Nike's success uses sports as a global communication platform. It crosses national borders as well as cultural divides. It is a long-standing client request and a motivator for personal development.personal development.
Sports teach valuable lessons about respect, cooperation, hard work, winning and losing, and fair and strong competition. Sports inspire, fascinate, and reward us in good times and bad. While working in the sports industry is fantastic, controlling one is much better.
The Success Story of Nike grew from a sleepy little Oregonian village to become the biggest sportswear and footwear corporation in the world. It all began with a shoe and a T-shirt. It has developed into an advanced, multifunctional multinational corporation.
Shoes, accessories, and clothing are among Nike's best-known products. It also sells products under the Nike and Jordan brands in addition to its Jordan Brand and Converse operations.
About the Workings of Nike
Nike is an American multinational sports corporation that designs, manufactures, distributes, and markets footwear, clothing, training equipment, and services. Much of its equipment is used for casual or recreational activities, even if it was created with sports in mind.
Most of Nike's product is made by independent contractors and sold directly to customers through their websites, independent retailers, franchisees, sales agents, and Nike retail shops.
The corporate headquarters of the corporation are situated in Beaverton, Oregon, which is part of the Portland metropolitan region in the United States. The company is the most well-known in the sports business, employing approximately 44,000 people worldwide and having a $19 billion brand valuation in 2014.
The following brands are used by Nike to sell its products: Air Jordan, Nike Blazers, Nike Pro, Nike Golf, Nike+, and additional brands.
Nike - Industry
The world's largest sports sector is expanding as more individuals turn to recreational and competitive sports to improve and balance their work-life balance, health, and stress levels. Its appeal as a kind of both physical and mental recreation has increased.
Spending on sportswear has increased among consumers, with accessories and sportswear accounting for a significant portion of the cost. The 21st-century sports sector is characterized by intensity. Market research is becoming an increasingly important component of selling sports goods and accessories as international marketplaces become more competitive.
The sports equipment and accessories business is expanding rapidly all around the world because consumers are willing to adapt to changing trends and quickly adopt new technologies. E-commerce, a big retail channel that allows consumers to access the full range of sports equipment manufacturers these days, is the reason the sector is growing. Being an online store for all kinds of sports equipment makes sports clothing more marketable internationally.
At a compound annual growth rate of 7.2%, the sportswear and equipment business is expected to reach $817 billion by 2026, up from estimated sales of $480 billion in 2021.
Name, Logo, and Tagline of Nike
The word "Nike" comes from Greek mythology, where Nike is the Flying Queen of Victory. The "swoosh" logo was designed to represent motion, strength, drive, and speed, drawing inspiration from the goddess's wings.
The Founders of Nike
When Bill Bowerman and Phil Knight founded Nike on January 25, 1964, the company was known as "Blue Ribbon Sports." On May 30, 1971, "Nike", Inc." was the new name given to it.
Phil Knight
Philip Hampson Knight, an American multimillionaire, is an entrepreneur. He was not just a co-founder of Nike but also its former CEO and chairman. With a $54.5 billion net worth, Forbes ranked Knight as the 24th richest person in the world on July 23, 2020.
In addition, he is the co-founder and CEO of the time-lapse format film company Laika. Knight finished his studies at the University of Oregon and the Stanford Graduate School of Business. At the University of Oregon, he competed in track events under the direction of coach Bill Bowerman. Later, he and Bowerman co-founded Nike.
The Bill Bowerman
William Jay Bowerman was an American track and field coach and one of the co-founders of Nike, Inc. He coached 31 Olympic participants, 12 American record holders, and 51 All-Americans.
The corporation was first established in 1964 under the name Blue Ribbon Sports, which is where Nike got its start. Following his graduation from the University of Oregon's undergraduate program and receipt of his master's degree at Stanford University, Phil Knight experienced two transformative experiences.
Startup Story of Nike
When he was on the track team at the University of Oregon, Bowerman was the coach of his team. Apart from his intense competition, Bowerman was also concerned with making his running shoes better and would often experiment with new models after learning a few things from a local shoemaker.
Knight was the first competitor to profit off Bowerman's footwear. Given that Phil was a quiet, comfortable runner who was willing to explore, Bowerman promised to bring one of his shoes and add some flair to it.
Knight took the offer, and tales have it that the shoes were so good that his teammate Davis utilized them to win the gold medal in the 1960 Olympic 400-meter track competition. Otis Davis's shoes, he claimed, were created by Bowerman.
Knight attended the MBA program at Stanford after earning his degree from the University of Oregon. He submitted an article there advocating that, due to cheaper labor costs, the manufacturing of running shoes be transferred from Germany to Japan.
The University of Oregon track and field team spent twenty-four years winning every season but one, four NCAA crowns, sixteen top ten finishes, and a single national championship, despite his rejection of the coaching position.
Nike's Goals and Mission
The goal statement of Nike states, "To bring inspiration and innovation to every athlete in the world."
Nike states in their mission statement that "it is our mission to strive to maximize human potential." To do this, we create revolutionary sports inventions, manufacture our products in a more ecologically friendly way, put together a multicultural and creative international team, and make a constructive impact on the areas where we work and live."
Nike's revenue model and business plan
Nike's business model is based on the manufacturing and marketing of athletic goods, such as apparel, footwear, and equipment, along with certain services. Everything is marketed under one of the most well-known brands worldwide.
Customer Division
Nike has a wide selection of gear, shoes, and apparel. Based on revenue, Nike's market is divided geographically into four primary segments:
Asia-Pacific, China, North America, and South America
Europe, Africa, and the Middle East
Nike's Customer-Seller Relationship
Other than self-service, very little consumer interaction occurs. The customer will research the brand or item either in-person at the store or online, make a buy, and utilize it. There will be some interaction with a salesman as needed. The official website also has a section dedicated to FAQs, along with customer service through phone, email, or live chat.
Value Proposition
Nike produces products that inspire individuals to engage in sports. The brand's reputation, creativity, and quality all have a big impact on its products. This is the essence of the brand and what consumers desire to get out of a pair of Nikes.
Nike offers a large selection of gear for a variety of sports and pastimes. Getting a product that has been carefully studied and developed with the best raw materials and technology available is what matters to the audience, though.
Cost Structure
Nike incurs annual costs of almost $21 billion, primarily related to stocks and warehouses. An additional $3 billion has been set aside for marketing, encompassing expenses for advertising and promotion, sponsorship, marketing, brand events, and brand personality exhibition. Every year, more than $500 million is spent on other general and administrative expenditures.
Nike is the biggest retailer of apparel and shoes in the world, and the majority of its revenue comes from these sales. While a significant amount of money is invested in the development of its high-end, technologically advanced sports footwear, the bulk of its products are used regularly for leisure.
Along with other sports gear and accessories, Nike also sells balls, sunglasses, backpacks, gloves, electronic devices, and recreational goods for a range of indoor and outdoor activities.
Nike- Competitors
Nike's rivals include ASICS America, Steve Madden, Puma, Adidas, and Skechers USA.
Nike- Controversies
1. Claims of Child Labor - In the 1990s, Nike faced criticism for employing minors as laborers in factories it contracted with to produce footballs in Cambodia and Pakistan. Nike continues to outsource production to companies that operate in areas where it is difficult to prevent child labor due to a lack of regulation and control, despite making attempts to cease or at least reduce the practice.
A 2001 study into a Nike facility in Cambodia found cases of child labor and unfavorable working conditions. Six young ladies, often working sixteen hours a day, were the subjects of the documentary.
2. Paradise Papers: Nike was among the companies that used offshore organizations to cheat taxes, as per the private electronic documents associated with offshore investment that were made public on November 5, 2017.
3. Strikes at Chinese Factory: In April 2014, a strike at the Yue Yuen Industrial Holdings Dongguan shoe factory, which manufactures shoes for Nike and other brands, took place, making it one of the biggest in mainland China. An employee was paid 250 yuan less each month by Yue Yuen. Yue Yuen makes 3000 yuan a month on average. The plant has 70,000 employees. For nearly twenty years, this practice has been followed.
Nike- Future Plans
Nike has not been immune to the COVID-19 pandemic. 2020 saw a 1% decline in revenue following a 38% decline the quarter before. However, the market is thrilled about the company's capacity to increase profit and create significant growth in its digital platform.
Investors have been convinced by Nike's success that the company is gaining market share throughout the epidemic and will emerge from it stronger than its competitors. These factors, especially the business's digital skills, bode well for the company's competitors over the next five years.
In 2015, Nike first announced a target of generating $50 billion in revenue annually by the year 2020. It was forced to delay it until 2022 due to past difficulties when it lost momentum against Adidas, but despite the pandemic's setbacks, the company is on the way to achieving that objective. It would need to grow sales from $39.1 billion in fiscal 2019 at a compound annual rate of almost 9% to achieve this.
Like the rest of the clothing business, the company was well-positioned to take advantage of the demand after the pandemic was gone. Shops reopened, and there was a buying frenzy on streetwear, including the iconic Nike sneakers. Thanks to its digital momentum and pandemic recovery, Nike should be able to surpass its $50 billion revenue targets in 2022 and reach more than $60 billion by 2025—three years later.
Conclusion
It's no accident that Nike has been successful. Because of its innovative marketing strategies, commitment to producing high-quality goods, and ability to tap into the emotional connection that exists between athletes and their gear, Nike has consistently led the athletic clothing market. The origins of Nike's success can be traced back to 1962 at the University of Oregon in the United States, when Phil Knight, a middle-distance runner, and his competitive sports specialist coach Bill Bowerman realized it would be dangerous to bring in high-tech, inexpensive athletic shoes from Japan.
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