nike case study 2.3 - Nike, Inc. Running Head: Nike, Inc....

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Nike, Inc. Running Head: Nike, Inc. Nike, Inc. Case Study Adelaide A. Odoteye FIN 586 – Dr. Cullers Fall 2006
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Nike, Inc. The brand name “Nike” is one of the most readily recognized around the globe. The name is synonymous with high-quality athletic shoes, apparel, and accessories in the minds of many people worldwide. Perhaps it is the ubiquitous Nike “swoosh” and compelling marketing that commands attention. Or maybe it is the association between the brand name and its famous endorsers, such as Tiger Woods and Michael Jordan. Alternatively, it may be Nike’s cutting- edge sporting vision and technology that entrances multitudes of consumers. Quite conceivably, it is a combination of these factors that has propelled Nike to the top of its industry. However, not all of Nike’s story is ideal. In recent years, the company has faced criticism in connection with its use of contract labor in developing nations. The purpose of this case is to provide an understanding of the company’s background, its general business strategy, and its use of contract labor. The Athletic Apparel and Footwear Industry The athletic apparel and footwear industry experienced steady growth for more than two decades, beginning in the early 1980’s. For example, in the U.S.A. alone, consumer spending on athletic footwear increased by 10 percent during the first six months of 2005 (Quinn, 2006). Consumers were not just professional athletes, but ordinary men, women, and children who wore athletic apparel for both sports and leisure. The industry became more fashion-oriented, resulting in higher levels of innovation and cutting-edge technology. As a result of the emphasis on style and fashion and customers’ demands for improving performance and comfort, the industry experienced short life-cycles for individual products (Quinn, 2006). 2
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Nike, Inc. The industry was characterized by fierce competition in global markets. Industry leaders jousted for supremacy in the professional, female, and youth segments. By 2005, the U.S. market was considered to be mature, and global markets were likewise rapidly approaching maturity, resulting in intensified competition for market share (Harris, 2006). There also was heated competition for advertising and promotional licenses, particularly between the two industry giants, Nike and Adidas. For instance, Adidas sponsored one of the world’s premiere soccer clubs, Real Madrid, while Nike sponsored Manchester United, also a world class soccer club in Great Britain. Adidas was also the Official Supporter of the Athens 2004 Olympic Games and the Germany 2006 World Cup in soccer. However, Nike’s presence was very evident in the World Cup: many teams in this tournament wore uniforms emblazoned with the unmistakable swoosh. The athletic footwear and apparel industry has enjoyed a measure of stability beginning
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This note was uploaded on 05/27/2011 for the course MANAGEMENT 346 taught by Professor Tahirmasood during the Spring '11 term at Bahria University.

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nike case study 2.3 - Nike, Inc. Running Head: Nike, Inc....

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