Nike – Company Profile

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We have chosen to write about Nike. First of all we are going to make a company description of Nike and write about their history, and then we would like to make a swot analysis, wherein we are going to write about the company’s strengths, weaknesses, their opportunities and their threats. Then we will write about the importance of globalization for Nike’s expanding. After that, we will write about their policies, among these we will mention their environment policy. After this, we will write about their working conditions, on the different Nike factories. And hereafter we are going to write about the American business culture, and then write about their products. Finally, we will round our report off by evaluating it, and by making a conclusion.

History / company profile:

Bill Bowerman and Bill Hayward founded Nike in 1964 as Blue Ribbon sports BRS. BRS opened its first retail outlet in Santa Monica, California in 1966 and later they opened their first west retail store in Eugene, Oregon.

The brand name Nike and the company’s swoosh was created in 1971. Some years later in 1979 Nike introduced its first pair of running shoes, with air-sole that was engineered by former NASA employee Frank Rudy. In 1981 Nike opened its first footwear distribution center in Memphis, Tennessee.

Later in 1990, Nike opened its first Nike town store in Portland, Oregon. They made an exclusive agreement with The Athletic Congress in 1992, so that every medallist in the Barcelona games would wear Nike Apparel.

In 1993 Nike introduced the “Reuse-A-shoe” program, whereby old athletic shoes would be collected and used in the making of athletic courts, tracks and fields. During March 2004, Nike and Australian soccer Association entered a partnership. Two years later in 2006, Nike and Google announced a website Joga.com, and this website was an online community for football. It is available in 14 languages. Since Nike has also introduced Joga TV and an Internet TV cannel focused on football.

Nike to day is divided in four product lines: footwear, apparel, equipment and other businesses. Under the footwear product line, Nike sells footwear for men, women and children. This product footwear is also divided into special categories such as running, cross-training, basketball, tennis, golf, baseball, football and volleyball.

The apparel product line, Nike sells sports inspired lifestyle apparel like athletic bags and other accessory items. The company also apparel with professional teams and colleges.

The equipment product line, Nike sells equipment under their Nike brand name. They sell thing like golf clubs, sport balls, eyewear, bats, skates and other equipment that is used for sport activities. The company of Nike has also license to produce and sell Nike brand like children’s clothing and school supplies.

Nikes other business includes other subsidiaries like Bauer Nike Hockey, Cole Haan Holdings, Converse, Hurley International, Nike Golf and Exeter and Exeter brands Group.

Nike footwear and apparel products are produced outside the US, while equipment products are produced in both in the US and abroad.[1]

SWOT Analysis

Nike is the leading company for athletic footwear and athletic apparel in the world. Nike is operating globally with factories in the wide world. The majority of Nike’s products are produced outside USA e.g. in the Asian countries where the costs are very low. In a market like this, you have to increase your competitiveness by all means if you are to survive. With many competitors, like Adidas, Reebok etc. Nike has to follow the newest trends and be the leader, not just with regards to lower their costs, but also investing in new technologies in shoes.

Strengths: Nike’s market position is a big advantage and a very powerful strength. Nike is the leading shoe producer with approximately 40 percent of the worldwide footwear industry. Nike has its products produced in over 160 countries by a mix of independent distributors and licenses. Nike “Swoosh” I one of the world’s most recognized logos and their brand name is also an important competitive factor.

Nike’s economy has been in an amazing growth since 2000. Due to revenue growth in Nike’s portfolio the economy has been increasing rapidly in the 21st century. The strong economy allows them to invest in expansion missions in the future.

Nike’s products are being manufactured in the developing countries. Most of the Asian countries is producing Nike’s articles e.g. China, Indonesia and Vietnam. You can say that Nike is investing in the developing countries because of the low costs. Nike is also using a programme called “future”, which is an ordering programme where the retailers can order specific product up to six months in advance. Nike’s continuing investments in the developing countries is also a clear indicator that these markets are very significant not only for Nike but also for other companies. Nike product portfolio is very strong, Nike is offering an extensive range of sports products from footwear to clothing. The portfolio is developed all the time, an enables Nike to put their competitors under pressure with new products constantly under development.

Nike has very few weaknesses because they are one of the biggest companies seen in a global perspective. One of these weaknesses is “sweatshops”, these sweatshops is a big weakness for Nike because people more often relate them with child labour. The consumers are more aware of how these products are being manufactured. Therefore Nike’s image are being put under pressure because of the accusations. Nike’s opportunities lies within the growth of sporting goods, the growth of sporting goods reached a total sale of $ 51.3 billion in 2005, and are expected to grow by 3 % in 2006. Nike presence in this business allows them to harvest a great amount of money, by meeting the demand of the consumers. Nike is also sponsoring many athletes and sporting events, therefore they are widely recognized by the world’s population. Another big opportunity is Nike’s customized product where consumers can customize their own footwear etc. The consumers are willing to pay for unique products therefore there is a big opportunity in the consumers willingness to pay a premium price.

Threats

Raw material costs are increasing which means that footwear and the other sporting products are more expensive to produce. These raw materials include synthetic rubber plastic compounds etc. The rising oil prices results in these increased raw material prices. Nike’s profitability may suffer if the oil prices continue to increase, therefore Nike is forced use low-cost countries in Asia for their production. Chinese products also called “cheap” products, is a very big threat for Nike, because of their low price. Chinese shoe import to Europe increased with 700 % in 2005, and may affect the consumers to buy these products instead of Nike’s products. Nike’s market share all over the world is huge, but with these “cheap” products being mass produced every day, there is a great risk for Nike to lose market share.[2]

Environmental policy

Some years back in time, has Nike hasn’t been “acting” responsibly, and how they should with regards to the environment.

Nike has been accused of a lot of negative thing, with regards to their environment issues, and unfortunately the thing that they have been accused for, has been true. They have e.g. been accused for:

– Storing harmful chemicals, next to flammable fuels, which is extremely dangerous, because some chemical reactions, can occur and therefore it is very dangerous, for both the environment, and for the people working, at these storing facilities.

– They have been burning garbage, which was not reusable, and that has caused black smoke. Burning non reusable material is not good for the environment, it causes CO2, and by that we get involved, with some of the most mentioned, environment problems, that is to say the greenhouse effect.

– One other thing that Nike, hasn’t been very good to maintain, is their use of toxic chemicals, which creates damaging vapours. First of all it is very dangerous for the employees, who work near these vapours, and another thing we already have mentioned, is the environment. The environment gets polluted and that’s not good for anyone to do at all.

Of course when we talk about the negative thing, we also have to mention the good thing, the fact that Nike is doing a great effort to maintain their ways to have a positive and respectable environmental policy. Among the thing we can mention is:

– Nike has improved a lot of their environmental problems, at their factory in Vietnam, by putting a stop to the use of toxic glue in their manufacturing. The use of toxic glues is very dangerous for the people who actually work at these factories, and have to deal with, and inhale these toxic substances. The fact that they are doing this is a very positive thing, and it shows that they have the potential, to change, and its shows that they have taken the first step to start changing their environmental policies.

– Another huge announcement, that Nike has made, is actually a part of their environment policy, and is as follows: “Through the adoption of sustainable business practices Nike is committed to securing intergenerational quality of life, restoring the environment and increasing value for our customers, shareholders and business partners.” This is a very big step for Nike to take, and it will probably take some years to have their manufacturing and other things, changed, so they can follow this statement that they have made. The change of environmental issues, is happening in cooperation with CERES (The Coalition for Environmentally Responsible Economies), which I will get into later.[3]

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