BUS 1000 Research Paper of NIKE (1) - Smilovich Raja Durbin Bilal Raja Tom Smilovich Jeremy Durbin Professor Daniel Rubin Bus 1000 7 December 2012 Nike

BUS 1000 Research Paper of NIKE (1) - Smilovich Raja Durbin...

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Smilovich Raja Durbin Bilal Raja, Tom Smilovich, Jeremy Durbin Professor Daniel Rubin Bus 1000 7 December 2012 Nike Nike is one of the largest shoe brands in the athletic footwear market today. However, like any other big business, it started from humble beginnings. In 1962, Phillip Knight, a Stanford Business Graduate, went to Japan and got in touch with the Japanese athletic footwear firm, Onitsuka Tiger Co. The company agreed to allow Knight to import their goods to the United States. Knight created the name Blue Ribbon Sports for his company to show Onitsuka that the Japanese firm was dealing with a legitimate company rather than an individual. William Bowerman, Knight’s undergraduate track coach, was impressed with the operations of Blue Ribbon Sports and invested five hundred dollars in the firm. Bowerman was an experimenter; he tested with several types of product designs and technologies and worked with the runners on his track team to design a shoe that would maximize athletic performance on the track field (Pederson 1). Nike grew to fame in the 1970’s because of: Bowerman’s innovative shoe designs that improved running by increasing “the traction of the shoe without adding weight”, an increase in the popularity of jogging, and Nike’s endorsement of its products through athletes such as (“Nike, Inc.”). By the 1980’s half of the running shoes bought in the United States had the Nike logo on them; this success was accredited to Nike’s vociferous television and magazine advertising campaign and its international expansion when US markets experienced slow growth (“Nike, Inc.”). The company’s dominance continued well into the early 1990’s; it expanded into
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Smilovich Raja Durbin new lines, including causal apparel for women (“Nike, Inc.”). Despite a sluggish economy, Nike topped $1 billion for the first time in mid-1986; the company’s new goal was “to make the Nike brand into a worldwide megabrand (Nike, Inc.).” Although Nike suffered during the late 1990’s Asian financial crisis and the protests at home regarding worker treatment, it rose out of the rubble through smart investment in equipment, and in the 21 st century, has become one of the leaders in the sportswear industry (“Nike, Inc.”). Nike dominates its competitors in the athletic footwear market; the pie chart shows how Nike’s manufacturing and sales compete with its closest competitors (Appendix B). Nike controls 31% of market shares while Adidas trails with 16%; companies like Puma, New Balance, ASICS, Converse, and Skechers control from 5 to 7 percent of the market. A comparison of the revenues of Nike, Adidas, Geox, and Skechers since 1990 shows how Nike brings in so much more revenue than its competitors do. Furthermore, as this revenue comparison chart shows, Nike’s revenue line has a steady upward slope, suggesting that as Nike grew, so did its sales and market size (Appendix C). Adidas, which bought Reebok in 2005 for $3.8 million to dramatically increase its revenue by $2 billion, could not sustain its high revenue as its revenue started to decrease during the 2008 recession (MSNBC). In 2007, both Nike and
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