Nike

Summary

An American sportswear company with its headquarter in Beaverton, Oregon, Nike, Inc. was founded in 1964 as Blue Ribbon Sports [BRS] by track athlete Phil Knight and his coach Bill Bowerman. Today, it’s a substantial manufacturer and supplier of athletic shoes, apparel and sports equipment worldwide, valued at $32 billion.

History

An American sportswear company with its headquarter in Beaverton, Oregon, Nike, Inc. was founded in January 25, 1964 as Blue Ribbon Sports [BRS] by track athlete Phil Knight and his coach Bill Bowerman, who persistently figured ways to improve the performance of athletic shoes. For example, he figured that if he reduced the shoe’s weight an ounce, he would save the runner from lifting app. two hundred pounds in a mile race.

During Stanford’s MBA program, Knight wrote a paper speculating that the production of running shoes should move from its center in Germany to Japan, where labor was inexpensive, and got a chance to put this thesis to the test with a trip to Japan in 1962. Here, he signed a deal to export Onitsuka Tiger‘s shoes into the U.S. — later named ASICS. Bowerman supported Knight’s enterprise, and entered into a 50-50 proprietorship of BRS. Their startup—which faced fierce competition from Puma and Adidas—sold 1,300 running shoes for estimated $8,000. The following year, sales reached approximately $20,000. In 1965, Bowerman suggested a shoe design that would provide support for runners, to Tiger. ‘Tiger Cortez’ was an instant hit. However, the association between BRS and Onitsuka Tiger ended in 1971 with a lawsuit from Tiger. The court settled that both could sell their own versions of the shoe and the Cortez became an iconic footwear model—and not just with runners. Forrest Gump wore it during his transcontinental crossing and the shoe has street cred with Southern California gangs!!

Moving ahead, BRS launched its own line of footwear, rebranded Nike. It bore the iconic ‘Swoosh’ logo designed by Portland State University design student Carolyn Davidson for just $35. Later, she was given five hundred shares of stock, now worth an estimated $1 million. Interestingly, the first Nike shoes were made in Bowerman’s wife’s waffle iron; it inspired an idea for a grooved pattern on the sole of training shoes to help athletes grip running tracks. This Eureka moment led to “Nike Waffle Trainer,” patented in 1974, and he was inducted into The National Inventors Hall of Fame at U.S. Patent and Trademark Office in Alexandria, Va. In 1983, Nike launched “Pegasus” —  a basketball shoe with air cushioning designed by CEO Mark Parker and Bruce Kilgore. “Air Jordans” were introduced the following year just for Michael Jordan and later released to the public. In 1988, the first “tennis shoe” -style golf shoe was introduced into the market. Another success!

The company’s key advantage has always been its celebrity endorsements. Sports is at the heart of American culture so a lot of emotion is invested; there is something motivational and relatable seeing athletes push the limits of performance. So, the brand signed athletes Ilie Nastase, Tiger Woods, Steve Prefontaine, Alberto Salazar, Kobe Bryant, Bo Jackson, Derek Jeter and Lebron James, among others. The most lucrative endorsement, both for Nike and the celebrity, is with Michael Jordan. The deal proved to be lucrative for Nike and Jordan, who rose to stardom and “Air Jordans” made an estimated $100 million in revenue by end- 1985. Jordan reportedly continues to earn estimated $100 million annually in Nike royalties.

Nike maintained a growth trajectory, culminating in its 1980 IPO, expanding the business through acquisitions including Cole Haan [1988; sold in 2012]; Converse, Inc. [2003]; Canstar Sports, Inc. [1994; later called Bauer and sold in 2008]; and Umbro [2008; sold in 2012]. Since then, it has continued to grow stronger, enhanced by a series of campaigns, the most iconic being “Just Do It” in 1988 — inspired by the last words of serial killer Gary Gilmore before the firing squad, “Let’s Do It.” The campaign features eighty-year-old runner Walter Stack running across Golden Gate Bridge! Nike’s ad for Air Max also became a hit, soundtracked by The Beatles’ “Revolution” — reportedly the first time a Beatles song had been used in a television commercial! In 1996 the company created Nike ACG which markets products for extreme sports and in the twenty-first century, began selling sports-technology accessories.

Nike’s factories were based in Japan, and then moved to inexpensive labor in South Korea, China, and Taiwan. As the financial situation of these countries developed, Nike moved focused on China, Indonesia, and Vietnam. It was noted; activist Jeff Ballinger published a report in 1991, documenting the dismal working conditions of Nike’s operations in Indonesia followed by an article in Harper’s Magazine, on the life of an Indonesian Nike employee whose wages were fourteen cents an hour! Public outrage led to protests against the brand at the 1992 Olympics and increased media attention. With calls for boycotting the brand and pressure put on its celebrities like Michael Jordan to condemn the brand, Nike made a huge effort in 1998 to improve the working conditions of labour in its factories by raising the minimum age, monitoring factory conditions, enforcing U.S. standards for clean air and creation of the Fair Labor Association.

Bill Bowerman, co-founder of Nike, passed away in 1999 and Phil Knight stepped down as CEO and President of Nike, retaining the position of Chairman. His part in building Nike into a retail giant made him one of the richest men in the world. Knight has a net worth estimated at $24.1 billion, according to Forbes’ Real Time Billionaire List. In 2008, Mexican-American rapper Lil Rob wrote a hit song on Cortez shoes!! In 2012, Nike became an official supplier for National Football League apparel and in 2015, for National Basketball Association apparel. The same year, Nike committed to women empowerment through its campaigns and activities. In 2018, however, the brand incited controversy by signing athlete and political activist Colin Kaepernick, who was the first football player to take a knee during the national anthem, in protest of police ferocity toward black Americans. Courting controversy again the following year, when days before the Fourth of July, the brand canceled the launch of a sneaker bearing the 13-star American flag on the shoe’s heel. Reportedly, this decision came after Colin Kaepernick voiced his criticism to Nike, saying the flag represented America during a time of bondage. The choice to drop the shoe sparked a media controversy with conservatives criticising Nike for not being patriotic. One of Nike’s recent innovations is a shoe that contains a computing device embedded in it and can be connected to the smartphone of the wearer.

In more recent times, Nike is giving increasing importance to sustainability. Per Vogue, ‘Nike has made technical innovations in some of the apparel and footwear for the Olympics’ most visible sports—track and field, basketball, soccer, and skateboarding—as well as creating medal-stand uniforms that are made from 100 per cent recycled materials. “For us it’s not an either-or proposition,” begins Nike’s vice president of sustainable innovation Seana Hannah, “…Our athletes expect and are going to have the highest-quality performance gear—and we’re going to do it sustainably.”

Nike’s star continues to rise despite the pandemic. Per Forbes, “Nike’s second-quarter results [2020] delivered a 9 per cent increase over last year for the same time period. Direct-to-consumer sales were up 32 per cent and digital sales were up 84 per cent. ‘Nike’s strong results during a dynamic environment show the power of staying on the offense,’ said John Donahoe, President and CEO, NIKE, Inc. On the earnings call, Nike discussed staying with the current strategy which stresses continued product innovation, initiatives that drive brand strength and increasing memberships in the loyalty program.”

Vision

Bill Bowerman’s desire for finding better solutions for the core consumer, the athlete, and Phil Knight’s business acumen transformed Nike into one of the most profitable, identifiable brands worldwide.

Mission

The founders’ determined they wanted Nike to be the world’s leading sports and fitness brand. Nike was acclaimed for its excellence in track and field. It was a clear communication to consumers — this is its identity. The mission, to lead with innovation. One of Bowerman’s legendary innovations is the Waffle outsole, created by pouring rubber into a waffle iron. ‘The Waffle Trainer’ later became a best-seller training shoe in the US. Underlining the mission is the assurance that whether it’s for Michael Jordan or the average consumer, the principle is the same: the brand has to come up with what the consumer wants — and the team has spent considerable effort at grassroot levels to determine this.

The Team

Founders: Phil Knight and Bill Bowerman
Chairman Emeritus: Phil Knight
President and CEO: John Donahoe
Executive Chairman: Mark Parker
Chief Operating Officer: Andy Campion
Vice President of Sustainable Innovation Seana Hannah
President, Consumer and Marketplace: Heidi O’Neill
EVP and Chief Communications Officer: Nigel Powell

Frequently Asked Questions

What is the history of Nike?
An American sportswear company with its headquarter in Beaverton, Oregon, Nike, Inc. was founded in January 25, 1964 as Blue Ribbon Sports (BRS) by track athlete Phil Knight and his coach Bill Bowerman.

What is the mission of Nike for future?
The founders determined they wanted Nike to be the world’s leading sports and fitness brand. Nike was acclaimed for its excellence in track and field.

Who is Nike’s biggest competitor?
Adidas, founded in 1949, is a global brand that is Nike’s top competitor. Nike and Adidas compete across multiple industries, including footwear, apparel, sports equipment, and accessories.

References

1. https://en.wikipedia.org/wiki/Nike,_Inc.
2. https://www.gq-magazine.co.uk/fashion/gallery/best-nike-shoes
3. https://news.nike.com/news/bill-bowerman-inducted-into-national-inventors-hall-of-fame
4. http://naturalrunningcenter.com/2012/05/20/bill-bowerman-wifes-waffle-iron-nike-birth-modern-running-shoe/
5. https://www.gqindia.com/get-smart/content/kobe-bryants-expired-nike-deal-explained
6. https://www.voguebusiness.com/sustainability/unpacking-nikes-sustainable-basketball-capsule
7. https://in.fashionnetwork.com/news/nike-s-jordan-brand-to-create-first-ever-women-s-collaboration-with-vogue,997332.html
8. https://hbr.org/1992/07/high-performance-marketing-an-interview-with-nikes-phil-knight
9. https://in.fashionnetwork.com/news/nike-s-jordan-brand-to-create-first-ever-women-s-collaboration-with-vogue,997332.html
   https://www.vogue.com/article/nike-olympics-2020
10. https://www.forbes.com/sites/retailwire/2021/04/21/nike-refurbished-gets-more-mileage-out-of-used-sneakers/