Nike Company Profile Essay Research Paper I

Nike Company Profile Essay, Research Paper

I- COMPANY PROFILE

1) Nike.s overview

Nike Inc. was incorporated in 1968 under the laws of the state of Oregon, USA. The general business activities can be described as follows: design, development, and global marketing of high quality footwear, equipment and accessory products.

Nike is the largest seller of athletic footwear and athletic apparel in the world. The Nike swoosh is one of the most recognizable business logos on earth. It is more than a symbol of great brand marketing. Nike has revolutionized the way companies approach the athletics market. The company digs into any niche related to sports, including technological breakthroughs, retailing, sports management and sports promotion.

Nike deals in a very consumer orientated market. This means that the demand for the Nike’s goods heavily depends on the popularity of the various fitness activities. The company adjusts continuously their product mix in order to meet demands. It manages its business carefully, leading in aggressive marketing styles and innovative products.

When P. Knight and B. Bowerman created Nike, they decided to create a company to win, for the .ultimate victory.. This idea has been influencing Nike (the Greek Goddess of Victory) every day and it has been a dramatic success.

(millions of dollars)199919841989

Total Revenue8,7773,7901,711

Total Net Income451299167

They have built a remarkable company, which has emerged as one of the world’s greatest brand names. It is said that Nike posesses a reputation comparable to those of McDonald’s and Sony . Nike has outpaced its closest rivals.

Moreover, this success is reflected by the stock price of the company. During 1994 and 1997, the stock price nearly quintupled.$100 invested in Nike stock ten years ago would have been worth $ 1,432 on May 31, investment in the S&P 500 Index would have been worth $ 527.

Why such a success. In launching Nike, Knight paid attention to several emerging trends:

· The rapidly growing interest in sports, both as participatory and viewing event.

· The sharply increasing adulation of top athletes.

· The obsession with health and physical activity.

· The centrality of sports among teenagers. lives.

· The increased .fashionizing. of products.

2) What does Nike sell. How. And where.

Nike sells the product to 20,000 retail accounts in the U.S and through a mix of independent distributors, licensees and subsidiaries in approximately 110 countries around the world.

Most footwear products are produced outside the U.S (see the table) while apparel products are produced both in United States and abroad (Bangladesh, China, Hong-Kong, Indonesia, Malaysia, Mexico, The Philippines, Singapore, Sri Lanka, Taiwan and Thailand).

FOOTWEAR% of production

China40

Indonesia30

Vietnam12

Thailand11

As more fully explored in section II, this point is a key one because Nike has been accused of using child labor and abusing human rights in Asia.

Nike.s athletic footwear products are designed primarily for specific athletic use, although a large percentage of the products are worn for casual or leisure purposes.

Running, basketball, cross-training are currently on top-selling product categories. Nike also sells shoes for outdoor activities, tennis, golf, soccer, base-ball, football, bicycling, volley-ball, wrestling, cheerleading, aquatic activities, auto racing and other athletic and recreational uses.

Nike sells sports apparel covering each of the above categories, as well as athletics bags and accessory items; and a line of equipment under the Nike brand name, including sport balls, timepieces, eyewear, skates, bats.Nike also owns a line of dress and casual footwear and accessories under the brand name Cole Haan.

Bauer Nike Hockey Inc, Nike.s subsidiary, manufactures and distributes ice skates, skates blades, in line roller skates, etc. The headquarters are in Montreal.

Nike.s sales are composed of:

Major business line% in Nike.s revenues

Footwear59

Apparel33

Equipment and others2

Other brands5

The revenues per region:

Regions19991989

United States57 %80 %

Europe26 %14 %

Asia10 %2 %

Americas7 %4 %

3) Financial Highlights.

This chapter deals with both revenues and basic corporate data

Evolutions of the revenues (in millions of dollars):

The revenues declined for the first time since 1994.

Financial highlights for the last three years:

Year ended 31 May199919981997

Revenues8,7779,5539,186

Cross Margin3,2833,4883,683

Cross Margin %37.4%36.5%40.1%

Net Income451400796

Basic earnings per common share1.591.382.76

Return on equity13.7%12.5%28.5%

Revenues decreased 8% for the year 1999 but the net income increased to $ 451 millions. 3 of the 4 regions were down in revenues with Europe the only exception. If we are to believe P. Knight, there are 3 main explanations:

- Revenues in Japan fell by one third due to Asian crisis (particularly in Japan).

- M. Jordan retired.

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