Current Business Affairs

Contents

HISTORY OF NIKE 2

HUNT OF CHEAP LABOR 2

JEFF BALLINGER 3

NIKE INVOLVED IN UNETHICAL PRACTICES IF NOT ILLEGAL 3

THE EFFORTS OF JEFF BALLINGER RESULTED IN: 4

CHILD LABOR 4

HITTING THE WALL 6

CHILD LABOR WAS NOT THE ONLY ISSUE 6

INCOME VS EXPENSES 6

CONCLUSION 7

HISTORY OF NIKE

Nike first begun to capture the attention of both trend-setting teenagers and financial observers in the middle of 1970’s by selling a combination of basic footwear and street-smart athleticism. In 1972 Nike annual revenue was $60,000 but their strategy helped them to raise their revenue to $49 million in just ten years. Nike went public in 1980 and that multiplied their growth many times and revenues hit to over $9 billion. By 1998, Nike controlled over 40% of the $14.7 billion U.S. athletic footwear market. Nike was also a growing force in the $64 billion sports apparel market, selling a wide range of sport-inspired gear to consumers around the globe. So Nike was not only gaining market share in USA but also around the globe the market share was climbing.

Strategy was the major strength that differentiated Nike from its competitors that helped Nike to sell a fairly wide range of athletic footwear to a fairly wide range of consumers: men and women, athletes and non-athletes, in markets around the world. Nike strategy consisted of a simple idea that CEO Phil Knight had first concocted in 1962 while still a student at Stanford Business School. The formula had two main prongs. First, the company would save costs by outsourcing all manufacturing. All products would be made by independent contracting factories, this will save the money through outsourcing and that saved cost is poured into marketing. In particular, Knight focussed from the start on celebrity endorsements, using high-profile athletes to establish an invincible brand identity around the Nike name. Emblazoning the Nike logo across athletes such as Michael Jordan and Tiger Woods was adding color to...