strategic-management

27
Nike, Inc. — 2010 1
Randy Harris
California State University, Stanislaus
NKE
www.nike.com
In September 2009, Michael Jordan was inducted into the NBA Hall of Fame. Ironically, that
was the same time that Jordan became the first athlete to be worth over $1 billion; and it was
the same time that his Nike brand, Jordan, topped $1 billion in annual revenue. That event
came 23 years after the company Nike reached $1 billion in revenue for the first time.
Nike is all about marketing. Nike’s other men, Tiger Woods and LeBron James, are
expected to be the next athletes to be worth $1 billion. Tiger should reach this milestone in
2010. The rise of Jordan as a marketing icon is an amazing story. The kid from the
University of North Carolina, who had never worn Nikes before he signed his contract,
made buying Air Jordans an annual ritual. And now, years after he played his last game,
the business continues to grow. At more than $1 billion in sales, the Jordan brand now
makes up roughly 5 percent of Nike’s overall revenues.
Regarding Jordan’s importance to Nike, consider the following two facts provided
by SportsOneSource, a sports market retail tracking firm:
1. The Jordan brand has a 10.8 percent share of the overall U.S. shoe market, which
makes it the second biggest brand in the country and more than twice the size of
Adidas’ share.
2. Three out of every four pairs of basketball shoes sold in this country are Jordan,
while 86.5 percent of all basketball shoes sold over $100 are Jordan.
The Nike’s fiscal 2009 year ended May 31, 2009. As indicated in the company’s
income statement provided in Exhibit 1, Nike’s 2009 revenues increased 2.9 percent to
$19.1 billion; their net income decreased 21 percent to $1.48 billion.
History
Based in Beaverton, Oregon, Nike is the world’s largest designer, marketer, and distributor
of athletic footwear and athletic apparel. The company also designs, markets, and distributes
sports-related apparel, equipment, and accessories. Led by the company’s flagship
Nike brand footwear, as well as Nike Golf, the company also owns a number of
subsidiaries, such as Cole Haan, Converse, Hurley International, and Umbro Ltd.
Nike was founded in 1964 as Blue Ribbon Sports by Bill Bowerman, a University of
Oregon track and field coach, and Phil Knight, a talented middle-distance runner. Knight,
who had recently completed an MBA at Stanford University, had written a paper where he
proposed that quality running shoes could be manufactured in Japan that would compete
with the more established German brands. Knight originally sold their shoes out of the
trunk of his green Plymouth Valiant at track meets, and the company opened its first store
in Santa Monica, California, in 1966.
The company introduced its Nike brand of shoes in 1972, just in time for the U.S.
Track & Field trials, which were held in Eugene, Oregon, that year. The Nike name, which
took its name from the Greek goddess of victory, had its famous “swoosh” logo designed
by Carolyn Davidson, a graphic design student at Portland State University. The company