nike

Operation centers and subsidiariesNike as a business The Nike Brand Nike is the leading maker of athletic shoes, equipment and apparel. Nike products cover a broad range of sports including basketball, football, running and soccer. Sneakers made by Nike are sold for $40-$200 per pair. Nike is one of the most-heavily advertised and best known brands in the world. Nike has signed exclusive and expensive marketing deals with some of the world's top athletes -- including Tiger Woods, Andre Agassi and LeBron James -- to promote its products. The Nike Legacy Wholly-owned Nike subsidiaries include Converse Inc., which designs, markets and distributes athletic footwear, apparel and accessories; Cole Haan, which designs, markets and distributes luxury shoes, handbags, accessories and coats; Hurley International LLC, which designs, markets and distributes action sports and youth lifestyle footwear, apparel and accessories; and Umbro Ltd., a leading United Kingdom-based global football (soccer) brand. Brand IdentityNIKE enjoys the popularity of its brand name, which is recognized all around the world. Its name carries a trademark, and thus makes it illegal for other companies to infringe upon the NIKE name. Besides the brand name, the company also has a trademark for the ‘Swoosh Design’ logo that identifies NIKE Inc. In fact, NIKE considers its name and the ‘Swoosh’ symbol to be the most valuable assets; therefore, the company registered these trademarks in over 100 countries. PatentsOne of the exclusive licenses that distinguish NIKE from the rest of its competitors is the patented “Air” technology that the company uses to sell footwear. “The process utilizes pressurized gas encapsulated in polyurethane.” Although some NIKE AIR patents have expired, NIKE still holds a number of subsequent NIKE AIR patents, and patents that cover specific features in various athletic and leisure shoes that will not expire for several years. In addition, the company places a significant emphasis on its Research and Development, Production and Marketing, and Design departments to maintain its competitive edge. Customer Base Perspectives Customer logic is derived from evaluation of a company and its product based upon customer needs, customer benefits, and product features. Each of these areas is researched to determine what level of pressure logic exists. For branded athletic shoes, Nike is facing customer needs on a global level. This is because there is global demand for brand name athletic shoes and there is opportunity available for growth. Sponsorship Nike pays top athletes in many different sports to use their products and promote/advertise their technology and design. Nike's first professional athlete endorser was Romanian tennis player Ilie Năstase, and the company's first track endorser was distance running legend Steve Prefontaine. Prefontaine was the prized pupil of the company's co-founder Bill Bowerman while he coached at the University of Oregon. Today, the Steve Prefontaine Building is named in his honor at Nike's corporate headquarters. Besides Prefontaine, Nike has sponsored many other successful track & field athletes over the years such as Carl Lewis, Jackie Joyner-Kersee and Sebastian Coe. However, it was the signing of basketball player Michael Jordan in 1984, with his subsequent promotion of Nike over the course of his storied career with Spike Lee as Mars Blackmon, that proved to be one of the biggest boosts to Nike's publicity and sales. During the past 20 years especially, Nike has been one of the major clothing/footwear sponsors for leading tennis players. Some of the more successful tennis players currently or formerly sponsored by Nike include: James Blake, Jim Courier, Roger Federer, Lleyton Hewitt, Juan Martín del Potro, Andre Agassi, Rafael Nadal, Pete Sampras, Marion Bartoli, Lindsay Davenport, Daniela Hantuchová, Mary Pierce Maria Sharapova, Serena Williams. Nike is also the official kit sponsor for the Indian cricket team for 5 years, from 2006 till end of 2010. Nike also sponsors some of the leading clubs in world football, such as the Brazil National Team, Portugal National Team, Netherlands National Team, US National Team, Manchester United, Arsenal, FC Barcelona, Inter Milan, Juventus, Shakhtar, Porto, Steaua, Red Star, Boca Juniors, Corinthians, Club América, Aston Villa, Celtic, Águila and PSV Eindhoven. Nike will also sponsor Dundee United from summer 2009. Nike sponsors several of the world's top golf players, including Tiger Woods, Trevor Immelman and Paul Casey. Nike also sponsors various minor events including Hoop It Up (high school basketball) and The Golden West Invitational (high school track and field). ,[object Object],Headquarters Nike's world headquarters are surrounded by the city of Beaverton, but are within unincorporated Washington County. The city attempted to forcibly annex Nike's headquarters, which led to a lawsuit by Nike, and lobbying by the company that ultimately ended in Oregon Senate Bill 887 of 2005. Under that bill's terms, Beaverton is specifically barred from forcibly annexing the land that Nike and Columbia Sportswear occupy in unincorporated Washington County for 35 years, while Electro Scientific Industries and Tektronix get that same protection for 30 years. Subsidiaries As of November 2008, Nike, Inc. owns four key subsidiaries: Cole Haan, Hurley International, Converse Inc. and Umbro. Nike's first acquisition was the upscale footwear company Cole Haan in 1988. Cole Haan, a wholly-owned subsidiary of NIKE, Inc., is one of America’s leading luxury brands, offering high-quality men’s and women’s footwear, accessories and outerwear. Each product blends craftsmanship, design and innovation to give it distinctive character and style. Cole Haan operates more than 180 retail locations throughout the United States, Canada, the Middle East and Asia. Cole Haan is headquartered in New York City and Yarmouth, Maine. In February 2002, Nike bought surf apparel company Hurley International from founder Bob Hurley. Headquartered in Costa Mesa, California, Hurley International LLC designs and distributes a line of action sports apparel for surfing, skateboarding and youth lifestyle apparel and footwear under the Hurley brand name. Hurley realized $203 million in sales in fiscal 2009. In July 2003, Nike paid US$305 million to acquire Converse Inc., makers of the iconic Chuck Taylor All Stars. Converse, Inc., established in 1908 and based in North Andover, Massachusetts, has built a reputation as “America’s Original Sports Company”™ and has been associated with a rich heritage of legendary shoes such as the Chuck Taylor® All Star® shoe, the Jack Purcell® shoe and the One Star® shoe. Today, Converse offers a diverse portfolio including premium lifestyle men's and women's footwear and apparel. Converse product is sold globally by retailers in over 160 countries and through more than 50 company-owned retail locations. Converse realized $915 million in sales in fiscal 2009. On March 3, 2008, Nike acquired sports apparel supplier Umbro, known as the manufacturers of the England national football team's kits, in a deal said to be worth £285 million (about US$600 million). Founded in 1924 and headquartered in Manchester, England. Umbro, Ltd. designs, distributes, and licenses athletic and casual footwear, apparel and equipment, primarily for the sport of football (soccer), under the Umbro trademarks. Umbro Ltd. has been associated with football since the 1930s and its relationship with leading national teams and professional clubs includes exclusive endorsements and distribution rights for playing kit, apparel and equipment, including playing and training kits for England’s National Team. Umbro realized $174 million in sales in fiscal 2009. Other subsidiaries previously owned and subsequently sold by Nike include Bauer Hockey and Starter. Manufacturing Nike has contracted with more than 700 shops around the world and has offices located in 45 countries outside the United States. Most of the factories are located in Asia, including Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, Philippines, and Malaysia. Nike is hesitant to disclose information about the contract companies it works with. However, due to harsh criticism from some organizations like Corp Watch, Nike has disclosed information about its contract factories in its Corporate Governance Report. Physical Resources In 1980, Phil Knight dispatched five employees to Europe to establish presence for the U.S shoe manufacturer there. The initial office was set up in Amsterdam; the current, a state of the art complex designed by William McDonough & partners, opened in Hilversum, The Netherlands. Nike has entrenched local representation in the region; it currently has 21 offices in the Europe, Middle East, & Africa (EMEA) region. The distribution center in Laakdal, Belgium, and the headquarters in The Netherlands make up most of the employees in the region. Nike has the centralized European distribution point at Laakdal, Belgium since 1994. In 1980, Nike had only 2,700 employees and sales of $270 million. Today, Nike has 5,000 employees in Europe alone. PROPERTIES NIKE, Inc. World Headquarters (WHQ) encompasses 17 buildings on 193 acres, totaling 1.9 million square feet of interior space in Beaverton, Oregon. We also lease more than 750,000 square feet of space in the surrounding metropolitan area. NIKE, Inc. European Headquarters (EHQ) is located in leased office space of nearly 500,000 square feet in Hilversum, The Netherlands. Nike currently has more than 50 independent footwear contact factories in the Asia Pacific region, providing more than 250,000 jobs to local communities. There are over 300 apparel factories, providing more than 150,000 jobs to local communities. STEP2 ,[object Object]

Nike backgroundCompany History: Founded as an importer of Japanese shoes, NIKE, Inc. (Nike) has grown to be the world's largest marketer of athletic footwear and apparel. In the United States, Nike products are sold through about 20,000 retail accounts; worldwide, the company's 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 company's Asian contract manufacturers. BRS Beginnings 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 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 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 mid-sole throughout the entire length of an athletic shoe. Emergence of Nike in 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 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 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 groundbreaking 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 children's 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 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 strong hold 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. 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 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 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 marketed 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 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. 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, Illinois. 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 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, 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 fiscal 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 fiscal 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 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. 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&mdash⁄ort 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. 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 women's soccer team that won the Women's 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. Nike History Timeline Info 1950's Phil Knight and Bill Bowerman meet 1960's Blue Ribbon Sports (BRS) was made and founded by Phil Knight The popular Cortez aka quot;
Dope Mansquot;
are made in Japan 1970's The Swoosh logo is created by Carolyn Davidson for $35.00 The first Nike model shoe to hit the retail market is a soccer/football shoe A Promo Nike Tee becomes the first apparel item The famous Waffle Trainer is introduced, which becomes the best selling shoe in the US Nike’s racing and training spiked shoe is made called the quot;
Elitequot;
 Factories for manufacturing are set up in Korea and Taiwan For the first time Nike shoes are sold in Asia Blue Ribbon Sports changes their company name to Nike Inc. The first Nike running shoe with a air sole system to come out is the quot;
Tailwindquot;
 World Headquarters are opened in Beaverton, Oregon 1980's Nike talks with the P.R. of China so they can produce shoes there Nike shoes become Canada’s top seller Nike shoes are now produced in 11 countries The famous quot;
NIKE AIRquot;
Air Force 1 and Air Ace make their introduction Over 200 shoes are now in Nike’s footwear line The first high performance kid’s running shoe is called the quot;
Destinyquot;
 The Air Jordan makes it’s way to Nike footwear line up The Sock Racer comes out and is part of the Dynamic-Fit technology The first Air Max The first Cross Trainer The famous quot;
Just Do Itquot;
slogan comes to life The first model to combine the footbridge device and Air Sole is the Air Stab Spike Lee’s quot;
Mars Blackmonquot;
character helps promote the third style of Air Jordan Bo Jackson’s quot;
Bo Knowsquot;
commercials include the quot;
Just Do Itquot;
slogan Nike moves to a new World Campus in Beaverton 1990's The new World Campus sits on 74 acres with 570,000 square feet. In Portland, Oregon the first Nike Town opens The intro of the Air Huarache running shoe The intro of the Air Mowabb Nike Town opens in Chicago Charles Barkley first signature shoe is introduced The intro of the Run Walk shoe Nike Town opens in Atlanta and Orange County The intro of dual pressure cushioning in the Air Max Nike gets distribution rights in Korea and Japan The intro of Zoom Air technology Nike Town New York opens The Air Penny comes to life 2000's ,[object Object]

apparel licensing arrangement with Nike.

2001: Nike opens its first Nike Goddess store, a unit targeting women, in Newport Beach, CA.

2003: Nike purchases Converse Inc. for $ 305 million.

2008 :Nike acquired sports apparel supplier Umbro,

2010: Nike Future Sole Design Competition

Evolution of the Swoosh LogoSTEP 3 ,[object Object]

Financial statements and its analysis

Competitors and there's ratios

Share repurchasesACCOUNTING POLICIES Basis of Consolidation The consolidated financial statements include the accounts of NIKE, Inc. and its subsidiaries (the “Company”). All significant intercompany transactions and balances have been eliminated. Recognition of Revenues Wholesale revenues are recognized when title passes and the risks and rewards of ownership have passed to the customer, based on the terms of sale. This occurs upon shipment or upon receipt by the customer depending on the country of the sale and the agreement with the customer. Retail store revenues are recorded at the time of sale. Provisions for sales discounts, returns and miscellaneous claims from customers are made at the time of sale. As of May 31, 2010 and 2009, the Company's reserve balances for sales discounts, returns and miscellaneous claims were $370.6 million and $363.6 million, respectively. Shipping and Handling Costs Shipping and handling costs are expensed as incurred and included in cost of sales. Advertising and Promotion Advertising production costs are expensed the first time the advertisement is run. Media (TV and print) placement costs are expensed in the month the advertising appears. A significant amount of the Company’s promotional expenses result from payments under endorsement contracts. Accounting for endorsement payments is based upon specific contract provisions. Generally, endorsement payments are expensed on a straight−line basis over the term of the contract after giving recognition to periodic performance compliance provisions of the contracts. Prepayments made under contracts are included in prepaid expenses or other assets depending on the period to which the prepayment applies. Through cooperative advertising programs, the Company reimburses retail customers for certain costs of advertising the Company’s products. The Company records these costs in selling and administrative expense at the point in time when it is obligated to its customers for the costs, which is when the related revenues are recognized. This obligation may arise prior to the related advertisement being run. Total advertising and promotion expenses were $2,356.4 million, $2,351.3 million, and $2,308.3 million for the years ended May 31, 2010, 2009 and 2008, respectively. Prepaid advertising and promotion expenses recorded in prepaid expenses and other assets totaled $260.7 million and $280.0 million at May 31, 2010 and 2009, respectively. Cash and Equivalents Cash and equivalents represent cash and short−term, highly liquid investments with maturities of three months or less at date of purchase. The carrying amounts reflected in the consolidated balance sheet for cash and equivalents approximate fair value. Short−term Investments Short−term investments consist of highly liquid investments, primarily commercial paper, U.S. treasury, U.S. agency, and corporate debt securities, with maturities over three months from the date of purchase. Debt securities that the Company has the ability and positive intent to hold to maturity are carried at amortized cost. At May 31, 2010 and 2009, short-term investments consisted of available-for-sale securities Available−for−sale securities are recorded at fair value with unrealized gains and losses reported, net of tax, in other comprehensive income, unless unrealized losses are determined to be other than temporary. The Company considers all available−for−sale securities, including those with maturity dates beyond 12 months, as available to support current operational liquidity needs and therefore classifies all securities with maturity dates beyond three months as current assets within short−term investments on the consolidated balance sheet. Allowance for Uncollectible Accounts Receivable Accounts receivable consists primarily of amounts receivable from customers. We make ongoing estimates relating to the collectability of our accounts receivable and maintain an allowance for estimated losses resulting from the inability of our customers to make required payments. In determining the amount of the allowance, we consider our historical level of credit losses and make judgments about the creditworthiness of significant customers based on ongoing credit evaluations. Accounts receivable with anticipated collection dates greater than 12 months from the balance sheet date and related allowances are considered non−current and recorded in other assets. The allowance for uncollectible accounts receivable was $116.7 million and $110.8 million at May 31, 2010 and 2009, respectively, of which $43.1 million and $36.9 million was classified as long-term and recorded in other assets. Inventory Valuation Inventories are stated at lower of cost or market and valued on a first−in, first−out (“FIFO”) or moving average cost basis. Property, Plant and Equipment and Depreciation Property, plant and equipment are recorded at cost. Depreciation for financial reporting purposes is determined on a straight−line basis for buildings and leasehold improvements over 2 to 40 years and for machinery and equipment over 2 to 15 years. Computer software (including, in some cases, the cost of internal labor) is depreciated on a straight−line basis over 3 to 10 years. Impairment of Long−Lived Assets The Company reviews the carrying value of long−lived assets or asset groups to be used in operations whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Factors that would necessitate an impairment assessment include a significant adverse change in the extent or manner in which an asset is used, a significant adverse change in legal factors or the business climate that could affect the value of the asset, or a significant decline in the observable market value of an asset, among others. If such facts indicate a potential impairment, the Company would assess the recoverability of an asset group by determining if the carrying value of the asset group exceeds the sum of the projected undiscounted cash flows expected to result from the use and eventual disposition of the assets over the remaining economic life of the primary asset in the asset group. If the recoverability test indicates that the carrying value of the asset group is not recoverable, the Company will estimate the fair value of the asset group using appropriate valuation methodologies which would typically include an estimate of discounted cash flows. Any impairment would be measured as the difference between the asset groups carrying amount and its estimated fair value. Identifiable Intangible Assets and Goodwill The Company performs annual impairment tests on goodwill and intangible assets with indefinite lives in the fourth quarter of each fiscal year, or when events occur or circumstances change that would, more likely than not, reduce the fair value of a reporting unit or an intangible asset with an indefinite life below its carrying value. Events or changes in circumstances that may trigger interim impairment reviews include significant changes in business climate, operating results, planned investments in the reporting unit, or an expectation that the carrying amount may not be recoverable, among other factors. The impairment test requires the Company to estimate the fair value of its reporting units. If the carrying value of a reporting unit exceeds its fair value, the goodwill of that reporting unit is potentially impaired and the Company proceeds to step two of the impairment analysis. In step two of the analysis, the Company measures and records an impairment loss equal to the excess of the carrying value of the reporting unit’s goodwill over its implied fair value should such a circumstance arise. The Company generally bases its measurement of fair value of a reporting unit on a blended analysis of the present value of future discounted cash flows and the market valuation approach. The discounted cash flows model indicates the fair value of the reporting unit based on the present value of the cash flows that the Company expects the reporting unit to generate in the future. The Company’s significant estimates in the discounted cash flows model include: its weighted average cost of capital; long−term rate of growth and profitability of the reporting unit’s business; and working capital effects. The market valuation approach indicates the fair value of the business based on a comparison of the reporting unit to comparable publicly traded companies in similar lines of business. Significant estimates in the market valuation approach model include identifying similar companies with comparable business factors such as size, growth, profitability, risk and return on investment, and assessing comparable revenue and operating income multiples in estimating the fair value of the reporting unit. The Company believes the weighted use of discounted cash flows and the market valuation approach is the best method for determining the fair value of its reporting units because these are the most common valuation methodologies used within its industry; and the blended use of both models compensates for the inherent risks associated with either model if used on a stand−alone basis. Indefinite−lived intangible assets primarily consist of acquired trade names and trademarks. In measuring the fair value for these intangible assets, the Company utilizes the relief−from−royalty method. This method assumes that trade names and trademarks have value to the extent that their owner is relieved of the obligation to pay royalties for the benefits received from them. This method requires the Company to estimate the future revenue for the related brands, the appropriate royalty rate and the weighted average cost of capital. Foreign Currency Translation and Foreign Currency Transactions Adjustments resulting from translating foreign functional currency financial statements into U.S. dollars are included in the foreign currency translation adjustment, a component of accumulated other comprehensive income in shareholders’ equity. The Company’s global subsidiaries have various assets and liabilities, primarily receivables and payables, that are denominated in currencies other than their functional currency. These balance sheet items are subject to remeasurement, the impact of which is recorded in other (income) expense, net, within our consolidated statement of income. Accounting for Derivatives and Hedging Activities The Company uses derivative financial instruments to limit exposure to changes in foreign currency exchange rates and interest rates. All derivatives are recorded at fair value on the balance sheet and changes in the fair value of derivative financial instruments are either recognized in other comprehensive income (a component of shareholders’ equity), debt or net income depending on the nature of the underlying exposure, whether the derivative is formally designated as a hedge, and, if designated, the extent to which the hedge is effective. The Company classifies the cash flows at settlement from derivatives in the same category as the cash flows from the related hedged items. For undesignated hedges and designated cash flow hedges, this is within the cash provided by operations component of the consolidated statement of cash flows. For designated net investment hedges, this is generally within the cash used by investing activities component of the cash flow statement. As our fair value hedges are receive−fixed, pay−variable interest rate swaps, the cash flows associated with these derivative instruments are periodic interest payments while the swaps are outstanding, which are reflected in net income within the cash provided by operations component of the cash flow statement. Stock−Based Compensation The Company estimates the fair value of options granted under the NIKE, Inc. 1990 Stock Incentive Plan (the “1990 Plan”) and employees’ purchase rights under the Employee Stock Purchase Plans (“ESPPs”) using the Black−Scholes option pricing model. The Company recognizes this fair value, net of estimated forfeitures, as selling and administrative expense in the consolidated statements of income over the vesting period using the straight−line method. Income Taxes The Company accounts for income taxes using the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. United States income taxes are provided currently on financial statement earnings of non−U.S. subsidiaries that are expected to be repatriated. The Company determines annually the amount of undistributed non−U.S. earnings to invest indefinitely in its non−U.S. operations. The Company recognizes interest and penalties related to income tax matters in income tax expense. Earnings Per Share Basic earnings per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the year. Diluted earnings per common share is calculated by adjusting weighted average outstanding shares, assuming conversion of all potentially dilutive stock options and awards. Management Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates, including estimates relating to assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Reclassifications Certain prior year amounts have been reclassified to conform to fiscal year 2010 presentation, including a reclassification to investing activities for the settlement of net investment hedges in the consolidated statement of cash flows for the year ended May 31, 2008. These reclassifications had no impact on previously reported results of operations or shareholders’ equity and do not affect previously reported cash flows from operations, financing activities or net change in cash and equivalents. Recently Adopted Accounting Standards: In January 2010, the Financial Accounting Standards Board (quot;
FASBquot;
) issued guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires additional disclosures about the different classes of assets and liabilities measured at fair value, the valuation techniques and inputs used, the activity in Level 3 fair value measurements, and the transfers between Levels 1, 2, and 3 of the fair value measurement hierarchy. This guidance became effective for the Company beginning March 1, 2010, except for disclosures relating to purchases, sales, issuances and settlements of Level 3 assets and liabilities, which will be effective for the Company beginning June 1, 2011. As this guidance only requires expanded disclosures, the adoption did not and will not impact the Company's consolidated financial position or results of operations. See Note 6 — Fair Value Measurements for disclosure required under this guidance. In February 2010, the FASB issued amended guidance on subsequent events. Under this amended guidance, SEC filers are no longer required to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. This guidance was effective immediately and the Company adopted these new requirements since the third quarter of fiscal 2010. Financial statements and its analysis CONSOLIDATED STATEMENTS OF INCOME Year over year, Nike Inc. has seen revenues remain relatively flat ($19.2B to $19.0B), though the company was able to grow net income from $1.5B to $1.9B. A reduction in the percentage of sales devoted to cost of goods sold from 55.13% to 53.72% was a key component in the bottom line growth in the face of flat revenues. Currency inMillions of U.S. DollarsAs of:May 312007May 312008ReclassifiedMay 312009May 312010Revenues16,325.918,627.019,176.119,014.0TOTAL REVENUES16,325.918,627.019,176.119,014.0Cost of Goods Sold9,165.410,239.610,571.710,213.6GROSS PROFIT7,160.58,387.48,604.48,800.4Selling General & Admin Expenses, Total5,028.75,953.76,149.66,326.4OTHER OPERATING EXPENSES, TOTAL5,028.75,953.76,149.66,326.4OPERATING INCOME2,131.82,433.72,454.82,474.0Interest Expense-49.7-38.7-40.2-36.4Interest and Investment Income116.9115.849.730.1NET INTEREST EXPENSE67.277.19.5-6.3Currency Exchange Gains (Loss)---77.043.049.2Other Non-Operating Income (Expenses)-28.08.5----EBT, EXCLUDING UNUSUAL ITEMS2,171.02,442.32,507.32,516.9Merger & Restructuring Charges-----195.0--Impairment of Goodwill-----199.3--Gain (Loss) on Sale of Assets14.760.6----Other Unusual Items, Total14.2---156.5--Other Unusual Items14.2--45.5--EBT, INCLUDING UNUSUAL ITEMS2,199.92,502.91,956.52,516.9Income Tax Expense708.4619.5469.8610.2Earnings from Continuing Operations1,491.51,883.41,486.71,906.7NET INCOME1,491.51,883.41,486.71,906.7 NIKE, INC. CONSOLIDATED BALANCE SHEETS Nike Inc. is among the least leveraged companies in the Textiles, Apparel and Luxury Goods industry and has a Debt to Total Capital ratio of 5.72%. Additionally, an examination of near-term assets and liabilities shows that there are enough liquid assets to satisfy current obligations.. Cash collection is average with Accounts Receivable are typical for the industry, although improving, with 53.11 days worth of sales outstanding. Last, inventory levels, relative to the Cost of Goods Sold, are typical for the industry but have shown a consistent increase during the last 4 years. This implies a potential loss of efficiency or pricing power. Currency inMillions of U.S. DollarsAs of:May 312007May 312008ReclassifiedMay 312009May 312010Assets Cash and Equivalents1,856.72,133.92,291.13,079.1Short-Term Investments990.3642.21,164.12,066.8TOTAL CASH AND SHORT TERM INVESTMENTS2,847.02,776.13,455.25,145.9Accounts Receivable2,494.72,795.32,883.92,649.8TOTAL RECEIVABLES2,494.72,795.32,883.92,649.8Inventory2,121.92,438.42,357.02,040.8Prepaid Expenses--602.3482.3454.1Deferred Tax Assets, Current219.7227.2272.4248.8Other Current Assets393.2--283.2419.8TOTAL CURRENT ASSETS8,076.58,839.39,734.010,959.2Gross Property Plant and Equipment3,619.14,103.04,255.74,389.8Accumulated Depreciation-1,940.8-2,211.9-2,298.0-2,457.9NET PROPERTY PLANT AND EQUIPMENT1,678.31,891.11,957.71,931.9Goodwill130.8448.8193.5187.6Long-Term Investments----13.714.6Deferred Tax Assets, Long Term392.8520.4801.6858.6Other Intangibles409.9743.1467.4467.0Other Long-Term Assets----81.70.4TOTAL ASSETS10,688.312,442.713,249.614,419.3 LIABILITIES & EQUITY Accounts Payable1,040.31,287.61,031.91,254.5Accrued Expenses1,120.01,475.71,593.61,610.1Short-Term Borrowings100.8177.7342.9138.6Current Portion of Long-Term Debt/Capital Lease30.56.332.07.4Current Income Taxes Payable109.088.086.359.3Other Current Liabilities, Total183.4286.2190.3294.3TOTAL CURRENT LIABILITIES2,584.03,321.53,277.03,364.2Long-Term Debt409.9441.1437.2445.8Deferred Tax Liability Non-Current668.7854.5842.0853.8Other Non-Current Liabilities------1.5TOTAL LIABILITIES3,662.64,617.14,556.24,665.3TOTAL PREFERRED EQUITY0.30.30.30.3Common Stock2.82.82.82.8Additional Paid in Capital1,960.02,497.82,871.43,440.6Retained Earnings4,885.25,073.35,451.46,095.5Comprehensive Income and Other177.4251.4367.5214.8TOTAL COMMON EQUITY7,025.47,825.38,693.19,753.7TOTAL EQUITY7,025.77,825.68,693.49,754.0TOTAL LIABILITIES AND EQUITY10,688.312,442.713,249.614,419.3 NIKE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Currency inMillions of U.S. DollarsAs of:May 312007May 312008ReclassifiedMay 312009May 312010NET INCOME1,491.51,883.41,486.71,906.7Depreciation & Amortization260.3312.3371.4382.0Amortization of Goodwill and Intangible Assets9.99.211.913.5DEPRECIATION & AMORTIZATION, TOTAL270.2321.5383.3395.5(Gain) Loss from Sale of Asset---60.6----(Gain) Loss on Sale of Investment----20.7--Asset Writedown & Restructuring Costs----380.6--Change in Accounts Receivable-39.6-118.3-238.0181.7Change in Inventories-49.5-249.832.2284.6Change in Accounts Payable85.1330.9-220.0298.0Change in Other Working Capital-60.8-11.214.1-69.6CASH FROM OPERATIONS1,878.71,936.31,736.13,164.2Capital Expenditure-313.5-449.2-455.7-335.1Sale of Property, Plant, and Equipment28.31.932.010.1Cash Acquisitions---571.1----Divestitures--246.0----Investments in Marketable & Equity Securities382.4380.4-518.7-936.8CASH FROM INVESTING92.9-489.8-798.1-1,267.5Short-Term Debt Issued52.663.7177.1--Long-Term Debt Issued41.8------TOTAL DEBT ISSUED94.463.7177.1--Short Term Debt Repaid-------205.4Long Term Debt Repaid-255.7-35.2-6.8-32.2TOTAL DEBT REPAID-255.7-35.2-6.8-237.6Issuance of Common Stock322.9343.3186.6364.5Repurchase of Common Stock-985.2-1,248.0-649.2-741.2Common and/or Preferred Dividends Paid-343.7-412.9-466.7-505.4TOTAL DIVIDEND PAID-343.7-412.9-466.7-505.4Other Financing Activities55.863.025.158.5CASH FROM FINANCING-1,111.5-1,226.1-733.9-1,061.2Foreign Exchange Rate Adjustments42.456.8-46.9-47.5NET CHANGE IN CASH902.5277.2157.2788.0 Financial statements analysis Since the adoption of this long−term strategy in 2001, NIKE, Inc.’s revenues and earnings per share have grown 8% and 14%, respectively, on an annual compounded basis. During the same period, our return on invested capital has increased from 14% to 21%. While macroeconomic conditions in fiscal 2010 continued to remain challenging, putting significant pressure on consumer spending in most markets worldwide, they have continued to focus on achieving appropriate financial performance, while extending their market leadership and positioning for sustainable, profitable growth over the long term. NIKE, Inc.’s fiscal 2010 revenues declined 1% to $19.0 billion, net income increased 28% to $1.9 billion, and they delivered diluted earnings per share of $3.86, a 27% increase versus fiscal 2009. their fiscal 2009 reported results contain significant non−comparable transactions, including an after−tax charge of $145 million for restructuring activities, recorded in the fourth quarter of fiscal 2009, and an after−tax charge of $241 million for the impairment of goodwill, intangible and other assets of Umbro, which was recorded in the third quarter of fiscal 2009. Excluding these non−comparable items, Nike fiscal 2010 net income would have increased 2% and diluted earnings per share would have increased 1% compared to fiscal 2009 . The increase in net income excluding non−comparable items was primarily driven by an improved gross margin percentage and a reduction in our effective tax rate, which more than offset the reduction in revenues and higher selling and administrative expenses. The increase in gross margin percentage was primarily the result of favorable product mix, cost reduction initiatives, lower input costs and sales growth in NIKE−owned retail business. Nike year−over−year effective tax rate improvement was driven by continued benefit from Nike international businesses, which are generally taxed at rates lower than the U.S. statutory rate. The increase in selling and administrative expense was primarily attributable to an increase in performance−based compensation as well as investments in NIKE−owned retail business, which more than offset reductions in compensation expense resulting from restructuring activities that took place in the fourth quarter of fiscal 2009. For fiscal 2010, diluted earnings per share grew at a slightly lower rate than net income given higher average outstanding shares. In fiscal 2010, Nike increased cash flow from operations as a result of working capital reductions, reflecting our efforts to aggressively manage inventory levels and accounts receivable collections. At May 31, 2010, Nike inventory and accounts receivable balances were down 13% and 8%, respectively, compared to May 31, 2009. During fiscal 2010, Nike also returned larger amounts of cash to Nikes shareholders through higher dividends and increased share repurchases compared to fiscal 2009. Although most of Nike businesses reported revenue declines in the first half of fiscal 2010, the majority returned to growth in the second half of fiscal 2010. Futures orders for NIKE Brand Footwear and Apparel scheduled for delivery during the first six months of fiscal 2011 increased 7% as compared to the same periods in the prior year. Revenues Fiscal 2010 Compared to Fiscal 2009 leftbottom Excluding the effects of changes in currency exchange rates, revenues for NIKE, Inc. declined 2%, driven primarily by a 2% decline in revenues for the NIKE Brand. All of Nike geographies delivered lower revenues with the exception of Emerging Markets, reflecting a challenging economic environment across most markets, most notably in Western Europe and Central and Eastern Europe geographies. By product group, revenues for worldwide NIKE Brand footwear business were down 1% compared to the prior year. Worldwide NIKE Brand apparel and equipment revenues declined 5% and 7%, respectively. While Nike wholesale business remains the largest component of NIKE Brand revenues, NIKE−owned retail business continues to grow, representing approximately 15% of total NIKE Brand revenues in fiscal 2010 as compared to 13% in fiscal 2009. Revenues from Other Businesses were comprised of results from Cole Haan, Converse, Inc., Hurley International, LLC, NIKE Golf and Umbro, Ltd. Excluding the impact of currency changes, revenues for these businesses increased by 4% for fiscal 2010, driven by increased revenues at Converse, Umbro and Hurley, which more than offset revenue declines at NIKE Golf and Cole Haan Gross Margin Fiscal 2010 Compared to Fiscal 2009 For fiscal 2010, Nike consolidated gross margin percentage was 140 basis points higher than the prior year. The primary factors contributing to this improvement were as follows: • Improved in−line product margins across most geographies, driven by reduced raw material and freight costs as well as favorable changes in product mix; • Improved inventory positions, most notably in North America and Western Europe, which drove a shift in mix from discounted close−out to higher margin in−line sales; and • Growth of NIKE−owned retail as a percentage of total revenue, across most NIKE Brand geographies, driven by an increase in both new store openings and comparable store sales. Together, these factors increased consolidated gross margins by approximately 160 basis points for fiscal 2010. These increases were partially offset by the impact of unfavorable currency exchange rates, primarily affecting Nike Emerging Markets and Central and Eastern Europe geographies. Selling and Administrative Expense rightbottomFiscal 2010 Compared to Fiscal 2009 Changes in foreign currency exchange rates increased selling and administrative expense by 1 percentage point in fiscal 2010. Excluding changes in exchange rates, operating overhead expense increased 4% compared to the prior year due primarily to increases in performance−based compensation and investments in NIKE−owned retail. These increases were partially offset by reductions in compensation spending in fiscal 2010 as a result of restructuring activities that took place in the fourth quarter of fiscal 2009. In fiscal 2010, changes in currency exchange rates had a minimal impact on demand creation expense. Demand creation expense remained flat compared to the prior year, as increases in sports marketing and digital marketing expenses were offset by reductions in advertising. Goodwill, Intangible and Other Asset Impairment In fiscal 2009, Nike recognized a $401 million pre−tax non−cash impairment charge to reduce the carrying value of Umbro’s goodwill, intangible and other assets. Although Umbro’s financial performance for fiscal 2009 was slightly better than Nike had originally expected, projected future cash flows had fallen below the levels we expected at the time of acquisition. This erosion was a result of both the unprecedented decline in global consumer markets, particularly in the United Kingdom, and Nike decision to adjust the level of investment in the business. Other (Income) Expense, net Fiscal 2010 Compared to Fiscal 2009 Other (income) expense, net is primarily comprised of foreign currency conversion gains and losses from the remeasurement of monetary assets and liabilities in non−functional currencies, the impact of certain foreign currency derivative instruments and unusual or non−recurring transactions that are outside the normal course of business. For fiscal 2010, other (income) expense, net was primarily comprised of net foreign currency gains and the recognition of previously deferred licensing income related to Nike fiscal 2008 sale of NIKE Bauer Hockey. For fiscal 2010, Nike estimate that the combination of translation of foreign currency−denominated profits from Nike international businesses and the year−over−year change in foreign currency related gains included in other (income) expense, net increased Nike income before income taxes by approximately $34 million. Income Taxes Fiscal 2010 Compared to Fiscal 2009 Nike effective tax rate for fiscal 2010 was 20 basis points higher than the effective rate for fiscal 2009. Nike effective tax rate for fiscal 2009 includes a tax benefit related to charges recorded for the impairment of Umbro’s goodwill, intangible and other assets. Excluding this tax benefit, Nike effective rate for fiscal 2009 would have been 26.5%, 230 basis points higher than Nike effective tax rate for fiscal 2010. The decrease in the effective tax rate for fiscal 2010 was primarily attributable to the continued benefit from Nike international operations, where tax rates for these operations are generally lower than the U.S. statutory rate. Nike estimate that their effective tax rate for fiscal year 2011 will be in line with their fiscal 2010 effective tax rate. Geography Highlights By geography and in total for the NIKE Brand, futures orders were as follows: GeographyReported Futures OrdersExcluding Currency ChangesNorth America 8% 7% Western Europe -2% 11% Central and Eastern Europe -2% 3% Greater China 19% 16% Japan -17% -16% Emerging Markets 30% 30% Total NIKE Brand 7% 10% North America During the fourth quarter, revenue for North America increased 4 percent to $1.8 billion. Footwear revenue was up 1 percent to $1.2 billion, apparel revenue increased 13 percent to $447 million and equipment revenue was essentially flat at $90 million. Earnings before interest and taxes (EBIT) for North America improved 8 percent to $435 million. North America revenue for the full fiscal year was down 1 percent to $6.7 billion. Footwear revenue decreased 2 percent to $4.6 billion, apparel revenue was flat at $1.7 billion and equipment revenue increased 1 percent to $346 million. North America EBIT grew 8 percent to $1.5 billion for the fiscal year. Western Europe During the fourth quarter, revenue for Western Europe increased 2 percent to $956 million. Footwear revenue increased 1 percent to $593 million, apparel revenue was up 8 percent to $309 million and equipment declined 12 percent to $54 million. EBIT for Western Europe decreased 17 percent to $193 million. For the full fiscal year, revenue for Western Europe was down 6 percent to $3.9 billion. Footwear revenue decreased 3 percent to $2.3 billion, apparel revenue declined 9 percent to $1.3 billion and equipment revenue dropped 15 percent to $247 million. Compared to last year, EBIT decreased 9 percent to $856 million. Central and Eastern Europe In the fourth quarter, revenue for Central and Eastern Europe was 9 percent better than the same period last year at $332 million. Footwear increased 9 percent to $199 million, apparel revenue grew 10 percent to $109 million and equipment improved 2 percent to $25 million. EBIT for Central and Eastern Europe decreased 9 percent to $84 million. Revenue for Central and Eastern Europe declined 16 percent for the fiscal year to $1.1 billion. Footwear revenue decreased 12 percent to $660 million, apparel revenue dropped 21 percent to $399 million and equipment revenue declined 20 percent to $91 million. Compared to last year, EBIT decreased 32 percent to $281 million. Greater China Fourth quarter revenue for Greater China grew 12 percent to $464 million. Footwear revenue increased 14 percent to $246 million, apparel was up 10 percent to $193 million and equipment improved 17 percent to $25 million. EBIT for Greater China increased 20 percent to $187 million. For fiscal 2010 Greater China revenue was essentially flat to the prior year at $1.7 billion. Footwear revenue grew 1 percent to $953 million, apparel revenue declined 2 percent to $684 million and equipment revenue improved 1 percent to $105 million. Fiscal 2010 EBIT for Greater China grew 11 percent to $637 million. Japan Japan's fourth quarter revenue declined 8 percent to $261 million. Compared to the prior year, footwear revenue was basically flat at $129 million, apparel revenue was down 13 percent at $105 million and equipment revenue dropped 17 percent to $27 million. EBIT declined 6 percent in the fourth quarter to $61 million. Fiscal 2010 revenue for Japan declined 5 percent to $882 million. Compared to last year, footwear revenue increased 1 percent while apparel and equipment revenue declined 10 percent and 7 percent respectively. EBIT for Japan was down 12 percent for the year at $180 million. Emerging Markets In the Emerging Markets, revenue was up 47 percent to $556 million for the fourth quarter. Footwear revenue increased 42 percent to $355 million, apparel revenue rose 70 percent to $162 million and equipment revenue increased 19 percent to $39 million. EBIT for the Emerging Markets in the fourth quarter improved 46 percent to $114 million. Full fiscal year revenue for the Emerging Markets was up 20 percent to $2.0 billion. Footwear revenue was up 23 percent to $1.4 billion, apparel revenue increased 22 percent to $532 million and equipment revenue declined 3 percent to $154 million. EBIT for the Emerging Markets improved 44 percent to $493 million for the year FINANCIAL RATIOS Price RatiosCompanyIndustryS&P 500Current P/E Ratio21.620.521.3P/E Ratio 5-Year HighNA13.212.5P/E Ratio 5-Year LowNA1.72.2Price/Sales Ratio2.112.592.14Price/Book Value4.245.463.54Price/Cash Flow Ratio17.9017.2012.90 The company high P ratio shows that investors are expecting higher earnings growth in the future < 1.1%> Profit Margins %CompanyIndustryS&P 500Gross Margin46.551.839.5Pre-Tax Margin13.418.216.8Net Profit Margin10.112.612.25Yr Gross Margin (5-Year Avg.)44.951.638.35Yr PreTax Margin (5-Year Avg.)12.818.015.85Yr Net Profit Margin (5-Year Avg.)9.312.111.2 Also compared to the industry Nike has lower gross margin <5.3%> and lower net profit margin. Financial ConditionCompanyIndustryS&P 500Debt/Equity Ratio0.060.061.07Current Ratio3.43.21.4Quick Ratio2.62.30.9Interest Coverage648.7441.437.8Leverage Ratio1.51.53.1Book Value/Share20.2114.9723.78 Nike has slightly higher current ratio than industry <0.2%>, it means that the company has liquidity than can cover the debts. Also, higher quick ratio refers Nike higher ability to meet its short term obligations. Nike have the same leverage ratio compared to industry, it means that Nike have normal ability to cover its debts throw assets. Investment Returns %CompanyIndustryS&P 500Return On Equity20.826.325.4Return On Assets14.317.48.0Return On Capital18.422.210.5Return On Equity (5-Year Avg.)21.724.716.4Return On Assets (5-Year Avg.)14.116.87.8Return On Capital (5-Year Avg.)18.821.510.5 Lower ROA<3.1%> reflects that managers don’t use its assets efficient. Lower ROE<5.5%> indicates that company don’t generate its profit throw the equity. Management EfficiencyCompanyIndustryS&P 500Income/Employee56,765108,278102,166Revenue/Employee563,677696,031926,601Receivable Turnover6.913.217.0Inventory Turnover4.63.910.8Asset Turnover1.41.40.8 Nike low R turnover reflects how ineffective receivables are collected. Also low I turnover shows how ineffective the company inventory sold during the period. NIKE and competitors ratios Direct Competitor Comparison NKEADDYY.PKPVT1PVT2IndustryMarket Cap:41.07B13.71BN/AN/A380.26MEmployees:34,40042,6594,00019,50311.21KQtrly Rev Growth (yoy):7.80%20.10%N/AN/A9.20%Revenue (ttm): 19.39B15.75B1.64B13.53B2486.15MGross Margin (ttm):46.51%47.79%N/AN/A40.15%EBITDA (ttm):2.94B1.61BN/AN/A46.45MOperating Margin (ttm): 13.23%8.01%N/AN/A9.94%Net Income (ttm):1.95B791.64MN/A180.40M2N/AEPS (ttm):3.961.89N/AN/A1.38P/E (ttm):21.7017.32N/AN/A16.35PEG (5 yr expected):1.803.14N/AN/A1.00P/S (ttm):2.110.88N/AN/A0.79 STOCK The company common stock is traded on the NASDAQ Stock Market under the: Symbol: NKE Last Sale: $ 85.42 Shares Outstanding: 387,900,000 Market Value: $ 33,134,418,000 Exchange: NYSE Issue Type: Common Stock High: $ 92.49 Low: $ 60.89 Stock Ownership TypeDate(Q,M)No. OwnersShares Held (000s)% OwnInstitutional09/30/10804341,46688.03 Top 5 Holders Shares Held OAK HILL INVEST... 26,830,665 FMR LLC 19,036,943 VANGUARD GROUP ... 13,921,179 JENNISON ASSOCI... 13,881,034 STATE STREET CO... 12,576,163 Ownership Analysis# Of HoldersSharesTotal Shares Held: 800 341,335,877 New Positions: 63 5,680,170 Increased Positions: 331 19,752,930 Decreased Positions: 379 25,002,380 Holders With Activity: 710 44,755,310 Sold Out Positions: 43 1,697,457 This chart represent common stock prices during 2001-2010 At July 16, 2010, there were 20,452 holders of record of our Class B Common Stock and 19 holders of record of our Class A Common Stock. These figures do not include beneficial owners who hold shares in nominee name. The Class A Common Stock is not publicly traded but each share is convertible upon request of the holder into one share of Class B Common Stock. The following tables set forth, for each of the quarterly periods indicated, the high and low sales prices for the Class B Common Stock as reported on the New York Stock Exchange Composite Tape and dividends declared on the Class A and Class B Common Stock Share Repurchases & Dividends During the fourth quarter, the Company repurchased a total of 2,884,008 shares for approximately $216 million under the Company's four-year, $5 billion program approved in September 2008. For the fiscal year, the Company repurchased a total of 11.3 million shares for approximately $754 million. Repurchases for the fiscal year were made in conjunction with two approved repurchase programs. In the third quarter of fiscal 2010 the Company completed its previous four-year, $3 billion share repurchase program approved by the Board of Directors in June 2006 under which the Company purchased a total of 53.9 million shares. Having completed the previous program, the Company began repurchases under the four-year, $5 billion program approved in September 2008. Of the total shares repurchased during the fiscal year, 6.6 million shares for approximately $454 million were purchased under this program. Dividends & SplitsForward Annual Dividend Rate4:1.24Forward Annual Dividend Yield4:1.40%Trailing Annual Dividend Yield3:1.12Trailing Annual Dividend Yield3:1.30%5 Year Average Dividend Yield4:1.80%Payout Ratio4:27.00%Dividend Date3:Dec 29, 2010Ex-Dividend Date4:Dec 2, 2010Last Split Factor (new per old)2:2:1Last Split Date3:Apr 3, 2007 Per Share Overview Date12-mos Rolling EPSDividendP/E Ratio08/20103.960.27017.6805/20103.860.27018.7502/20103.510.27019.2611/20093.000.27021.6308/20093.040.25018.2205/20093.030.25018.8302/20093.310.25012.5511/20083.740.25014.24 STEP 4 ,[object Object]

Porter 5 forcesSportswear, sports accessories & footwear industries Sportswear The global sportswear industry has become increasingly competitive since the phase out of the Multi-Fibre Arrangement in 2005 with the industry containing some of the world’s must powerful multinational brands such as Adidas, Nike, and Puma. In 2007 the global sportswear industry was worth US$145 billion and despite the global economic downturn the sector continues to increase in value. In 2010, the United States athletic apparel market become the world’s largest Sportswear market, accounting for 41% of total sales, followed by the European Union, which accounts for about 38% of total sporting apparel turnover. There is a stiff competition among the sportswear brands that control a majority of the share of this market. These companies spend heavily on innovation and sponsorship events which act as major barriers for the new entrants to this industry. Athletic footwear Since the 2003 athletic footwear industry has begun to enter the high-cost, high-growth quot;
double highquot;
development mode. The athletic footwear market declined 2008, and continued till 2009. In 2010, According to The NPD Group, Inc., one of the leading market research companies, the athletic footwear market is starting to show signs of shifting momentum. Women's and girls' footwear (excluding athletic footwear)Athletic footwearMen's and boys' footwear (excluding athletic footwear)Footwear and shoe accessoriesInfants' footwear Competition Because Nike sells products for such a wide variety of sports, it competes against many niche companies, like New Balance, but also against similar large athletic footwear and apparel manufacturers like Adidas AG (ADDYY) and Puma AG Rudolf Dassler Sport (PMMAY). Adidas AG (ADDYY) : 2009 revenues - $13.8 billion. The adidas Group competes in the overall sporting goods market. It makes sports footwear, apparel, accessories, and equipment. Like Nike, the adidas Group is also much larger than Puma in terms of sales. Puma AG Rudolf Dassler Sport (PMMAY) : 2009 revenue - $3.3 billion. Puma AG is a Germany-based competitor in the sells sports footwear, apparel, accessories, and equipment. It operates through two brands, Puma and Tretorn. Under Armour (UA): 2009 revenue - $856.4 million. Under Armour is a fairly new company (incorporated in 1996) that designs and sells sports footwear, apparel, and accessories. Its products, which are designed with microfibers intended to wick away perspiration, extend across the sporting goods, outdoor, and active lifestyle markets. Under Armour's sales are growing rapidly, with a 5 year growth rate of 65.03% (industry average is 16%). Company Revenue 2009 (Millions) Net Income 2009 (Millions) Nike (2009 Data) $18,627 $1,883.4 Adidas AG (ADDYY)[29] $13,786 $325 Puma AG Rudolf Dassler Sport (PMMAY)[30] $3,261 $167 Under Armour (UA) [31] $857 $47 In addition to Nike's footwear competitors, the company also competes with other makers of outdoor apparel, such as V.F. Corporation, Columbia Sportswear and Quicksilver Market Share Nike was the clear market leader, with 31% of the global athletic footwear market in 2007. Looking at the market in the United States, Europe, or Asia reveals a similar picture: Nike's market share in these regions hovers around 36%, followed by Adidas at 20%, with Puma and New Balance as distant third and fourth. The market for athletic apparel is both larger--$49.5 billion in 2005--and more diffuse; the top five firms control only 27% of the market. Nike is, however, also the global leader in apparel, with a 7% market share in 2007. PESTLE ANALYSIS Political Striking dock workers Political unrest in the production countries Terrorism in the home country The government must create economic policies that will foster the growth of businesses. Nike, fortunately, has been helped by the US policies which enable it to advance its products. The support accorded to Nike by the US government, particularly in the general macroeconomic stability, low interest rates, stable currency conditions and the international competitiveness of the tax system, form the foundation critical to Nike’s growth. Economic Slow down in the economy Reduction in consumer confidence Barriers of entry to the EU Contract manufacturing In economy, the biggest threat for Nike would be economic recession. During recession, Nike’s growth will be adversely affected. The US economy is experiencing a downturn right now. Consumer purchases are slowing down. Currently, Nike's feeling the pinch of the economic recession. The Asian economic crisis also affects Nike since its goods are manufactured in Asia. The labor costs and material prices are going up. Nike's growth is not just affected by the local economy but also in the international economy. A weak Euro and an Asian recession could mean weak sales for Nike. Socio-cultural Brand conscious consumers Change in buying habits in younger people Generation Y prefers other types of footwear Increase in the female share of the market Corporate social responsibility People are more health conscious nowadays. Diet and health are getting more prominence. Consequently, more and more people are joining fitness clubs. There is an accompanying demand for fitness products particularly exercise apparel, shoes and equipment. Nike is at the forefront of this surge in demand as people are looking for sports shoes, apparel and equipment. Nike, however, failed to foresee problems brought about by a sweatshop expose pertaining to labor and factory conditions at production locations in Asia. This caused bad publicity and declining sales as society and consumers demand more socially responsible companies Technological Speed of change of product Design Ability Speed of News reporting Nike uses IT in its marketing information systems very effectively. Nike applies marketing information systems to the economics of innovation, segmentation and differentiation for most of its businesses. Nike’s leadership status owes in large part to the use of extremely valuable Information Technology, and applying it to every aspect of the product from development to distribution. ,[object Object]

Nike also collaborated with Apple and is launching new apparel and footwear that will easily carry the consumer’s iPod

Product innovation is an ongoing process and is vital to stay ahead of competition Companies in this industry invest money in R&D to keep up with the new demands of today’s athletes.

Nike employs many specialists including engineers, athletes, biomechanics, and industrial designers to work together in the design processEnvironmental Re use a shoe Sustainability philosophy Climate impact Environmental consciousness has a strong presence in Western Europe and Japan, as well as in the United States. Currently, Nike has been “… pursuing product sustainability for more than a decade. From increasing the use of water-based solvents in footwear manufacturing and working to keep greenhouse gas emissions in check, to supporting organic cotton and turning old shoes into new sports surfaces, Nike’s commitment to sustainability is part of our Considered ethos” (“What led us to Nike Considered”). It can be said then that Nike does not suffer environmental issues. Legal Threaten action by underage workforce Poor employment record Corporate social responsibility Contract manufacturing and copying of product (intellectual property) Trade agreements ,[object Object]

Nike has made a true bounce-back from the negative media attention, and continues to be successful due to their strong business ethic philosophy.

Geography ,[object Object]

This reduces costs because labor is cheaper

Puts sources of production closer to where they will be sold

Firms who outsource lose the ability to closely monitor product quality and working conditions

Although some people find this unethical, firms cannot afford to keep production close to home and still compete on profit margins

Plants are also located in many different countries, rather than being concentrated in one area

Diversification of production plants reduces the risk that a firm will greatly be affected by a problem in any particular country

Example: Nike’s largest footwear factory accounts for only 6% of the total footwear production

Nike claims it can recover from any loss in production within one year’s time

INTERNATIONAL The demographic environment tells marketers who can be potential customer in terms of size, density, location, age, sex, race, occupation, and other statistics. Changes can result in significant opportunities and threats presenting themselves to the organization and major trends for marketers include worldwide explosive population growth (Kotler and Armstrong). All of these can provide Nike with the tools and assets it needs to promote its products in different areas of the world and gain a bigger share of the market globally. The industry has realized the influence of women’s sport players and is preparing to accommodate such an increase and as women increase their consumption the younger generation is decreasing because of the popularity of other footwear. Porter’s 5 forces This model is used to identify the sources of competition, and how to gain advantage over them. Potential Entrants ,[object Object]

Cheap copies from the Far East

Threats of New Entrants: (Low) Barriers to entry in the athletic footwear industry are high due to several factors. It is as very capital intensive industry. Even though it would not be difficult for a new company to obtain the raw materials and the labor needed to produce shoes, there is almost no chance for them to gain popularity in such a mature industry with some of the strongest brand names in the world. Brand loyalty is extremely strong and it would be very hard for a new entrant to “steal” loyal customers from the already existent players. Economies of scale play a huge role as well and the bigger players have an advantage of producing the products at a lower price than compared with newer entrants. As the output is bigger and the fixed costs of factories, machinery, marketing and R&D will be decreased per unit. Both marketing and R&D constitute high costs and since new entrants will not be able to take advantage of the economies of scale they will be less competitive. The industry itself is in a consolidation phase and only the big ones will survive. The large companies are strategically and constantly acquiring smaller companies. Some of the most popular acquisitions include Reebok by Adidas, Converse by Nike, Saucony by Stride Rite, etc. Small companies are bought before they become a threat to the bigger ones and before they have a chance to gain market share. In other words, it is impossible to grow in this industry because someone will take over your company. Buyers ,[object Object]

There has been and increase in women purchasing the shoes,

Generation Y has a different tastes and purchasing methods

Customers more affected by price

The buyers for this industry are retailers and end users. The footwear retailers, i.e. Footlocker, Wal-Mart, range in sizes. However, the top 25 retailers account for two-thirds of the sales of athletic footwear- approximately $15 billion in value. New retailers are entering the market, such as “big box stores” and vendors that open their own stores. The lack of concentration among buyers brings down the margins and gives the power to the vendors. Retailers also have no power in determining the design of the product. Therefore the big footwear manufacturers generally dictate the price of their shoes. In order to gain more power buyer companies have started merging- Footlocker -Foot Action, Sport Authority- Gart. This consolidation will transfer some of the power from the big players because in order to be industry leaders they will need these well-recognized retailers as well. Growing margins suggest that buyer power has been increasing.24 The end user of the industry is also considered a buyer and he has unlimited power. Every company is fighting for the loyalty of the end user through constant innovations and brand management. However, if the user is dissatisfied, he can easily switch the brand to another one. . Substitutes ,[object Object]

When required for professional use there is no substitute goods, but as a fashion item there are many other goods that could be purchased.

Lifestyle athletic shoes sales, for instance are growing at the fastest annual rate and Puma is undoubtedly the leader in this segment- with more than 50% sales growth. First, in the sports industry, other types of apparel could also be seen as a substitute, in terms of building image and style. Second, in the same product category, other types of shoes are also substitutes, such as slippers, heels, boots, flip-flops, etc. Even though sneakers are still the most popular type of footwear in the world, Companies such as Steve Madden and Sketchers are also seen as threats. Steve Madden’s “thick high heeled shoes”19 are very popular and since thick heels are considered a more comfortable version among women they could be a substitute for sneakers. Sketchers introduced non-athletic heel-less shoes also called “sneaker mules”20 These shoes, first gained popularity in Europe but now are also becoming popular in the United States. 1) They are an attractive alternative product or service, which customers can easily shift to if there are low switching costs OR 2) The availability of substitutes invites customers to make price, quality and performance comparisons CAN I jump higher? Is it cheaper? Can I run faster? 3) Competitively priced substitutes impose a maximum value on prices relevant industry can charge for its products or services Suppliers ,[object Object]

The suppliers do not have the power to bargain the price of their product, since there are numerous suppliers. There has been some standardization of production in the industry due to growing concerns of labor practices of the suppliers and manufacturers. These practices have been damaging the image of some companies including Nike. Therefore, the big companies prefer to work only with approved manufacturers and suppliers that are known to follow these labor standards. Both Adidas and Nike have created a system to ensure that all the high quality of the product, the working conditions, and the distribution are at high standards. Competitive Rivalry Reebok, offering more choice of shoe, introducing endorsement by sports personalities, sponsoring sporting leagues Adidas have recovered from the problems that plagued them, and have a good product mix, covering a wide range of sports. In order to stay competitive and have presence in all sectors, many mergers and acquisitions, i.e. Adidas and Reebok, are taking place and the market is going towards consolidation. As a result, maintaining a single brand image for companies like Nike becomes really a tough ask. In general, with three out of five forces being high, emerging market does not look like a favorable environment. However, on continuous marketing an educating effort, this market might be transferred into a growth region for all companies. STEP 5 ,[object Object]

Nike Responsibility Governance

ProductsMoving Toward Greater Diversity Employee Networks Nike Employee Networks are designed to help Nike move toward greater diversity. In the U.S., six employee networks focus attention on important communities within Nike. The intended role of each network is to foster professional development, enhance work performance, identify mentors, assist in recruiting diverse professionals, develop increased community interaction, and encourage improved teamwork and interaction within and across work groups. Native American Employee Network Mission: To increase awareness and continue to educate Nike employees about the Native American culture. Through educational opportunities, seminars, speakers and community involvement, NAEN continues to increase awareness of Native American values and culture at Nike. By sponsoring sporting events and various youth programs, the group creates visible community support and inspiration for Native cultures. With their help, the North American Native American community will understand Nike is an employer of choice. Latino Employee Network Mission: To increase the awareness of the Hispanic/Latino culture at Nike, explore diversity in the Nike workplace, develop resources to increase career and cultural growth for Nike employees, strengthen ties to the Hispanic/Latino community and develop initiatives that align with Nike business strategies. The Latino Employee Network encourages all Nike employees to experience Hispanic/Latino culture. The group holds monthly network meetings to discuss Hispanic/Latino initiatives and activities, and celebrates Hispanic/Latino cultural events such as Cinco de Mayo and Hispanic Heritage Month. Ability* Network Mission: To enrich Nike and our community

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