¶ … Nike's tremendous success up until the mid-90s?
Nike was founded by Phil Knight in 1964 when he put his MBA project into practice along with his former track coach Bill Bowerman. At that time, the companies which were already established were manufacturing the sports shoes in economy that was high waged; while the project showed that decreasing the costs of transport would mean that the company could gain high sourcing from the countries that had low costs of labor. Keeping this in mind, Nike started importing shoes from Japan; however with the birth of waffle trainer by Bowerman one night, the company became a designer logo rather than an importer. The strong personalities and the love for sports of Knight and Bowerman played a lot of role in defining the purpose of Nike and it attracted a lot of confident and young employees to the company. The logo of Nike also became very popular and spoke of a 'no nonsense emphasis on speed and performance' could be recognized by ninety seven percent of the people. The company's tag line 'Just Do It' is also the most recognizable slogan in America.
The early recognition that Nike received enable the company to establish its products with a superiority which continued to grow and strengthen the company. During 1980 to 1997, the share price of the company grew up to 3686% and it took the lead from Reebok in 1988 to become the leader in sports shoes. The market share of the company increased from 32% in 1994 to 45% in 1996. In 1997, the group size of the company tripled and it earned nine billion dollar sales with eight hundred million dollar profits. With a lot of success in their hands, the company decided to become a leader in sports and fitness and not just shoes. Knight in an interview to Harvard Business Review stated that the company considered itself to be a production oriented company and emphasized on designing the product, but they have also realized that the company also markets the product in the best possible ways which is also the reason their sales have spread across the world. After that claim, the company also considered itself to be a market oriented company. Furthermore, Nike moved on to retailing and opened a lot of Nike stores around the world. The company received a good initial response from the journalists and several athletes.
With increasing success, Nike went forward in redefining and expanding through a joint venture with a talent agency of Hollywood. The main aim of the company in doing so was to package events where the company's endorsers like Michael Jordan and Charles Barkley would be involved and sell it to the media companies and the sponsors. The director of advertising of Nike claimed that this would boom the image of the company and increase their sales as well. In 1996, the company was manufacturing everything from footballs to sunglasses, hockey sticks to batting gloves and the Vice President of the company pro-claiming that Nike was not just a shoe company but covered everything related to sports.
2. Using ESTEMPLE, explain why Nike suffered a severe decline in 1997.
Nike was a leading sports company before the mid-1990s, and had a lot of financial liquidity that was favoring the company and opened up many opportunities for it. The company, however, had to face a downfall in their profits in 1997 that made the owners go through their strategies again. A lot of small events played their part in effecting the success of Nike which resulted in a huge drop in their market share which dropped from forty seven percent to forty percent and their profits too had dropped to 96%.
Economic
EU instating one currency
The financial breakdown of 1997 in Asia had cause macro effects
The American economic growth decelerating
Instability in currency rates, gold rates and crude oil rates
Increasing price of crude oil increased the price of raw materials, transportations, energy and took another chunk of customer's earnings (The Nike Company's position in Athletics, 2011).
Social
Change in consumer's taste in athlete shoes: more fashion-oriented. The users of Nike did not consider them cool anymore and Peter York who was the marketing guru of Nike also accepted the fact that there was an air of desperation in the company and it was not where it should be at the moment. The company is introducing a lot of limited editions and special runs and it was trying very hard to keep their image of being cool which was not working for them.
Protesters opposed the treatments of workers in the contract factories. Furthermore, the media investigators and protestor groups had started focusing on the alleged abuses of the workers in the Nike factories. The different...
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