Nike, Inc.

Nike, Inc. is a high-profile sporting goods and apparel company that engages in the design, development, and marketing of footwear, equipment, and accessory products worldwide under brand names such as NIKE, Cole Haan, Converse, Starter, Hurley, and Bauer. The company, which is headquartered in Beaverton, Oregon, sells its products through a mix of independent distributors, licensees, and subsidiaries in approximately 120 countries worldwide. Nike has experienced substantial financial and marketing success since its founding in the 1960s and is now the largest sporting goods company in the world (in terms of market capitalization). Despite its success, the company has been the target of much criticism in recent years for alleged abusive or “sweatshop” labor practices in its subcontractors.

Nike was founded as an athletic shoe company by Phil Knight and Bill Bowerman in 1962 under the name Blue Ribbon Sports. In 1972, the company changed its name to Nike, after the Greek goddess of victory. Knight had been a track athlete and business student at the University of Oregon, where Bowerman was his coach. While getting his MBA at Stanford, [Page 1504]Knight devised a strategy for the manufacturing of athletic shoes overseas that would take advantage of lower-cost off-shore production capabilities. The plan was for Nike to be essentially a design, marketing, and distribution company with all the production performed by subcontractors operating overseas.

This strategy proved highly successful. Nike started subcontracting in Japan and then moved its sourcing operations to South Korea and Taiwan to take advantage of lower cost of production in these locations. As the economies of South Korea and Taiwan developed, Nike continued to move its sourcing operations to even cheaper locations such as China, Indonesia, and Vietnam.

In the fiscal year 2005, Nike had revenues of $13.7 billion and employed about 24,000 people directly and another 650,000 in more than 800 supplier factories worldwide. The company has operations in several locations including Oregon, Tennessee, North Carolina, and the Netherlands in addition to its Niketown and Nike Factory Store retail outlets. It has several subsidiaries: Cole Haan (casual luxury footwear and accessories), Bauer Nike Hockey (hockey equipment), Hurley International (teen-oriented sports apparel for surfing, skateboarding, and snowboarding), Converse (athletic footwear), Nike IHM, Inc. (cushioning components used in Nike footwear), and Exeter Brands Group, which includes Starter and licenses other Nike brands. Nike became a publicly traded company in 1980, and its New York Stock Exchange ticker symbol is NKE.

One of the key components of Nike's strategy has been the use of celebrity athletes as endorsers for its products. Its endorsers have included some of the biggest names in sports such as Michael Jordan (after whom the famed “Air Jordan” shoes were named), Lance Armstrong, Tiger Woods, Kobe Bryant, and Jerry Rice.

In the late 1980s, Nike found itself at the center of controversy brewing over alleged sweatshop labor working conditions in its subcontractor factories in developing countries. Critics alleged that a number of labor-oriented problems existed in these factories including (1) wage and salary concerns—both the payment of low wages and the use of various schemes to cheat workers out of the wages to which they were entitled, (2) unsafe/unhealthy working conditions, (3) excessive working hours and forced overtime, (4) harsh and abusive disciplinary tactics, (5) the use of child labor, and (6) active opposition to unionization efforts by the workers. According to some critics, such as labor activist Jeff Ballinger, the opposition to unionization was the key concern because, it was reasoned, with effective union representation the other issues could be resolved.

...