Nike Report from Case Studies in Finance Case Study

Nike, Inc.: Cost of Capital

The History and Influential People of Nike

Before Bo knew it and we were told to “Just do it,” before we could inflate our shoes, there was a dream, a dream that one day he would revolutionize the way we think about athletic shoes. It begins decades before the now well-known name Nike was even heard of; it begins with a desire to improve and enhance running shoes for his track and field stars of the University of Oregon.

In the mid-1950s, William Jay “Bill” Bowerman, track and field coach at the University of Oregon in Portland, Oregon had a desire to come up with ways to give his athletes a competitive edge over the other schools they competed against. He experimented with different track surfaces, rehydration drinks, and most importantly, innovations in running shoes. His efforts to present his ideas to the established manufacturers of his time went ignored, so Bowerman began cobbling shoes for his runners.

During this same time, Philip Hampson “Phil” Knight competed for Bowerman’s team and upon graduation from the University of Oregon went on to Sanford University to earn his MBA. While at Sanford, Phil wrote a paper proposing that quality running shoes could be manufactured in Japan and Asia that would be competitive with the already established German brands. Like Bowerman’s submissions to manufacturers that went without praise, so were Knight’s letters of ideas to manufacturers in Japan and Asia. On a cold call to the Onituka Company in Kobe, Japan, Knight persuaded the manufacturer of Tiger running shoes to make him a distributor of the shoes in the United States. When the first delivery of sample shoes arrived, Knight sent several pairs to Bowerman hoping to make a sale. Knight was surprised when Bowerman offered to become his partner and provide his footwear designs to Tiger to manufacture. This would be the beginning of something that would one day change the way we look at athletic shoes.

Bowerman and...