INTRODUCTION :

Major publicly traded sports wear and equipment supplier base in the U.S.
Employed over 30,000 people world wide. World’s leading suppliers of
athletic shoes and apparel and a major manufacturer of sports equipments
with and revenue in access of $16 billion USD in 2007. At the beginning of
1992, Nike was the world leader in the athletic shoe market in terms of
overall market share. Nike was not the market share leader in each global
regional market, nor was Nike the market share leader in each segment of
the athletic shoe market. Nike's primary objective, however, was to become
the global market share leader--overall, in each region, and in each segment.
Nike markets its products under its own brand as well as Nike gold, Nike
pro, Nike gold, Nike pro, Nike plus, Air Jordan , Nike skate body, jeam plus.

At the beginning of 1992, Nike was organized as a marketing and research

and development company that depended on independent contracting firms
to produce the goods developed and marketed by Nike. It is this
organizational focus that is at the heart of both Nike's strength and the
company's vulnerability. The major problems and issues confronting Nike at
the beginning of 1992 were as follows:

1. Marketing and research and development:

a. Distribution. A key Nike objective is the development of control of the

distribution of the company's products on a global basis. While the company
has made significant gains in this area, problems remain.

b. Product/target market relationship. Nike defines its athletic shoes as

performance products, and identifies the target market for these products as
persons pursuing fitness regimes.

GOING ESTABLISHMENT :

The most telling events for Nike didn't take place on the track, however. The
brash guerrilla marketer, famous for thumbing its nose at big-time sporting
events, was showing a new restraint. Eight years ago in Atlanta, Nike
ambushed basketball sponsor Champion (a brand of Sara Lee Corp.) by
sneaking giant Swoosh signs into the arena. When the cameras panned the
stands, TV audiences saw the Nike logo loud and clear, while Champion had
nothing. Nike has even signed up to become an official U.S. Olympic
sponsor in four years in Beijing, and it has toned down its anti-
Establishment attitude. For good reason: These days, Nike is the
Establishment when it comes to global sports marketing. With revenues
exceeding $12 billion in fiscal 2004, the company that Philip H. Knight
started three decades ago by selling sneakers out of the back of a car at track
meets has finally grown up.

The kind of creativity that led Bill Bowerman, the University of Oregon
track coach who co-founded the company with Knight, to dream up a new
kind of sneaker tread after studying the pattern on his wife's waffle iron, is
still revered at Nike. When it comes to the rest of the business, however, it's
a whole new ball game. Gone are the days when Nike execs, working on
little more than hunches, would do just about anything and spend just about
any amount in the quest for publicity and market share. Scott Bedbury, a
former Nike marketing chief, recalls pitching his advertising budget to
Knight back in 1987. He was asking for a huge increase, from $8 million to
$34 million and was prepared to make his case. Instead, Knight asked him
the one question he hadn't prepped for: "How do we know you're asking for
enough?" That year, Nike spent a jaw-dropping $48 million. The brash
innovator of sports marketing may still open the checkbook wide -- as it did
when it signed basketball phenom LeBron James to a $90 million
endorsement contract last year, but those grand gestures are far fewer at the
new Nike.

In the past few years, the company has devoted as much energy to the
mundane details of running a business -- such as developing top-flight
information systems, logistics, and (yawn) supply-chain management -- as it
does to marketing coups and cutting-edge sneaker design. More and more,
Nike is searching for the right balance between its creative and its business
sides, relying on a newfound financial and managerial discipline to drive
growth. "Senior management now has a clear understanding of managing the
creative process and bringing it to the bottom line. That's the big difference
compared to the past," says Robert Toomey, an equity analyst at RBC Dain
Rauscher Inc. in Seattle.

What is Supply Chain? What is v

The network of firms that bring products to market, from companies that
produce raw materials to retailers and others raw materials to retailers and
others that deliver finished products to consumer. Economic value is added
through the coordinated management of the flow of physical goods and
associated information at each stage of the chain.
We can say that a value chain is “a string of companies working together to
satisfy market demand”

FILLING THE ORDERS :

Nike also overhauled its supply-chain system, which often left retailers
either desperately awaiting delivery of hot shoes or struggling to get rid of
the duds. The old jerry-built compilation strung together 27 different
computer systems worldwide, most of which couldn't talk with the others.
Under Denson's direction, Nike has spent $500 million to build a new
system. Almost complete, it is already contributing to quicker design and
manufacturing times, and fatter gross margins -- 42.9% last year, up from
39.9% five years ago. Nike says that the percentage of shoes it makes
without a firm order from a retailer has fallen from 30% to 3%, while the
lead time for getting new sneaker styles to market has been cut to six months
from nine.

Meanwhile, Nike has started paying serious attention to its handful of

acquisitions, once treated as more of an afterthought. After buying up Cole
Haan almost 15 years ago, Nike struggled to add any real value at the dress-
shoe outfit. But lately, Nike managers have figured out that by giving their
acquired brands some independence, rather than forcing Nike's testosterone-
laced corporate culture on them, they can achieve better results. "We've
learned to let those brands pull resources and expertise out of the mother
ship as opposed to pushing the mother ship onto the brands," Blair says.
Nike doesn't break out results for each sub-brand, but the group's sales grew
51%, to $1.4 billion last year. With nearly a quarter of the sales growth,
Converse was the star.

That still-modest portfolio of different brands helps to lessen the company's

dependence on hit shoes and could help Nike turn in a more consistent
performance. That's why Nike is eager to snap up complementary brands as
they become available. In mid-August it paid $43 million for Official Starter
Properties, licensors of sneakers and athletic apparel whose brands include
the budget-level Shaq label. "What we're trying to do is move toward more
of a consumer, no cyclical model," says Blair. "The key is trying to find the
right balance of discipline, innovation, creativity, and structure."

Nike has also had to grapple with the touchy topic of sweatshop labor at the
900-odd independent overseas factories that make its clothes and sneakers.
When Nike was getting pummeled on the subject in the 1990s, it typically
had only two responses: anger and panic. Executives would issue denials,
lash out at critics, and then rush someone to the offending supplier to put out
the fire. But since 2002, Nike has built an elaborate program to deal with
charges of labor exploitation. It allows random factory inspections by the
Fair Labor Assn., a monitoring outfit it founded with human rights groups
and other big companies, such as Reebok International Ltd. and Liz
Claiborne Inc. that use overseas contractors. Nike also has an in-house staff
of 97 which has inspected 600 factories in the past two years, grading them
on labor standards. "You haven't heard about us recently because we have
had our head down doing it the hard way. Now we have a system to deal
with the labor issue, not a crisis mentality," says Maria S. Eitel, Nike vice-
president for corporate responsibility.

It's overseas, in fact, where most of Nike's sales now come from. Last year,
for the first time, international sales exceeded U.S. sales -- still the
company's single largest market. Under Grossman, Nike is making sports
fashion a core business, something unthinkable until recently inside Nike's
male-dominated culture. Thanks to stylish athletic wear -- think tennis star
Serena Williams at the U.S. Open -- Nike's worldwide apparel sales climbed
30% in three years, to $3.5 billion in fiscal 2004.

Of course, Nike still faces challenges. After several years of red-hot growth,
European sales of higher-priced shoes have started to slide. In the U.S.,
retro-sneaker makers like K-Swiss, Diesel, and Puma are filling a rising
demand. And adidas-Salomon has redoubled efforts to attack the North
America basketball market, where Nike has a 60% share. Taking a leaf from
Nike's book, Adidas just signed three NBA all-stars: Tracy McGrady, Tim
Duncan, and Kevin Garnett, each of whom will have his own sneaker. On
the technology front, Adidas has unveiled the Adidas 1, a $250 shoe slated
for December that has a computer chip that automatically adjusts the fit as
the wearer runs.
Nike aims to keep pace in the techno-battle with Nike Free, a shoe still being
tested, that makes runners feel as if they were barefoot. It's inspired by the
barefoot runners of Kenya, who have proved that shoeless training builds
strength and improves performance. Meanwhile the company continues to
refine its Shox technology -- a special cushioning system first developed for
runners, which is now becoming a top seller in categories from running to
basketball to cross training. The shoes, which sell for up to $135 a pair,
helped put to rest the idea that high-priced sneakers no longer sell well in the
U.S.