aggressive protesters against a World Trade Organization meeting in Seattle attempted to storm a NikeTown outlet.

Seeking to recapture the growth of the early to mid-1990s, Nike pursued a number of new initiatives in the late 1990s. Having initially missed out on the trend toward extreme sports (such as skateboarding, mountain biking, and snowboarding), Nike attempted to rectify this miscue by establishing a unit called ACG, short for "all-conditions gear," in 1998. Two years later, the company created a new division called Techlab to market a line of sports-technology accessories, such as a digital audio player, a high-altitude wrist compass, and a portable heart-rate monitor. Both of these initiatives were aimed at capturing sales from the emerging Generation Y demographic group. In early 1999 Nike began selling its shoes and other products directly to consumers via the company web site. The company finally earned some good publicity in 1999 when it sponsored the U.S. national women's soccer team that won the Women's World Cup. In December 1999 Nike cofounder Bowerman died, and the company later introduced a line of running shoes in his honor.

Early 21st-Century Comeback

Nike's struggles continued into the early 2000s, but by 2002 the company appeared to have turned a corner. Surprisingly, the turnaround stemmed in large part not from clever marketing or new high-tech sneakers but from concentrating more attention on the more mundane aspects of running a business, such as investing in start-of-the-art information systems, logistics, and supply-chain management. Equally important was Knight's willingness to cede more control of the company to a number of underlings, some recruited from the outside. Donald W. Blair was brought onboard from PepsiCo, Inc. to become chief financial officer in 1999 after Nike inexplicably had been without a CFO for two years. In 2001 Knight named two longtime company insiders, Mark G. Parker and Charles D. Denson, as copresidents with responsibility for day-to-day operations. On the product side, Nike successfully overhauled its apparel operations, garnered surging sales of its golf equipment after Woods began using Nike golf balls in 2000, and made a big push in the soccer shoe market, where it gained the top spot among Euro-pean soccer shoe buyers, leapfrogging over Adidas, by 2003. Nike also continued to score endorsement coups, inking high school basketball phenom LeBron James to a $90 million contract in 2003.

The Nike comeback also centered around a commitment to lessen its dependence on the volatile market for high-performance shoes by owning a portfolio of brands covering different market sectors and price points. In 2002 the company bought Hurley International, a teen lifestyle brand, for an estimated $95 million. Based in Costa Mesa, California, Hurley was a designer and distributor of action sports apparel and footwear for surfing, skateboarding, and snowboarding. Nike next bought Converse Inc. for $305 million in September 2003. The 95-year-old Converse of North Andover, Massachusetts, was best known for its retro, low-tech Chuck Taylor All-Star sneakers, a product that for many teenagers and young adults had come to be viewed as the very antithesis of everything Nike. Converse's management team remained in place following the takeover, with the company operating as an autonomous subsidiary. In August 2004 Nike bought Official Starter Properties LLC and Official Starter LLC for approximately $47 million. These companies marketed athletic apparel, footwear, and accessories under the Starter, Team Starter, Asphalt, Shaq, and Dunkman brands (the latter two featuring NBA star Shaquille O'Neal), primarily through discount chains such as Wal-Mart Stores, Inc. These brands were placed within a new wholly owned subsidiary, Exeter Brands Group LLC, focusing on developing products for value-conscious consumers.

While these acquisitions were unfolding in the United States, Nike was pushing hard into overseas markets, and by 2003 international sales exceeded domestic sales for the first time. Starting in 2002 the company also concentrated on building an extensive program to address the perennial charges of labor exploitation. Nike began allowing a monitoring organization it had cofounded, the Fair Labor Association, to conduct random factory inspections. It also built an in-house staff of approximately 100 employees to inspect hundreds of factories and grade them on labor standards. In early 2005 Nike took an unprecedented step toward greater transparency by issuing a list of its more than 700 contract factories. Such moves provided the basis for an improving relationship between Nike and its critics. There were even a few cases in which activists worked with the company to resolve specific issues at certain factories.

Nike enjoyed record results in the fiscal year ending in May 2004, posting profits of $945.6 million on revenues of $12.25 billion. Profits surged past the $1 billion mark the next year, hitting $1.21 billion, while revenues jumped to a new high of $13.74 billion. Late in 2004 Knight stepped aside from his executive position, while remaining chairman, to bring William D. Perez onboard as president and CEO. Perez, a marathon runner and avid golfer, was hired away from S.C. Johnson & Son, Inc., the family-controlled consumer products company, where he spent 34 years and rose to the top as president and CEO. His vast international experience was expected to help Nike as it continued its expansion abroad, and Perez was known as an excellent marketer with a stellar reputation of acquiring and managing well-known brands. Within months of Perez's appointment, Nike's need for such an experienced hand appeared to grow when adidas-Salomon AG agreed to buy Reebok International Ltd. for approximately $3.8 billion. The deal, announced in August 2005, promised to combine two of Nike's biggest rivals, giving the newly enlarged company about 30 percent of the worldwide athletic footwear market, compared to Nike's 37 percent. A revitalized Nike nevertheless seemed to have the strategies in place to fend off this new threat and stay on top of the global sneaker heap.

Principal Subsidiaries

Bauer Nike Hockey Inc.; Cole Haan Holdings Incorporated; Converse Inc.; Hurley International LLC; Exeter Brands Group LLC.

Principal Competitors

Reebok International Ltd.; adidas-Salomon AG; Fila USA, Inc.; PUMA AG Rudolf Dassler Sport; Skechers U.S.A., Inc.

Further Reading

Buell, Barbara, "Nike Catches Up with the Trendy Frontrunner," Business Week, October 24, 1988, p. 88.

Collingwood, Harris, "Nike Rushes in Where Reebok Used to Tread," Business Week, October 3, 1988, p. 42.

Dash, Eric, "Founder of Nike to Hand Off Job to a New Chief," The New York Times, November 19, 2004, p. C1.

Dowdell, Stephen, "No Finish Line," Footwear News, November 25, 2002, p. 12.

Eales, Roy, "Is Nike a Long Distance Runner?," Multinational Business, 1986, pp. 9+.

"Fitting the World in Sport Shoes," Business Week, January 25, 1982.

Gallagher, Leigh, "Rebound," Forbes, May 3, 1999, p. 60.

Gilley, Bruce, "Sweating It Out," Far Eastern Economic Review, December 10, 1998, pp. 66-67.

Gold, Jacqueline S., "The Marathon Man?," Financial World, February 16, 1993, p. 32.

Grimm, Matthew, "Nike Vision," Brandweek, March 29, 1993, p. 19.

Heins, John, "Looking for That Strong Finish," Forbes, May 4, 1987, pp. 74+.

Holmes, Stanley, "The New Nike," Business Week, September 20, 2004, pp. 78-82, 84, 86.

Holmes, Stanley, and Christine Tierney, "How Nike Got Its Game Back," Business Week, November 4, 2002, pp. 129-31.

Jenkins, Holman W., Jr., "The Rise and Stumble of Nike," Wall Street Journal, June 3, 1998, p. A19.

Kang, Stephanie, and Joann S. Lublin, "Nike Taps Perez of S.C. Johnson to Follow Knight," Wall Street Journal, November 19, 2004, p. A3.

Katz, Donald R., Just Do It: The Nike Spirit in the Corporate World, New York: Random House, 1994, 336 p.

"Kennel Mates: Nike Bites into Fogdog Ownership," Sporting Goods Business, October 11, 1999, p. 10.

Klein, Naomi, No Logo: Taking Aim at the Brand Bullies, Toronto: Knopf Canada, 2000, 490 p.

Labich, Kenneth, "Nike vs. Reebok: A Battle for Hearts, Minds, and Feet," Fortune, September 18, 1995, pp. 90+.

LaFeber, Walter, Michael Jordan and the New Global Capitalism, rev. ed., New York: Norton, 2002, 220 p.

Lane, Randall, "You Are What You Wear," Forbes 400, October 14, 1996, pp. 42-46.

Lee, Louise, "Can Nike Still Do It?," Business Week, February 21, 2000, pp. 120-22+.

Loftus, Margaret, "A Swoosh Under Siege," U.S. News and World Report, April 12, 1999, p. 40.

McGill, Douglas C., "Nike Is Bounding Past Reebok," The New York Times, July 11, 1989, p. D1.

Murphy, Terence, "Nike on the Rebound," Madison Avenue, June 1985, pp. 28+.

"Nike Pins Hopes for Growth on Foreign Sales and Apparel," New York Times, March 24, 1983.

"Nike Sports Shoes: Winged Victory," Economist, December 2, 1989, pp. 83+.

"Nike Versus Reebok: A Foot Race," Newsweek, October 3, 1988, p. 52.

Richards, Bill, "Just Doing It: Nike Plans to Swoosh into Sports Equipment but It's a Tough Game," Wall Street Journal, January 6, 1998, pp. A1+.

, "Tripped Up by Too Many Shoes, Nike Regroups," Wall Street Journal, March 3, 1998, p. B1.

Robson, Douglas, "Just Do Something," Business Week, July 2, 2001, pp. 70-71.

Roth, Daniel, "Can Nike Still Do It Without Phil Knight?," Fortune, April 4, 2005, pp. 59-62, 64, 66, 68.

Saporito, Bill, "Can Nike Get Unstuck?," Time, March 30, 1998, pp. 48-53.

Sellers, Patricia, "Four Reasons Nike's Not Cool," Fortune, March 30, 1998, pp. 26-27.

Steinhauer, Jennifer, "Nike Is in a League of Its Own: With No Big Rival, It Calls the Shots in Athletic Shoes," The New York Times, June 7, 1997, Sec. 1, p. 31.

Strasser, J.B., and Laurie Becklund, Swoosh: The Unauthorized Story of Nike, and the Men Who Played There, San Diego: Harcourt Brace Jovanovich, 1991, 682 p.

Stroud, Ruth, "Nike Ready to Run a More Traditional Race," Advertising Age, June 18, 1984, pp. 4+.

Tharp, Mike, "Easy-Going Nike Adopts Stricter Controls to Pump Up Its Athletic-Apparel Business," Wall Street Journal, November 6, 1984.

Thurow, Roger, "Shtick Ball: In Global Drive, Nike Finds Its Brash Ways Don't Always Pay Off," Wall Street Journal, May 5, 1997, pp. A1+.

Tkacik, Maureen, "Nike to Swoosh Up Old-Line Converse for $305 Million," Wall Street Journal, July 10, 2003, p. A3.

, "Rubber Match: In a Clash of Sneaker Titans, Nike Gets Leg Up on Foot Locker," Wall Street Journal, May 13, 2003, p. A1.

"Where Nike and Reebok Have Plenty of Running Room," Business Week, March 11, 1991.

Williams, Christopher C., "The Now and Future King," Barron's, June 13, 2005, pp. 18, 20.

Wrighton, Jo, and Fred R. Bleakley, "Philip Knight of NikeJust Do It!," Institutional Investor, January 2000, pp. 22-24.

Wyatt, John, "Is It Time to Jump on Nike?," Fortune, May 26, 1997, pp. 185-86.

Yang, Dori Jones, et al., "Can Nike Just Do It?," Business Week, April 18, 1994, pp. 86-90.

                          Elizabeth Rourke; Maura Troester

                                  update: David E. Salamie

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"NIKE, Inc.." International Directory of Company Histories. . Encyclopedia.com. 16 Aug. 2017 <http://www.encyclopedia.com>.

"NIKE, Inc.." International Directory of Company Histories. . Encyclopedia.com. (August 16, 2017). http://www.encyclopedia.com/books/politics-and-business-magazines/nike-inc

"NIKE, Inc.." International Directory of Company Histories. . Retrieved August 16, 2017 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/nike-inc

NIKE, Inc.

NIKE, Inc.

One Bowerman Drive
Beaverton, Oregon 97005-6453
U.S.A.
Telephone: (503) 671-6453
Fax: (503) 671-6300
Web site: http://www.nike.com

Public Company
Incorporated:
1968 as Blue Ribbon Sports
Employees: 20,700
Sales: $8.78 billion (1999)
Stock Exchanges: New York Pacific
Ticker Symbol: NKE
NAIC: 316219 Other Footwear Manufacturing; 315220 Mens and Boys Cut and Sew Apparel Manufacturing; 315230 Womens and Girls Cut and Sew Apparel Manufacturing; 339920 Sporting and Athletic Goods Manufacturing; 422340 Footwear Wholesalers; 448190 Other Clothing Stores; 448210 Shoe Stores

Founded as an importer of Japanese shoes, NIKE, Inc. (Nike) has grown to be the worlds largest marketer of athletic footwear and apparel. In the United States, Nike products are sold through about 20,000 retail accounts; worldwide, the companys products are sold in about 110 countries. Both domestically and overseas Nike operates retail stores, including NikeTowns and factory outlets. Nearly all of the items are manufactured by independent contractors, primarily located overseas, with Nike involved in the design, development, and marketing. In addition to its wide range of core athletic shoes and apparel, the company also sells Nike and Bauer brand athletic equipment, Cole Haan brand dress and casual footwear, and the Sports Specialties line of headwear featuring licensing team logos. The company has relied on consistent innovation in the design of its products and heavy promotion to fuel its growth in both U.S. and foreign markets. The ubiquitous presence of the Nike brand and its Swoosh trademark led to a backlash against the company by the late 20th century, particularly in relation to allegations of low wages and poor working conditions at the companys Asian contract manufacturers.

BRS Beginnings

Nikes precursor originated in 1962, a product of the imagi-nation of Philip H. Knight, a Stanford University business graduate who had been a member of the track team as an undergraduate at the University of Oregon. Traveling in Japan after finishing up business school, Knight got in touch with a Japanese firm that made athletic shoes, the Onitsuka Tiger Co., and arranged to import some of its products to the United States on a small scale. Knight was convinced that Japanese running shoes could become significant competitors for the German products that then dominated the American market. In the course of setting up his agreement with Onitsuka Tiger, Knight invented Blue Ribbon Sports to satisfy his Japanese partners expectations that he represented an actual company, and this hypothetical firm eventually grew to become Nike, Inc.

At the end of 1963, Knights arrangements in Japan came to fruition when he took delivery of 200 pairs of Tiger athletic shoes, which he stored in his fathers basement and peddled at various track meets in the area. Knights one-man venture became a partnership in the following year, when his former track coach, William Bowerman, chipped in $500 to equal Knights investment. Bowerman had long been experimenting with modified running shoes for his team, and he worked with runners to improve the designs of prototype Blue Ribbon Sports (BRS) shoes. Innovation in running shoe design eventually would become a cornerstone of the companys continued expansion and success. Bowermans efforts first paid off in 1968, when a shoe known as the Cortez, which he had designed, became a big seller.

BRS sold 1,300 pairs of Japanese running shoes in 1964, its first year, to gross $8,000. By 1965 the fledgling company had acquired a full-time employee and sales had reached $20,000. The following year, the company rented its first retail space, next to a beauty salon in Santa Monica, California, so that its few employees could stop selling shoes out of their cars. In 1967 with fast-growing sales, BRS expanded operations to the East Coast, opening a distribution office in Wellesley, Massachusetts.

Bowermans innovations in running shoe technology continued throughout this time. A shoe with the upper portion made of nylon went into development in 1967, and the following year Bowerman and another employee came up with the Boston shoe, which incorporated the first cushioned mid-sole throughout the entire length of an athletic shoe.

Emergence of Nike in 1970s

By the end of the decade, Knights venture had expanded to include several stores and 20 employees and sales were nearing $300,000. The company was poised for greater growth, but Knight was frustrated by a lack of capital to pay for expansion. In 1971 using financing from the Japanese trading company Nissho Iwai Corporation, BRS was able to manufacture its own line of products overseas, through independent contractors, for import to the United States. At this time, the company introduced its Swoosh trademark and the brand name Nike, the Greek goddess of victory. These new symbols were initially affixed to a soccer shoe, the first Nike product to be sold.

A year later, BRS broke with its old Japanese partner, Onitsuka Tiger, after a disagreement over distribution, and kicked off promotion of its own products at the 1972 U.S. Olympic Trials, the first of many marketing campaigns that would seek to attach Nikes name and fortunes to the careers of well-known athletes. Nike shoes were geared to the serious athlete, and their high performance carried with it a high price.

In their first year of distribution, the companys new products grossed $1.96 million and the corporate staff swelled to 45. In addition, operations were expanded to Canada, the companys first foreign market, which would be followed by Australia, in 1974.

Bowerman continued his innovations in running-shoe de-sign with the introduction of the Moon shoe in 1972, which had a waffle-like sole that had first been formed by molding rubber on a household waffle iron. This sole increased the traction of the shoe without adding weight.

In 1974 BRS opened its first U.S. plant, in Exeter, New Hampshire. The companys payroll swelled to 250, and world-wide sales neared $5 million by the end of 1974. This growth was fueled in part by aggressive promotion of the Nike brand name. The company sought to expand its visibility by having its shoes worn by prominent athletes, including tennis players Hie Nastase and Jimmy Connors. At the 1976 Olympic Trials these efforts began to pay off as Nike shoes were worn by rising athletic stars.

The companys growth had truly begun to take off by this time, riding the boom in popularity of jogging that took place in the United States in the late 1970s. BRS revenues tripled in two years to $14 million in 1976, and then doubled in just one year to $28 million in 1977. To keep up with demand, the company opened new factories, adding a stitching plant in Maine and additional overseas production facilities in Taiwan and Korea. International sales were expanded when markets in Asia were opened in 1977 and in South America the following year. European distributorships were lined up in 1978.

Nike continued its promotional activities with the opening of Athletics West, a training club for Olympic hopefuls in track and field, and by signing tennis player John McEnroe to an endorsement contract. In 1978 the company changed its name to Nike, Inc. The company expanded its line of products that year, adding athletic shoes for children.

By 1979 Nike sold almost half the running shoes bought in the United States, and the company moved into a new world headquarters building in Beaverton, Oregon. In addition to its shoe business, the company began to make and market a line of sports clothing, and the Nike Air shoe cushioning device was introduced.

1980s Growth Through International Expansion and Aggressive Marketing

By the start of the 1980s, Nikes combination of ground-breaking design and savvy and aggressive marketing had allowed it to surpass the German athletic shoe company Adidas AG, formerly the leader in U.S. sales. In December 1980, Nike went public, offering two million shares of stock. With the revenues generated by the stock sale, the company planned continued expansion, particularly in the European market. In the United States, plans for a new headquarters on a large, rural campus were inaugurated, and an East Coast distribution center in Greenland, New Hampshire, was brought on line. In addition, the company bought a large plant in Exeter, New Hampshire, to house the Nike Sport Research and Development Lab and also to provide for more domestic manufacturing capacity. The company had shifted its overseas production away from Japan at this point, manufacturing nearly four-fifths of its shoes in South Korea and Taiwan. It established factories in mainland China in 1981.

By the following year, when the jogging craze in the United States had started to wane, half of the running shoes bought in the United States bore the Nike trademark. The company was well insulated from the effects of a stagnating demand for running shoes, however, since it gained a substantial share of its sales from other types of athletic shoes, notably basketball shoes and tennis shoes. In addition, Nike benefited from strong sales of its other product lines, which included apparel, work and leisure shoes, and childrens shoes.

Company Perspectives

Nikes Corporate Mission Statement:
To be the worlds leading sports and fitness company
.

Given the slowing of growth in the U.S. market, however, the company turned its attention to growth in foreign markets, inaugurating Nike International, Ltd. in 1981 to spearhead the companys push into Europe and Japan, as well as into Asia, Latin America, and Africa. In Europe, Nike faced stiff competition from Adidas and Puma, which had a strong hold on the soccer market, Europes largest athletic shoe category. The company opened a factory in Ireland to enable it to distribute its shoes without paying high import tariffs, and in 1981 bought out its distributors in England and Austria, to strengthen its control over marketing and distribution of its products. In 1982 the company outfitted Aston Villa, the winning team in the English and European Cup soccer championships, giving a boost to promotion of its new soccer shoe.

In Japan, Nike allied itself with Nissho Iwai, the sixth largest Japanese trading company, to form Nike-Japan Corporation. Because Nike already held a part of the low-priced athletic shoe market, the company set its sights on the high-priced end of the scale in Japan.

By 1982 the companys line of products included more than 200 different kinds of shoes, including the Air Force I, a basketball shoe, and its companion shoe for racquet sports, the Air Ace, the latest models in the long line of innovative shoe designs that had pushed Nikes earnings to an average annual increase of almost 100 percent. In addition, the company marketed more than 200 different items of clothing. By 1983when the company posted its first-ever quarterly drop in earnings as the running boom peaked and went into a declineNikes leaders were looking to the apparel division, as well as overseas markets, for further expansion. In foreign sales, the company had mixed results. Its operations in Japan were almost immediately profitable, and the company quickly jumped to second place in the Japanese market, but in Europe, Nike fared less well, losing money on its five European subsidiaries.

Faced with an 11.5 percent drop in domestic sales of its shoes in the 1984 fiscal year, Nike moved away from its traditional marketing strategy of support for sporting events and athlete endorsements to a wider-reaching approach, investing more than $10 million in its first national television and magazine advertising campaign. This followed the Cities Campaign, which used billboards and murals in nine American cities to publicize Nike products in the period before the 1984 Olympics. Despite the strong showing of athletes wearing Nike shoes in the 1984 Los Angeles Olympic games, Nike profits were down almost 30 percent for the fiscal year ending in May 1984, although international sales were robust and overall sales rose slightly. This decline was a result of aggressive price discounting on Nike products and the increased costs associated with the companys push into foreign markets and attempts to build up its sales of apparel.

Earnings continued to fall in the next three quarters as the company lost market share, posting profits of only $7.8 million at the end of August 1984, a loss of $2.2 million three months later, and another loss of $2.1 million at the end of February 1985. In response, Nike adopted a series of measures to change its sliding course. The company cut back on the number of shoes it had sitting in warehouses and also attempted to fine-tune its corporate mission by cutting back on the number of products it marketed. It made plans to reduce the line of Nike shoes by 30 percent within a year and a half. In addition, leadership at the top of the company was streamlined, as founder Knight resumed the post of presidentwhich he had relinquished in 1983in addition to his duties as chairman and chief executive officer. Overall administrative costs were also reduced. As part of this effort, Nike also consolidated its re-search and marketing branches, closing its facility in Exeter, New Hampshire, and cutting 75 of the plants 125 employees. Overall, the company laid off about 400 workers during 1984.

Faced with shifting consumer interests (i.e., the U.S. market move from jogging to aerobics), the company created a new products division in 1985 to help keep pace. In addition, Nike purchased Pro-form, a small maker of weightlifting equipment, as part of its plan to profit from all aspects of the fitness movement. The company was restructured further at the end of 1985 when its last two U.S. factories were closed and its previous divisions of apparel and athletic shoes were rearranged by sport. In a move that would prove to be the key to the companys recovery, in 1985 the company signed basketball player Michael Jordan to endorse a new version of its Air shoe, introduced four years earlier. The new basketball shoes bore the name Air Jordan.

Key Dates

1962:
Philip H. Knight founds Blue Ribbon Sports (BRS) to import Japanese running shoes.
1963:
BRS takes its first delivery of 200 shoes from Onitsuka Tiger Co.
1964:
BRS becomes partnership between Knight and William Bowerman.
1966:
The companys first retail outlet opens.
1968:
Company is incorporated; the Bowerman-designed Cortez shoe becomes a big seller.
1971:
BRS begins manufacturing its own products over-seas, through subcontractors; the Swoosh trademark and the Nike brand are introduced.
1972:
At the 1972 U.S. Olympic Trials, the Nike brand is promoted for the first time; company enters its first foreign market, Canada.
1978:
Company changes its name to Nike, Inc.
1979:
First line of clothing is launched and the Nike Air shoe cushioning device debuts.
1980:
Nike goes public.
1981:
Nike International, Ltd. is created to spearhead overseas push.
1985:
Company signs Michael Jordan to endorse a version of its Air shoethe Air Jordan.
1988:
Cole Haan, maker of casual and dress shoes, is acquired; Just Do It slogan debuts.
1990:
First NikeTown retail outlet opens in Portland, Oregon.
1991:
Revenues reach $3 billion.
1994:
Company acquires Canstar Sports Inc., the leading maker of skates and hockey equipment in the world, later renamed Bauer Nike Hockey Inc.
1995:
Company signs golfer Tiger Woods to a 20-year, $40 million endorsement deal.
1996:
The Nike equipment division is created.
1999:
Company begins selling its products directly to consumers via its web site.

In early 1986 Nike announced expansion into a number of new lines, including casual apparel for women, a less expensive line of athletic shoes called Street Socks, golf shoes, and tennis gear marketed under the name Wimbledon. By mid-1986 Nike was reporting that its earnings had begun to increase again, with sales topping $1 billion for the first time. At that point, the company sold its 51 percent stake in Nike-Japan to its Japanese partner; six months later, Nike laid off ten percent of its U.S. employees at all levels in a major cost-cutting strategy.

Following these moves, Nike announced a drop in revenues and earnings in 1987, and another round of restructuring and budget cuts ensued, as the company attempted to come to grips with the continuing evolution of the U.S. fitness market. Only Nikes innovative Air athletic shoes provided a bright spot in the companys otherwise erratic progress, allowing the company to regain market share from rival Reebok International Ltd. in several areas, including basketball and cross-training.

The following year, Nike branched out from athletic shoes, purchasing Cole Haan, a maker of casual and dress shoes, for $80 million. Advertising heavily, the company took a commanding lead in sales to young people to claim 23 percent of the overall athletic shoe market. Profits rebounded to reach $100 million in 1988, as sales rose 37 percent to $1.2 billion. Later that year, Nike launched a $10 million television campaign around the theme Just Do It and announced that its 1989 advertising budget would reach $45 million.

In 1989 Nike marketed several new lines of shoes and led its market with $1.7 billion in sales, yielding profits of $167 million. The companys product innovation continued, including the introduction of a basketball shoe with an inflatable collar around the ankle, sold under the brand name Air Pressure. In addition, Nike continued its aggressive marketing, using ads featuring Michael Jordan and actor-director Spike Lee, the ongoing Just Do It campaign, and the Bo Knows television spots featuring athlete Bo Jackson. At the end of 1989, the company began relocation to its newly constructed headquarters campus in Beaverton, Oregon.

Market Dominance in the Early to Mid-1990s

In 1990 the company sued two competitors for copying the patented designs of its shoes and found itself engaged in a dispute with the U.S. Customs Service over import duties on its Air Jordan basketball shoes. In 1990 the companys revenues hit $2 billion. The company acquired Tetra Plastics Inc., producers of plastic film for shoe soles. That year, the company opened NikeTown, a prototype store selling the full range of Nike products, in Portland, Oregon.

By 1991 Nikes Visible Air shoes had enabled it to surpass its rival Reebok in the U.S. market. In the fiscal year ending May 31, 1991, Nike sales surpassed the $3 billion mark, fueled by record sales of 41 million pairs of Nike Air shoes and a booming international market. Its efforts to conquer Europe had begun to bear fruit; business there grew by 100 percent that year, producing more than $1 billion in sales and gaining the second place market share behind Adidas. Nikes U.S. shoe market had, in large part, matured, slowing to five percent annual growth, down from 15 percent annual growth from 1980 and 1988. The company began eyeing overseas markets and predicted ample room to grow in Europe. Nikes U.S. rival Reebok, however, also saw potential for growth in Europe, and by 1992 European MTV was glutted with athletic shoe advertisements as the battle for the youth market heated up between Nike, Reebok, and their European competitors, Adidas and Puma.

Nike also saw growth potential in its womens shoe and sports apparel division. In February 1992 Nike began a $13 million print and television advertising pitch for its womens segment, built upon its Dialogue print campaign, which had been slowly wooing 18- to 34-year-old women since 1990. Sales of Nike womens apparel lines Fitness Essentials, Elite Aerobics, Physical Elements, and All Condition Gear increased by 25 percent in both 1990 and 1991 and jumped by 68 percent in 1992.

In July 1992 Nike opened its second NikeTown retail store in Chicago, Illinois. Like its predecessor in Portland, the Chicago NikeTown was designed to combine the fun and excitement of FAO Schwartz, the Smithsonian Institute and Disney-land in a space that will entertain sports and fitness fans from around the world as well as provide a high-profile retail outlet for Nikes rapidly expanding lines of footwear and clothing.

Nike celebrated its 20th anniversary in 1992, virtually debt free and with company revenues of $3.4 billion. Gross profits jumped $100 million in that year, fueled by soaring sales in its retail division, which expanded to include 30 Nike-owned discount outlets and the two NikeTowns. To celebrate its anniversary, Nike brought out its old slogan There is no finish line. As if to underscore that sentiment, Nike Chairman Philip Knight announced massive plans to remake the company with the goal of being the best sports and fitness company in the world. To fulfill that goal, the company set the ground plans for a complicated yet innovative marketing structure seeking to make the Nike brand into a worldwide megabrand along the lines of Coca-Cola, Pepsi, Sony, and Disney.

Nike continued expansion of its high-profile NikeTown chain, opening outlets in Atlanta, Georgia, in the spring of 1993 and Costa Mesa, California, later that year. Also in 1993, as part of its long-term marketing strategy, Nike began an ambitious venture with Mike Ovitzs Creative Artists Agency to organize and package sports events under the Nike namea move that potentially led the company into competition with sports management giants such as ProServ, IMG, and Advantage International.

Nike also began a more controversial venture into the arena of sports agents, negotiating contracts for basketballs Scottie Pippin, Alonzo Mourning, and others in addition to retaining athletes such as Michael Jordan and Charles Barkley as company spokespersons. Nikes influence in the world of sports grew to such a degree that in 1993 Sporting News dubbed Knight the most powerful man in sports.

Critics contended that Nikes influence ran too deep, having its hand in negotiating everything in an athletes life from investments to the choice of an apartment. But Nikes marketing executives saw it as part of a campaign to create an image of Nike not just as a product line but as a lifestyle, a Nike attitude.

Nearly everyone agreed, however, that Nike was the dominant force in athletic footwear in the early to mid-1990s. The company held about 30 percent of the U.S. market by 1995, far outdistancing the 20 percent of its nearest rival, Reebok. Over-seas revenues continued their steady rise, reaching nearly $2 billion by 1995, about 40 percent of the overall total. Not content with its leading position in athletic shoes and its growing sales of athletic apparelwhich accounted for more than 30 percent of revenues in 1996Nike branched out into sports equipment in the mid-1990s. In 1994 the company acquired Canstar Sports Inc., the leading maker of skates and hockey equipment in the world, for $400 million. Canstar was renamed Bauer Nike Hockey Inc., Bauer being Canstars brand name for its equipment. Two years later Bauer Nike became part of the newly formed Nike equipment division, which aimed to extend the company into the marketing of sport balls, protective gear, eyewear, and watches. Also during this period, Nike signed up its next superstar spokesperson, Tiger Woods. In 1995, at the age of 20, Woods agreed to a 20-year, $40 million endorsement contract. The golf phenom went on to win an inordinate number of tournaments, often shattering course records, and to become only the second golfer in history to win three majors within a single year, more than validating the blockbuster contract.

Late 1990s Slippage

For the fiscal year ending in May 1997, Nike earned a record $795.8 million on record revenues of $9.19 billion. Overseas sales played a large role in the 42 percent increase in revenues from 1996 to 1997. Sales in Asia increased by more than $500 million (to $1.24 billion), while European sales surged ahead by $450 million. Back home, Nikes share of the U.S. athletic shoe market neared 50 percent. The picture at Nike soon turned sour, however, as the Asian financial crisis that erupted in the summer of 1997 sent sneaker sales in that region plunging. By fiscal 1999, sales in Asia had dropped to $844.5 million. Compounding the companys troubles was a concurrent stagnation of sales in its domestic market, where the fickle tastes of teenagers began turning away from athletic shoes to hiking boots and other casual brown shoes. As a result, overall sales for 1999 fell to $8.78 billion. Profits were falling as wellincluding a net loss of $67.7 million for the fourth quarter of fiscal 1998, the companys first reported loss in more than 13 years. The decline in net income led to a cost-cutting drive that included the layoff of five percent of the workforce, or 1,200 people, in 1998, and the slashing of its budget for sports star endorsements by $100 million that same year.

Nike was also dogged throughout the late 1990s by protests and boycotts over allegations regarding the treatment of workers at the contract factories in Asia that employed nearly 400,000 people and that made the bulk of Nike shoes and much of its apparel. Charges included abuse of workers, poor working conditions, low wages, and use of child labor. Nikes initial reactionwhich was highlighted by Knights insistence that the company had little control over its suppliersresulted in waves of negative publicity. Protesters included church groups, students at universities that had apparel and footwear contracts with Nike, and socially conscious investment funds. Nike finally announced in mid-1998 a series of changes affecting its contract workforce in Asia, including an increase in the minimum age, a tightening of air quality standards, and a pledge to allow independent inspections of factories. Nike nonetheless remained under pressure from activists into the 21st century. Nike, along with McDonalds Corporation, the Coca-Cola Company, and Starbucks Corporation, among others, also be-came an object of protest from those who were attacking multi-national companies that pushed global brands. This undercur-rent of hostility burst into the spotlight in late 1999 when some of the more aggressive protesters against a World Trade Organization meeting in Seattle attempted to storm a NikeTown outlet.

Seeking to recapture the growth of the early to mid-1990s, Nike pursued a number of new initiatives in the late 1990s. Having initially missed out on the trend toward extreme sports (such as skateboarding, mountain biking, and snowboarding), Nike attempted to rectify this miscue by establishing a unit called ACGshort for all-conditions gearin 1998. Two years later, the company created a new division called Techlab to market a line of sports-technology accessories, such as a digital audio player, a high-altitude wrist compass, and a portable heart-rate monitor. Both of these initiatives were aimed at capturing sales from the emerging Generation Y demographic group. In early 1999 Nike began selling its shoes and other products directly to consumers via the company web site. Nike announced in September of that year that it would buy about ten percent of Fogdog Inc., which ran a sporting goods e-commerce site, in exchange for granting Fogdog the exclusive online rights to sell the full Nike line. The company finally earned some good publicity in 1999 when it sponsored the U.S. national womens soccer team that won the Womens World Cup. With its record of innovative product design and savvy promotion and an aggressive approach to containing costs and revitalizing sales, Nike appeared likely to stage an impressive comeback in the early 21st century.

Principal Subsidiaries

Cole Haan Holdings Incorporated; Nike Team Sports, Inc.; Nike IHM, Inc.; Bauer Nike Hockey Inc.

Principal Competitors

adidas-Salomon AG; Callaway Golf Company; Converse Inc.; Deckers Outdoor Corporation; Fila Holding S.p.A.; Fortune Brands, Inc.; Fruit of the Loom, Ltd.; FUBU; HI-TEC Sports USA Inc.; Levi Strauss & Co.; Nautica Enterprises, Inc.; New Balance Athletic Shoe, Inc.; Polo Ralph Lauren Corporation; Puma AG; R. Griggs Group Limited; Rawlings Sporting Goods Company, Inc.; Reebok International Ltd.; Rollerblade, Inc.; Russell Corporation; Sara Lee Corporation; Skechers U.S.A., Inc.; Spalding Holdings Corporation; The Stride Rite Corporation; The Timberland Company; Timex Corporation; Tommy Hilfiger Corporation; VF Corporation; Wolverine World Wide, Inc.

Further Reading

Buell, Barbara, Nike Catches Up with the Trendy Frontrunner, Business Week, October 24, 1988, p. 88.

Collingwood, Harris, Nike Rushes in Where Reebok Used to Tread, Business Week, October 3, 1988, p. 42.

Eales, Roy, Is Nike a Long Distance Runner?, Multinational Business, 1986. pp. 9 +.

Fitting the World in Sport Shoes, Business Week, January 25, 1982.

Gallagher, Leigh, Rebound, Forbes, May 3, 1999, p. 60.

Gilley, Bruce, Sweating It Out, Far Eastern Economic Review, December 10, 1998, pp. 6667.

Gold, Jacqueline S., The Marathon Man?, Financial World, February 16, 1993, p. 32.

Grimm, Matthew, Nike Vision, Brandweek, March 29, 1993, p. 19.

Heins, John, Looking for That Strong Finish, Forbes, May 4, 1987, pp. 74 +.

Jenkins, Holman W., Jr., The Rise and Stumble of Nike, Wall Street Journal, June 3, 1998, p. A19.

Katz, Donald R., Just Do It: The Nike Spirit in the Corporate World, New York: Random House, 1994.

Kennel Mates: Nike Bites into Fogdog Ownership, Sporting Goods Business, October 11, 1999, p. 10.

Klein, Naomi, No Logo: Taking Aim at the Brand Bullies, Toronto: Knopf Canada, 2000.

Labich, Kenneth, Nike Vs. Reebok: A Battle for Hearts, Minds and Feet, Fortune, September 18, 1995, pp. 90 +.

LaFeber, Walter, Michael Jordan and the New Global Capitalism, New York: W.W. Norton, 1999.

Lane, Randall, You Are What You Wear, Forbes 400, October 14, 1996, pp. 4246.

Lee, Louise, Can Nike Still Do It?, Business Week, February 21, 2000, pp. 12022 +.

Loftus, Margaret, A Swoosh Under Siege, U.S. News and World Report, April 12, 1999, p. 40.

McGill, Douglas C, Nike Is Bounding Past Reebok, New York Times, July 11, 1989, p. D1.

Murphy, Terence, Nike on the Rebound, Madison Avenue, June 1985, pp. 28 +.

Nike Pins Hopes for Growth on Foreign Sales and Apparel, New York Times, March 24, 1983.

Nike Sports Shoes: Winged Victory, Economist, December 2,1989, pp. 83 +.

Nike Timeline, Beaverton, Ore.: Nike, Inc. 1990.

Nike Versus Reebok: A Foot Race, Newsweek, October 3, 1988, p. 52.

Richards, Bill, Just Doing It: Nike Plans to Swoosh into Sports Equipment But Its a Tough Game, Wall Street Journal, January 6, 1998, pp. A1 +.

______, Tripped Up by Too Many Shoes, Nike Regroups, Wall Street Journal, March 3, 1998, p. B1.

Saporito, Bill, Can Nike Get Unstuck?, Time, March 30, 1998, pp. 4853.

Sellers, Patricia, Four Reasons Nikes Not Cool, Fortune, March 30, 1998, pp. 2627.

Steinhauer, Jennifer, Nike Is in a League of Its Own: With No Big Rival, It Calls the Shots in Athletic Shoes, New York Times, June 7, 1997, Sec. 1, p. 31.

Strasser, J.B., and Laurie Becklund, Swoosh: The Unauthorized Story of Nike, and the Men Who Played There, San Diego: Harcourt Brace Jovanovich, 1991.

Stroud, Ruth, Nike Ready to Run a More Traditional Race, Advertising Age, June 18, 1984, pp. 4 +.

Tharp, Mike, Easy-Going Nike Adopts Stricter Controls to Pump Up Its Athletic-Apparel Business, Wall Street Journal, November 6, 1984.

Thurow, Roger, Shtick Ball: In Global Drive, Nike Finds Its Brash Ways Dont Always Pay Off, Wall Street Journal, May 5, 1997, pp. A1 +.

Where Nike and Reebok Have Plenty of Running Room, Business Week, March 11, 1991.

Wrighton, Jo, and Fred R. Bleakley, Philip Knight of NikeJust Do It!, Institutional Investor, January 2000, pp. 2224.

Wyatt, John, Is It Time to Jump on Nike?, Fortune, May 26, 1997, pp. 18586.

Yang, Dori Jones, et al., Can Nike Just Do It?, Business Week, April 18, 1994, pp. 8690.

Elizabeth Rourke and Maura Troester

updated by David E. Salamie

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"NIKE, Inc.." International Directory of Company Histories. . Encyclopedia.com. 16 Aug. 2017 <http://www.encyclopedia.com>.

"NIKE, Inc.." International Directory of Company Histories. . Encyclopedia.com. (August 16, 2017). http://www.encyclopedia.com/books/politics-and-business-magazines/nike-inc-0

"NIKE, Inc.." International Directory of Company Histories. . Retrieved August 16, 2017 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/nike-inc-0

Nike, Inc.

Nike, Inc.

One Bowerman Dr.
Beaverton, Oregon 97005
U.S.A.
(503) 671-6453
Fax: (503) 671-6300

Public Company
Incorporated: 1964 as Blue Ribbon Sports; 1972 as Nike, Inc.
Employees: 5,500
Sales: $3.00 billion
Stock Exchanges: NASDAQ New York Pacific
SICs: 3149 Footwear Except Rubber Nec; 2329 Mens/Boys Clothing Nec; Womens/Misses Outerwear Nec

Founded as an importer of Japanese shoes, Nike, Inc. has grown to be one of the worlds largest makers of athletic footwear and apparel. The company has relied on consistent innovation in the design of its products and steady promotion to fuel its growth in both U.S. and foreign markets.

Nikes precursor originated in 1962, a product of the imagination of Philip H. Knight, a Stanford University business graduate who had been a member of the track team as an undergraduate at the University of Oregon. Traveling in Japan after finishing up business school, Knight got in touch with a Japanese firm that made athletic shoes, the Onitsuka Tiger Co., and arranged to import some of its products to the United States on a small scale. Knight was convinced that Japanese running shoes could become significant competitors for the German products that then dominated the American market. In the course of setting up his agreement with Onitsuka Tiger, Knight invented Blue Ribbon Sports to satisfy his Japanese partners expectations that he represented an actual company, and this hypothetical firm eventually grew to become Nike, Inc.

At the end of 1963, Knights arrangements in Japan came to fruition when he took delivery of 200 pairs of Tiger athletic shoes, which he stored in his fathers basement and peddled at various track meets in the area. Knights one-man venture became a partnership in the following year, when his former track coach, William Bowerman, chipped in $500 to equal Knights investment. Bowerman had long been experimenting with modified running shoes for his team, and he worked with runners to improve the designs of prototype Blue Ribbon Sports (BRS) shoes. Innovation in running shoe design eventually would become a cornerstone of the companys continued expansion and success. Bowermans efforts first paid off in 1966, when a shoe known as the Cortez, which he had designed, became a big seller.

BRS sold 1,300 pairs of Japanese running shoes in 1964, its first year, to gross $8,000. By 1965 the fledgling company had acquired a full-time employee, and sales had reached $20,000. The following year, the company rented its first retail space, next to a beauty salon in Santa Monica, California, so that its few employees could stop selling shoes out of their cars. In 1967 with fast-growing sales, BRS expanded operations to the East Coast, opening a distribution office in Wellesley, Massachusetts.

Bowermans innovations in running shoe technology continued throughout this time. A shoe whose upper portion was made of nylon went into development in 1967, and the following year, Bowerman and another employee came up with the Boston shoe, which incorporated the first cushioned mid-sole throughout the entire length of an athletic shoe.

By the end of the decade, Knights venture had expanded to include several stores and 20 employees, and sales were nearing $300,000. The company was poised for greater growth, but Knight was frustrated by a lack of capital to pay for expansion. In 1971 using financing from the Japanese trading company Nissho Iwai, BRS was able to manufacture its own line of products overseas, for import to the United States. At this time, the company introduced its Swoosh trademark, and the brand name Nike, the Greek goddess of victory. These new symbols were first affixed to a soccer shoe, the first Nike product to be sold.

A year later, BRS broke with its old Japanese partner, Onitsuka Tiger, after a disagreement over distribution, and kicked off promotion of its own products at the 1972 U.S. Olympic Trials, the first of many marketing campaigns that would seek to attach Nikes name and fortunes to the careers of well-known athletes. Nike shoes were geared to the serious athlete, and their high performance carried with it a high price.

In their first year of distribution, the companys new products grossed $1.96 million, and its staff swelled to 45. In addition, operations were expanded to Canada, the companys first foreign market, which would be followed by Australia, in 1974.

Bowerman continued his innovations in running-shoe design with the introduction of the Moon shoe in 1972, which had a waffle-like sole that had first been formed by molding rubber on a household waffle iron. This sole increased the traction of the shoe without adding weight.

In 1974 BRS opened its first U.S. plant, in Exeter, New Hampshire. The companys payroll swelled to 250, and worldwide sales neared $5 million by the end of 1974.

This growth was fueled in part by aggressive promotion of the Nike brand name. The company sought to expand its visibility by having its shoes worn by prominent athletes, including tennis players Ile Nastase and Jimmy Connors. At the 1976 Olympic Trials these efforts began to pay off as Nike shoes were worn by rising athletic stars.

The companys growth had truly begun to take off by this time, riding the boom in popularity of jogging that took place in the United States in the late 1970s. BRS revenues tripled in two years to $14 million in 1976, and then doubled in just one year to $28 million in 1977. To keep up with demand, the company opened new factories, adding a stitching plant in Maine and additional overseas production facilities in Taiwan and Korea. International sales were expanded when markets in Asia were opened in 1977 and in South America the following year. European distributorships were lined up in 1978.

Nike continued its promotional activities with the opening of Athletics West, a training club for Olympic hopefuls in track and field, and by signing tennis player John McEnroe to an endorsement contract. In 1978 the company changed its name to Nike, Inc. The company expanded its line of products that year, adding athletic shoes for children.

By 1979 Nike sold almost half the running shoes bought in the United States, and the company moved into a new world headquarters building in Beaverton, Oregon. In addition to its shoe business, the company began to make and market a line of sports clothing, and the Nike Air shoe cushioning device was introduced.

By the start of the 1980s, Nikes combination of ground-breaking design and savvy and aggressive marketing had allowed it to surpass the German athletic shoe company Adidas AG, formerly the leader in U.S. sales. In December of that year, Nike went public, offering two million shares of stock. With the revenues generated by the stock sale, the company planned continued expansion, particularly in the European market. In the United States, plans for a new headquarters on a large, rural campus were inaugurated, and an east coast distribution center in Greenland, New Hampshire, was brought on line. In addition, the company bought a large plant in Exeter, New Hampshire, to house the Nike Sport Research and Development Lab and also to provide for more domestic manufacturing capacity. The company had shifted its overseas production away from Japan at this point, manufacturing nearly four-fifths of its shoes in South Korea and Taiwan. It established factories in mainland China in 1981.

By the following year, when the jogging craze in the United States had started to wane, half of the running shoes bought in the United States bore the Nike trademark. The company was well insulated from the effects of a stagnating demand for running shoes, however, since it gained a substantial share of its sales from other types of athletic shoes, notably basketball shoes and tennis shoes. In addition, Nike benefited from strong sales of its other product lines, which included apparel, work and leisure shoes, and childrens shoes.

Given the slowing of growth in the U.S. market, however, the company turned its attention to growth in foreign markets, inaugurating Nike International, Ltd., in 1981 to spearhead the companys push into Europe and Japan, as well as into Asia, Latin America, and Africa. In Europe, Nike faced stiff competition from Adidas and Puma, which had a strong hold on the soccer market, Europes largest athletic-shoe category. The company opened a factory in Ireland to enable it to distribute its shoes without paying high import tariffs, and in 1981, bought out its distributors in England and Austria, to strengthen its control over marketing and distribution of its products. In 1982 the company outfitted Aston Villa, the winning team in the English and European Cup soccer championships, giving a boost to promotion of its new soccer shoe.

In Japan, Nike allied itself with Nissho Iwai Corp., the sixth-largest Japanese trading company, to form Nike-Japan Corporation. Because Nike already held a part of the low-priced athletic shoe market, the company set its sights on the high-priced end of the scale in Japan.

By 1982 the companys line of products included more than 200 different kinds of shoes, including the Air Force I, a basketball shoe, and its companion shoe for racquet sports, the Air Ace, the latest models in the long line of innovative shoe designs that had pushed Nikes earnings to an average annual increase of almost 100 percent. In addition, the company marketed more than 200 different items of clothing. By 1983 when the company posted its first-ever quarterly drop in earnings as the running boom peaked and went into a decline, resulting in slowing shoe sales, Nikes leaders were looking to the apparel division, as well as overseas markets, for further expansion. In foreign sales, the company had mixed results. Its operations in Japan were almost immediately profitable, and the company quickly jumped to second place in the Japanese market, but in Europe, Nike fared less well, losing money on its five European subsidiaries.

Faced with an 11.5 percent drop in domestic sales of its shoes in the 1984 fiscal year, Nike moved away from its traditional marketing strategy of support for sporting events and athlete endorsements to a wider-reaching approach, investing more than $10 million in its first national television and magazine advertising campaign. This followed the Cities Campaign, which used billboards and murals in nine American cities to publicize Nike products in the period before the 1984 Olympics. Despite the strong showing of athletes wearing Nike shoes in the 1984 Los Angeles Olympic games, Nike profits were down almost 30 percent for the fiscal year ending in May 1984, although international sales were robust and overall sales rose slightly. This decline was a result of aggressive price discounting on Nike products and the increased costs associated with the companys push into foreign markets and attempts to build up its sales of apparel.

Earnings continued to fall in the next three quarters, as the company lost market share, posting profits of only $7.8 million at the end of August 1984, a loss of $2.2 million three months later, and another loss of $2.1 million at the end of February 1985. In response, Nike adopted a series of measures to change its sliding course. The company cut back on the number of shoes it had sitting in warehouses, and also attempted to fine-tune its corporate mission by cutting back on the number of products it marketed. It made plans to reduce the line of Nike shoes by 30 percent within a year and a half. In addition, leadership at the top of the company was streamlined, as founder Knight resumed the post of president, which he had relinquished in 1983, in addition to his duties as chairman and chief executive officer, and overall administrative costs were reduced. As part of this effort, Nike also consolidated its research and marketing branches, closing its facility in Exeter, New Hampshire, and cutting 75 of the plants 125 employees. Overall, the company laid off about 400 workers during 1984.

Faced with shifting consumer interests, as, for instance, the U.S. market moved from jogging to aerobics, the company created a new products division in 1985 to help keep up with changing market demands. In addition, Nike purchased Pro-form, a small maker of weight-lifting equipment, as part of its plan to profit from all aspects of the fitness movement. The company was restructured further at the end of 1985 when its last two U.S. factories were closed and its previous divisions of apparel and athletic shoes were rearranged by sport. In a move that would prove to be the key to the companys recovery, in 1985 the company signed up basketball player Michael Jordan to endorse a new version of its Air shoe, introduced four years earlier.

In early 1986 Nike announced expansion into a number of new lines, including casual apparel for women, a less-expensive line of athletic shoes called Street Socks, golf shoes, and tennis gear marketed under the name Wimbledon. By mid-1986 Nike was reporting that its earnings had begun to increase again, and that year sales topped $1 billion for the first time. At that time, the company sold its 51 percent stake in Nike-Japan to its Japanese partner, and six months later, at years end, laid off 10 percent of its U.S. employees at all levels in a cost-cutting move.

Following these moves, Nike announced a drop in revenues and earnings in 1987, and another round of restructuring and cost-cutting ensued, as the company attempted to come to grips with the continuing evolution of the U.S. fitness market from jogging to walking, from aerobics to cross-trainingdiversified physical workout. Only Nikes innovative Air athletic shoes provided a bright spot in the companys otherwise erratic progress, allowing the company to regain market share from rival Reebok International Ltd. in several areas, including basketball and cross-training.

The following year, Nike branched out from athletic shoes, purchasing Cole Haan, a maker of casual and dress shoes, for $80 million. Advertising heavily, the company took a commanding lead in sales to young people to claim 23 percent of the overall athletic shoe market. Profits rebounded to reach $100 million dollars in 1988, as sales rose 37 percent to $1.2 billion. Later that year, Nike launched a $10 million dollar television campaign around the theme Just Do It, and announced that its 1989 advertising budget would reach $45 million.

In 1989 Nike marketed several new lines of shoes, and led its market with $1.7 billion in sales, yielding profits of $167 million. The companys product innovation continued, as a basketball shoe with an inflatable collar around the ankle was introduced under the brand name Air Pressure. In addition, Nike continued its aggressive marketing, using ads featuring Michael Jordan and the Mars Blackmon character played by actor-director Spike Lee, the ongoing Just Do It campaign, and Bo Knows television spots featuring athlete Bo Jackson. At the end of 1989, the company began relocation to its newly constructed headquarters campus in Beaverton, Oregon.

In 1990 the company sued two competitors for copying the patented designs of its shoes, and found itself engaged in a dispute with the U.S. Customs Service over import duties on its Air Jordan basketball shoes. In 1990 the companys revenues hit $2 billion. The company acquired Tetra Plastics Inc., producers of plastic film for shoe soles. That year, the company opened Nike Town, a prototype store selling the full range of Nike products, in Portland, Oregon.

By 1991 Nikes Visible Air shoes had enabled it to surpass its rival Reebok in the U.S. market. In the fiscal year ending May 31, 1991, Nike sales surpassed the $3 billion mark, fueled by record sales of 41 million pairs of Nike Air shoes and a booming international market. Its efforts to conquer Europe had begun to show fruit as the companys business grew by 100 percent in Europe that year, producing over $1 billion in sales and gaining the second-place market share behind the leading German company, Adidas. Nikes U.S. shoe market had largely matured, slowing to five percent annual growth down from 15 percent annual growth from 1980 and 1988. The company began eyeing overseas markets and predicted ample room to grow in Europe. However, Nikes U.S. rival Reebok also saw potential for growth in Europe, and by 1992 European MTV was glutted with athletic shoe advertisements as the battle for the youth market heated up between Nike, Reebok, and their European competitors, Adidas and Puma.

Nike also saw growth potential in its womens shoe and sports apparel division. In February of 1992 Nike began a $13 million print and television advertising pitch for its womens segment, built upon its Dialogue print campaign which had been slowly wooing 18-to-34 year old women since 1990. Sales of Nike womens apparel lines Fitness Essentials, Elite Aerobics, Physical Elements, and All Condition Gear increased by 25 percent in both 1990 and 1991 and jumped by 68 percent in 1992.

In July of 1992 Nike opened its second Nike Town retail store in Chicago, Illinois. Like its predecessor in Portland, the Chicago Nike Town was designed to combine the fun and excitement of FAO Schwartz, the Smithsonian Institute and Disneyland in a space that will entertain sports and fitness fans from around the world as well as provide a high-profile retail outlet for Nikes rapidly expanding lines of footwear and clothing.

Nike celebrated its 20th anniversary in 1992, virtually debt free and with company revenues of $3.4 billion. Gross profits jumped $100 million in that year, fueled by soaring sales in its retail division which expanded to include 30 Nike-owned discount outlets and the two Nike Towns. To celebrate its anniversary, Nike brought out its old slogan, There is no finish line. As if to underscore that sentiment, Nike chairman Philip Knight announced massive plans to remake the company with the goal of being the best sports and fitness company in the world. To fulfill that goal, the company set the ground plans for a complicated yet innovative marketing structure seeking to make the Nike brand into a worldwide megabrand along the lines of Coca-Cola, Pepsi, Sony, and Disney.

Nike continued expansion of its high-profile Nike Town chain, opening outlets in Atlanta, Georgia, in spring of 1993 and Costa Mesa, California, later that year. Also in 1993, as part of its long-term marketing strategy, Nike began an ambitious venture with Mike Ovitzs Creative Artists Agency to organize and package sports events under the Nike namea move that could lead the company into competition with sports management giants such as ProServ, IMG, and Advantage International.

Nike also began a more controversial venture into the arena of sports agents, negotiating contracts for basketballs Scottie Pippin, Alonzo Mourning, and others in addition to retaining athletes such as Michael Jordan and Charles Barkley as company spokespeople. Nikes influence in the world of sports grew to such a degree that in 1993 the Sporting News dubbed Knight the most powerful man in sports.

Critics contend that Nikes influence runs too deep, having its hand in negotiating everything in an athletes life from investments to the choice of an apartment. But Nikes marketing executives see its as part of a campaign to create an image of Nike not just as a product line but as a lifestyle, a Nike attitude. Marketing ideas under consideration range from the creation of Nike theme park to creating Nike television programs sponsored by Nike products.

Although much of Nikes marketing plan remains in the conceptual stage, its goal after 20 years in the business remained simple: to sell more shoes and clothing. Nike entered into this massive marketing plan with a large supply of financial reserves, a highly polished image, and a strong foothold in both U.S. and European markets. The company has a record of innovative design and savvy promotion. And if it succeeds at enacting its current plan, Nike may well become a household name worldwide.

Principal Subsidiaries

Cole Haan Holdings, Inc.; Tetra Plastics Inc.

Further Reading

Fitting the World in Sport Shoes, Business Week, January 25, 1982.

Gold, Jacqueline S, The Marathon Man?, Financial World, February 16, 1993, p. 32.

Grimm, Matthew, Nike Vision, Brandweek, March 29, 1993, p. 19.

Nike Pins Hopes for Growth on Foreign Sales and Apparel, New York Times, March 24, 1983.

Nike Timeline, Beaverton, Oregon: Nike, Inc. 1990.

Tharp, Mike,Easy-Going Nike Adopts Stricter Controls To Pump Up Its Athletic-Apparel Business, Wall Street Journal, November 6, 1984.

Where Nike and Reebok Have Plenty of Running Room, Business Week, March 11, 1991.

Elizabeth Rourke

updated by Maura Troester

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Nike, Inc.." International Directory of Company Histories. . Encyclopedia.com. 16 Aug. 2017 <http://www.encyclopedia.com>.

"Nike, Inc.." International Directory of Company Histories. . Encyclopedia.com. (August 16, 2017). http://www.encyclopedia.com/books/politics-and-business-magazines/nike-inc-1

"Nike, Inc.." International Directory of Company Histories. . Retrieved August 16, 2017 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/nike-inc-1

Nike, Inc.

Nike, Inc.

One Bowerman Drive
Beaverton, Oregon 97005
U.S.A.
(503) 671-6453
Fax: (503) 671-6339

Public Company
Incorporated: 1964 as Blue Ribbon Sports
Employees: 4,500
Sales: $3.00 billion
Stock Exchanges: New York Pacific

Founded as an importer of Japanese shoes, Nike, Inc. has grown to be one of the worlds largest makers of athletic footwear and apparel. The company has relied on consistent innovation in the design of its products and steady promotion to fuel its growth in both U.S. and foreign markets.

Nikes precursor originated in 1962, a product of the imagination of Phillip Knight, a Stanford University business graduate who had been a member of the track team as an undergraduate at the University of Oregon. Traveling in Japan after finishing up business school, Knight got in touch with a Japanese firm that made athletic shoes, the Onitsuka Tiger Company, and arranged to import some of its products to the United States on a small scale. Knight was convinced that Japanese running shoes could become significant competitors for the German products that then dominated the American market. In the course of setting up his agreement with Onitsuka Tiger, Knight invented Blue Ribbon Sports to satisfy his Japanese partners expectations that he represented an actual company, and this hypothetical firm eventually grew to become Nike.

At the end of 1963, Knights arrangements in Japan came to fruition when he took delivery of 200 pairs of Tiger athletic shoes, which he stored in his fathers basement and peddled at various track meets in the area. Knights one-man venture became a partnership in the following year, when his former track coach, William Bowerman, chipped in $500 to equal Knights investment. Bowerman had long been experimenting with modified running shoes for his team, and he worked with runners to improve the designs of prototype Blue Ribbon Sports (BRS) shoes. Innovation in running shoe design eventually would become a cornerstone of the companys continued expansion and success. Bowermans efforts first paid off in 1966, when a shoe known as the Cortez, which he had designed, became a big seller.

BRS sold 1,300 pairs of Japanese running shoes in 1964, its first year, to gross $8,000. By 1965 the fledgling company had acquired a full-time employee, and sales had reached $20,000. The following year, the company rented its first retail space, next to a beauty salon in Santa Monica, California, so that its few employees could stop selling shoes out of their cars. In 1967 with fast-growing sales, BRS expanded operations to the East Coast, opening a distribution office in Wellesley, Massachusetts.

Bowermans innovations in running shoe technology continued throughout this time. A shoe whose upper portion was made of nylon went into development in 1967, and the following year, Bowerman and another employee came up with the Boston shoe, which incorporated the first cushioned mid-sole throughout the entire length of an athletic shoe.

By the end of the decade, Knights venture had expanded to include several stores and 20 employees, and sales were near-ing $300,000. The company was poised for greater growth, but Knight was frustrated by a lack of capital to pay for expansion. In 1971 using financing from the Japanese trading company Nissho Iwai, BRS was able to manufacture its own line of products overseas, for import to the United States. At this time, the company introduced its Swoosh trademark, and the brand name Nike, the Greek goddess of victory. These new symbols were first affixed to a soccer shoe, the first Nike product to be sold.

A year later, BRS broke with its old Japanese partner, Onitsuka Tiger, after a disagreement over distribution, and kicked off promotion of its own products at the 1972 U.S. Olympic Trials, the first of many marketing campaigns that would seek to attach Nikes name and fortunes to the careers of well-known athletes. Nike shoes were geared to the serious athlete, and their high performance carried with it a high price.

In their first year of distribution, the companys new products grossed $1.96 million, and its staff swelled to 45. In addition, operations were expanded to Canada, the companys first foreign market, which would be followed by Australia, in 1974.

Bowerman continued his innovations in running-shoe design with the introduction of the Moon shoe in 1972, which had a waffle-like sole that had first been formed by molding rubber on a household waffle iron. This sole increased the traction of the shoe without adding weight.

In 1974 BRS opened its first U.S. plant, in Exeter, New Hampshire. The companys payroll swelled to 250, and worldwide sales neared $5 million by the end of 1974.

This growth was fueled in part by aggressive promotion of the Nike brand name. The company sought to expand its visibility by having its shoes worn by prominent athletes, including tennis players Hie Nastase and Jimmy Connors. At the 1976 Olympic Trials these efforts began to pay off as Nike shoes were worn by rising athletic stars.

The companys growth had truly begun to take off by this time, riding the boom in popularity of jogging that took place in the United States in the late 1970s. BRS revenues tripled in two years to $14 million in 1976, and then doubled in just one year to $28 million in 1977. To keep up with demand, the company opened new factories, adding a stitching plant in Maine and additional overseas production facilities in Taiwan and Korea. International sales were expanded when markets in Asia were opened in 1977 and in South America the following year. European distributorships were lined up in 1978.

Nike continued its promotional activities with the opening of Athletics West, a training club for Olympic hopefuls in track and field, and by signing tennis player John McEnroe to an endorsement contract. In 1978 the company changed its name to Nike, Inc. The company expanded its line of products that year, adding athletic shoes for children.

By 1979 Nike sold almost half the running shoes bought in the United States, and the company moved into a new world headquarters building in Beaverton, Oregon. In addition to its shoe business, the company began to make and market a line of sports clothing, and the Nike-Air shoe cushioning device was introduced.

By the start of the 1980s, Nikes combination of groundbreaking design and savvy and aggressive marketing had allowed it to surpass the German athletic shoe company Adidas, formerly the leader in U.S. sales. In December of that year, Nike went public, offering two million shares of stock. With the revenues generated by the stock sale, the company planned continued expansion, particularly in the European market. In the United States, plans for a new headquarters on a large, rural campus were inaugurated, and an east coast distribution center in Greenland, New Hampshire, was brought on line. In addition, the company bought a large plant in Exeter, New Hampshire, to house the Nike Sport Research and Development Lab and also to provide for more domestic manufacturing capacity. The company had shifted its overseas production away from Japan at this point, manufacturing nearly four-fifths of its shoes in South Korea and Taiwan. It established factories in mainland China in 1981.

By the following year, when the jogging craze in the United States had started to wane, half of the running shoes bought in the United States bore the Nike trademark. The company was well insulated from the effects of a stagnating demand for running shoes, however, since it gained a substantial share of its sales from other types of athletic shoes, notably basketball shoes and tennis shoes. In addition, Nike benefited from strong sales of its other product lines, which included apparel, work and leisure shoes, and childrens shoes.

Given the slowing of growth in the U.S. market, however, the company turned its attention to growth in foreign markets, inaugurating Nike International, Ltd., in 1981 to spearhead the companys push into Europe and Japan, as well as into Asia, Latin America, and Africa. In Europe, Nike faced stiff competition from Adidas and Puma, which had a strong hold on the soccer market, Europes largest athletic-shoe category. The company opened a factory in Ireland to enable it to distribute its shoes without paying high import tariffs, and in 1981, bought out its distributors in England and Austria, to strengthen its control over marketing and distribution of its products. In 1982 the company outfitted Aston Villa, the winning team in the English and European Cup soccer championships, giving a boost to promotion of its new soccer shoe.

In Japan, Nike allied itself with Nissho Iwai Corp., the sixth-largest Japanese trading company, to form Nike-Japan Corporation. Because Nike already held a part of the low-priced athletic shoe market, the company set its sights on the high-priced end of the scale in Japan.

By 1982 the companys line of products included more than 200 different kinds of shoes, including the Air Force I, a bas- ketball shoe, and its companion shoe for racquet sports, the Air Ace, the latest models in the long line of innovative shoe designs that had pushed Nikes earnings to an average annual increase of almost 100%. In addition, the company marketed more than 200 different items of clothing. By 1983 when the company posted its first-ever quarterly drop in earnings as the running boom peaked and went into a decline, resulting in slowing shoe sales, Nikes leaders were looking to the apparel division, as well as overseas markets, for further expansion. In foreign sales, the company had mixed results. Its operations in Japan were almost immediately profitable, and the company quickly jumped to second place in the Japanese market, but in Europe, Nike fared less well, losing money on its five European subsidiaries.

Faced with an 11.5% drop in domestic sales of its shoes in the 1984 fiscal year, Nike moved away from its traditional marketing strategy of support for sporting events and athlete endorsements to a wider-reaching approach, investing more than $10 million in its first national television and magazine advertising campaign. This followed the Cities Campaign, which used billboards and murals in nine American cities to publicize Nike products in the period before the 1984 Olympics. Despite the strong showing of athletes wearing Nike shoes in the 1984 Los Angeles Olympic games, Nike profits were down almost 30% for the fiscal year ending in May 1984, although international sales were robust and overall sales rose slightly. This decline was a result of aggressive price discounting on Nike products and the increased costs associated with the companys push into foreign markets and attempts to build up its sales of apparel.

Earnings continued to fall in the next three quarters, as the company lost market share, posting profits of only $7.8 million at the end of August 1984, a loss of $2.2 million three months later, and another loss of $2.1 million at the end of February 1985. In response, Nike adopted a series of measures to change its sliding course. The company cut back on the number of shoes it had sitting in warehouses, and also attempted to fine-tune its corporate mission by cutting back on the number of products it marketed. It made plans to reduce the line of Nike shoes by 30% within a year and a half. In addition, leadership at the top of the company was streamlined, as founder Knight resumed the post of president, which he had relinquished in 1983, in addition to his duties as chairman and chief executive officer, and overall administrative costs were reduced. As part of this effort, Nike also consolidated its research and marketing branches, closing its facility in Exeter, New Hampshire, and cutting 75 of the plants 125 employees. Overall, the company laid off about 400 workers during 1984.

Faced with shifting consumer interests, as, for instance, the U.S. market moved from jogging to aerobics, the company created a new products division in 1985 to help keep up with changing market demands. In addition, Nike purchased Pro-form, a small maker of weight-lifting equipment, as part of its plan to profit from all aspects of the fitness movement. The company was restructured further at the end of 1985 when its last two U.S. factories were closed and its previous divisions of apparel and athletic shoes were rearranged by sport. In a move that would prove to be the key to the companys recovery, in 1985 the company signed up basketball player Michael Jordan to endorse a new version of its Air shoe, introduced four years earlier.

In early 1986 Nike announced expansion into a number of new lines, including casual apparel for women, a less-expensive line of athletic shoes called Street Socks, golf shoes, and tennis gear marketed under the name Wimbledon. By mid-1986 Nike was reporting that its earnings had begun to increase again, and that year sales topped $1 billion for the first time. At that time, the company sold its 51% stake in Nike-Japan to its Japanese partner, and six months later, at years end, laid off 10% of its U.S. employees at all levels in a cost-cutting move.

Following these moves, Nike announced a drop in revenues and earnings in 1987, and another round of restructuring and cost-cutting ensued, as the company attempted to come to grips with the continuing evolution of the U.S. fitness market from jogging to walking, from aerobics to cross-training diversified physical workout. Only Nikes innovative Air athletic shoes provided a bright spot in the companys otherwise erratic progress, allowing the company to regain market share from rival Reebok in several areas, including basketball and cross-training.

The following year, Nike branched out from athletic shoes, purchasing Cole Haan, a maker of casual and dress shoes, for $80 million. Advertising heavily, the company took a commanding lead in sales to young people to claim 23% of the overall athletic shoe market. Profits rebounded to reach $100 million dollars in 1988, as sales rose 37% to $1.2 billion. Later that year, Nike launched a $10 million dollar television campaign around the theme Just Do It, and announced that its 1989 advertising budget would reach $45 million.

In 1989 Nike marketed several new lines of shoes, and led its market with $1.7 billion in sales, yielding profits of $167 million. The companys product innovation continued, as a basketball shoe with an inflatable collar around the ankle was introduced under the brand name Air Pressure. In addition, Nike continued its aggressive marketing, using ads featuring Michael Jordan and the Mars Blackmon character played by actor-director Spike Lee, the ongoing Just Do It campaign, and Bo Knows television spots featuring athlete Bo Jackson. At the end of 1989, the company began relocation to its newly constructed headquarters campus in Beaverton, Oregon.

In 1990 the company sued two competitors for copying the patented designs of its shoes, and found itself engaged in a dispute with the U.S. Customs Service over import duties on its Air Jordan basketball shoes. In 1990 the companys revenues hit $2 billion. The company acquired Tetra Plastics Inc., producers of plastic film for shoe soles. That year, the company opened Nike Town, a prototype store selling the full range of Nike products, in Portland, Oregon. Additional stores based on this model in other large cities are planned for 1992.

By 1991 Nikes Visible Air shoes had enabled it to surpass its rival Reebok in the U.S. market. Its efforts to conquer Europe had begun to show fruit as the company gained a second-place market share, behind only the leading German company, Adidas. Unlike the U.S. market, which had largely matured, Nike predicted ample room to grow on foreign soil.

As Nike enters the 1990s, this young company can look back on an extraordinary record of growth over a relatively short period of time. Blessed with good timing, the company rode the U.S. fitness and jogging boom to unprecedented profits, only to suffer the pangs of adjustment as the market matured and changed. Given the companys record of innovative design and savvy promotion, however, it appears unlikely that Nike will stumble again badly as it runs, jogs, walks, dances, jumps, and plays its way into the future.

Principal Subsidiaries

Cole Haan Holdings, Inc.; Tetra Plastics Inc.

Further Reading

Fitting the World in Sport Shoes, Business Week, January 25, 1982; Nike Pins Hopes for Growth on Foreign Sales and Apparel, The New York Times, March 24, 1983; Tharp, Mike, Easy-Going Nike Adopts Stricter Controls To Pump Up Its Athletic-Apparel Business, The Wall Street Journal, November 6, 1984; Nike Timeline, Beaverton, Oregon, Nike, Inc., 1990; Where Nike and Reebok Have Plenty of Running Room, Business Week, March 11, 1991.

Elizabeth Rourke

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Nike, Inc.." International Directory of Company Histories. . Encyclopedia.com. 16 Aug. 2017 <http://www.encyclopedia.com>.

"Nike, Inc.." International Directory of Company Histories. . Encyclopedia.com. (August 16, 2017). http://www.encyclopedia.com/books/politics-and-business-magazines/nike-inc-2

"Nike, Inc.." International Directory of Company Histories. . Retrieved August 16, 2017 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/nike-inc-2

Nike, Inc.

Nike, Inc.

One Bowerman Drive Beaverton, OR 97005
(503) 671-6453
www.nike.com

A relatively young company, Nike, Inc. has existed for only thirty years yet has managed to become one of the world's top companies, selling not only athletic shoes, but athletic clothing and equipment in 140 countries around the world. Headquartered in Beaverton, Oregon, this athletic and apparel giant is named for the Greek goddess of victory, and is represented by a famous symbol, the "swoosh." The Nike swoosh is instantly recognizable, and has become an international symbol for athletes who strive for the very best.

Just Two Guys Who Like to Run

Nike was founded by two men who were rather obsessed with sports, Bill Bowerman (1911-1999) and Philip Knight (1938-). Bowerman was a World War II (1939-45) veteran who began coaching the track-and-field team at the University of Oregon in 1949. A hardcore athlete, he was a man thrilled with speed and running in all forms. He is frequently credited with bringing jogging as a form of exercise and sport into widespread popularity. Bowerman was such a skilled athlete and coach that the University of Oregon earned a reputation for excellence, and attracted athletes from around the world. One of these athletes was Philip Knight, who met Coach Bowerman in 1957.

While Knight competed on Bowerman's track team, the two became friends. They both enjoyed sports, especially running and jogging, and believed athletes could achieve greater balance and speed with better shoes. At the time, the athletic shoe market was ruled by German-made sneakers and tennis shoes manufactured by Adidas and Puma. None were really designed for running or jogging. Bowerman frequently experimented at home trying to create the perfect running shoe.

After Knight earned his business degree at the University of Oregon, he attended graduate school in California at Stanford University. In 1962, he received his master's degree in business administration (MBA). After graduation, Knight rewarded himself with a trip around the world. A very important stop was in Kobe, Japan, where he found, and fell in love with, Oniksuka Tiger shoes. Knight believed the shoes were far superior to the brands currently available in the United States. He bought a large shipment of the Tiger athletic shoes and made up a business on the spot. He called it Blue Ribbon Sports.

Nike at a Glance

  • Employees: 22,000
  • CEO: Phil Knight
  • Subsidiaries: Bauer NIKE Hockey, Inc.; Cole Haan Holdings, Inc.; NIKE Golf; NIKE IHM, Inc.; NIKE Team Sports, Inc.
  • Major Competitors: Reebok; Fila; Adidas-Saloman; Puma AG
  • Notable Products: Nike Air; Nike Pegasus; Air Jordan basketball shoes; Typhoon ACG and Triax watches; Airelon sunglasses

Blue Ribbon Sports Is Born

After returning to the United States, Knight and Coach Bowerman decided to form a partnership. They used the name Knight had already created, Blue Ribbon Sports, and each contributed $500 toward their dream of selling better athletic shoes. Bowerman continued to coach at the University of Oregon while serving as the idea and design man of Blue Ribbon, tinkering and experimenting with various materials and types of shoe. Knight handled the business side of the company.

Timeline

1957:
Bill Bowerman and Philip Knight meet at the University of Oregon.
1962:
Knight travels to Japan and purchases Oniksuka Tiger shoes.
1964:
Bowerman and Knight form a partnership; company makes $8,000 in first year.
1965:
Blue Ribbon Sports hires its first employee.
1968:
First Bowerman-designed shoe, the Cortez, takes the United States by storm.
1969:
Knight quits his accounting job to focus on Blue Ribbon Sports; sales reach $800,000.
1971:
Partners begin manufacturing their own shoes.
1972:
Company is renamed Nike.
1979:
Nike introduces its apparel line; company controls 50 percent of U.S. running shoe market.
1980:
Nike becomes a public corporation with twenty-seven thousand employees.
1984:
Sales hit just under $920 million.
1985:
Company signs Michael Jordan to promote Nike shoes.
1988:
Nike-Air shoes for men and women are introduced; "just Do It" ad campaign is launched.
1990:
First NikeTown retail store opens in Portland, Oregon.
1995:
Golfer Tiger Woods is signed as pitchman.
1999:
Bill Bowerman dies at age eighty-eight.
2001:
Sales reach over $9 billion; first NikeGoddess store for women opens.

The shipment of Tiger shoes took over a year to arrive in the United States. When they did, Knight stowed them in his parents' garage and began selling them from his car at sports events. The first year Blue Ribbon Sports was in business, the struggling firm made about $8,000. By 1965, the partners hired their first employee, Jeff Johnson, to help sell the Japanese shoes. Like Phil Knight, Johnson sold the shoes wherever and whenever he could, talking to athletes and demonstrating their high-quality craftsmanship.

In the meantime, Bowerman was busy making adjustments and improvements to the original shoe. A Bowerman-redesigned Tiger shoe, called the Cortez, became a best-seller with area sports enthusiasts and soon caught on across the United States. Cortez sales made the six-year-old company a success.

Based on Cortez sales, Bowerman and Knight decided they were ready to design and manufacture their own brand of shoes. They stopped importing shoes from Japan, and by the early 1970s were producing athletic shoes with a new type of rubber sole that had been crafted by Bowerman for speed and traction. The night before the company's first batch of custom shoe boxes was to be produced, Jeff Johnson suggested another improvementa name change. His choice was a name taken from Greek mythology, Nike (pronounced NI-kee). Nike was the goddess of victory, an athletic beauty whose winged shoes and love of speed would be a perfect symbol for the young company. In 1972, Blue Ribbon Sports, Inc., officially changed its name to Nike.

Nike Takes the United States by Storm

In Nike's first year, Bowerman and Knight found an excellent way to introduce the fledgling firm to the world. Eugene, Oregon, happened to be hosting the Olympic trials and the partners gave some of the marathon runners Nike shoes to wear while competing. Two of the runners did very well, and the company had proof of the winning potential of its shoes. The company pulled in nearly $2 million in sales for the year; it also grew to forty-five employees. Knight devoted himself fulltime to the company, while Bowerman remained coach at the University of Oregon until 1972 when he retired to focus his energies on Nike and its growing athletic shoe line.

In 1971, Bill Bowerman made his first lightweight shoe sole by pouring rubber into his wife's waffle iron. According to Bowerman, every ounce he could remove from a shoe's sole would make a runner go even faster.

Nike continued to expand and gain attention, with sales topping $3 million for 1973. It also opened its first retail store in Santa Monica, California, which featured a variety of Nike-brand shoes. By 1979, Nike was the leading athletic shoe manufacturer in the United States, controlling half of this quickly expanding market. The company then introduced clothing to its product line, including a variety of shorts, running pants, and shirts.

By 1982, Nike spread its wings and started selling its famous brand internationally; this was also the year the company began a little advertising. Knight had never been a fan of advertising, but felt it was time to bring the Nike name to more Americans. He hired a small agency in Portland, called Weiden & Kennedy to craft a Nike image, although neither the agency nor Phil Knight had any idea their collaboration would eventually achieve worldwide attention. Over time, Nike ads would become almost more famous than the products the company produced.

Missed Trends and New Successes

While Nike had become a tremendous success, it was sometimes slow to respond to trends. For example, the company failed to recognize the potential of the aerobics craze of the 1980s. A new rival, Reebok International, did seize the opportunity and made millions. Nike bounced back in 1985 when it signed Michael Jordan (1963-) of the Chicago Bulls to promote its new Air Jordan basketball shoe. Early sales were good due largely to the "cool" television commercials that featured Jordan flying through the air.

In 1986, the company reached over $1 billion in sales, but Reebok still pushed Nike out of the top slot in the American athletic shoe market. The reason? Nike had continued to overlook a crucial part of the athletic market: women. Reebok had many styles and colors for women while Nike had traditionally looked to men and boys for its sales.

Missed trends caused Nike sales to drop to $850 million in 1987. That same year, however, a new line was released that would boost the company. The shoes featured a special cushioning system in the heel to reduce the stress of running on the foot and ankle. The new Air shoe line (not the same as the Air Jordan basketball shoes) had gas in the shoe's sole to create the cushion, which was like a shock absorberabsorbing the impact of the foot hitting the ground in the same way a shock absorber reduces bumps in the road for a car or truck.

Michael Jordan and Nike

In the early 1970s, Nike began sponsoring athletes as a way to gain attention for its shoes. Its first deal was with a runner named Steve Prefontaine (1951-1975), who was coached by Bill Bowerman at the University of Oregon. Prefontaine was an exceptional athlete with an attitudehe did things his own way, and didn't care what other people said or thought. Bowerman and Knight believed Prefontaine projected the perfect Nike image. They offered the runner money to wear Nike shoes when he competed and Prefontaine began wearing Nikes in 1973.

Sadly, Prefontaine's career was cut short when he died in a car crash in 1975. It would be another ten years before Nike again approached an athlete to wear its shoes. The young man Knight and Bowerman selected was Michael Jordan (1963-) who, in 1985, was just starting to make a name for himself in basketball as a player for the Chicago Bulls. Knight believed Jordan had loads of potential, just like young filmmaker Spike Lee (1957-), who was signed to produce several television ads featuring Jordan.

Lee created memorable commercials depicting how hard work and special Nike shoes made Jordan "fly." The ads were such a big success that everyone wanted to wear Air Jordan shoes. Jordan became known as "His Airness" and Nike quickly became an internationally known sports apparel company. Jordan and the Chicago Bulls went on to win six national titles, and the popularity of Air Jordan shoes continued to soar.

Jordan retired from basketball on two occasions, once to play baseball, then again to pursue other interests. In 2001, he returned to basketball to play with the Washington Wizards. Throughout his career changes, Jordan's popularity remained high and Nike continued to sell products. The Jordan line of shoes and clothing grew so much over the years, it was separated from other Nike products to form its own division. Michael Jordan even has his own office at Nike headquarters, and has played an active role in shaping what goes into the items bearing his name.

In 1988, the advertising campaign featuring the line "Just do it" was launched, and brought Nike instant acclaim as a company with hot products and a lot of attitude. The excitement generated by the ads made Nike the fashion sensation of the year and the company quickly regained the athletic shoe market from rival Reebok. Yet what enabled Nike to hold on to this market position in the coming years was finally taking notice of women buyers. Nike began sponsoring women athletes, initiated research on shoes specifically designed for female feet, and introduced footwear, apparel, and equipment.

Nike Captures the World

When Nike entered the 1990s, its sales had risen to $2 billion and it employed over five thousand people worldwide. For Knight and his top managers, however, this wasn't enoughthey wanted to make Nike the world's leading athletic apparel and equipment company. A move in this direction was the purchase of the largest hockey and skating equipment producer, Canstar Sports, in 1995. By the mid-1990s, the Nike name had spread throughout the sports world: NFL football teams wore Nike-made jerseys and shoes; finalists in the U.S. Open tennis championships sported Nike gear; Nike sponsored New York City marathons; the company even outfitted major league soccer teams.

In 1995, sales were just under $5 billion, and Nike was indeed the top athletic shoe and apparel manufacturer in the marketplace. By the following year, sales leapt to over $6 billion, while Nike employees jumped to fifteen thousand throughout the world producing shoes, clothing, and equipment. Nike was on top not only in the shoe business; it had become one of the world's most successful companies.

The Nike Swoosh

The famous Nike "swoosh" was designed in 1971 by Carolyn Davidson, who was attending graduate school at Portland State University. She was paid $35 for this simple, yet rather interesting shape (it looks like a rounded checkmark), having no idea it would change the business world.

The trademark is so well known that the company often uses the symbol instead of its name in advertising on television and in magazines and newspapers. At company headquarters in Oregon, Nike has a giant red swoosh on the outside of its building instead of its name. In 1999, Marketing magazine declared the Nike swoosh to be Logo of the Century, beating out such famous symbols as McDonald's golden "M " arches. This made it the most recognizable logo in the world.

The Nike swoosh, however, is not only a marketing tool. It has become synonymous with hard work and success, and it appeals to a wide range of peoplechildren, teens, and adults of all races and in dozens of countries around the world. Some people, like young athletes, have had the swoosh symbol shaved onto their heads or tattooed on their bodies. Nike cofounder Phil Knight even got a swoosh tattoo on his left ankle after several employees challenged him to do it.

The end of the 1990s brought a major change for Nike and Phil Knight when Bill Bowerman retired from the board of directors after thirty years. Just a few months later, Bowerman died on December 24, 1999, at his home in Fossil, Oregon. Knight, Nike employees, and hundreds of athletes past and present mourned the loss of Bowerman, a vital force in creating Nike and its one-of-a-kind products. While Bowerman could never be replaced, the company honored his memory with a new line of shoes carrying his name.

Into the Future

In the new century, Nike continues to grow. In 2000, the company had over twenty-two thousand employees in offices around the world, with five thousand of them working at the Beaverton, Oregon, "campus." Nike also continues its long tradition of research and development through their Nike Sports Research Lab, which opened in 1980.

In 2000, Tiger Woods (1975-), who like Michael Jordan had become another famous face for Nike, signed a new contract to pitch Nike golf products for another five years. That same year, Nike designed uniforms for over two thousand athletes at the Sydney, Australia, Olympic Games, and formed a women's division within the company, complete with its own vice president and advertising budget. Next came the opening of its first NikeGoddess store in Newport Beach, California, in 2001. There are plans for several more NikeGoddess stores to open in the United States over the next few years.

Whether for men or women, girls or boys, top athletes or beginners, Nike has shoes, apparel, and equipment for everyone. Over the years, it has become one of the world's top companies, recognized for quality athletic apparel, edgy advertising, and famous phrases. The ultimate goal, however, remains the samea commitment to athletic fitness. According to the Nike Web site, "It's all about the athlete. Always has been, always will be."

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Nike, Inc.." Leading American Businesses. . Encyclopedia.com. 16 Aug. 2017 <http://www.encyclopedia.com>.

"Nike, Inc.." Leading American Businesses. . Encyclopedia.com. (August 16, 2017). http://www.encyclopedia.com/reference/trade-magazines/nike-inc

"Nike, Inc.." Leading American Businesses. . Retrieved August 16, 2017 from Encyclopedia.com: http://www.encyclopedia.com/reference/trade-magazines/nike-inc