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INTRODUCTION :

Major publicly traded sports wear and equipment supplier base in the U.S.Employed over 30,000 people world wide. Worlds leading suppliers ofathletic shoes and apparel and a major manufacturer of sports equipmentswith and revenue in access of $16 billion USD in 2007. At the beginning of1992, Nike was the world leader in the athletic shoe market in terms ofoverall market share. Nike was not the market share leader in each globalregional market, nor was Nike the market share leader in each segment ofthe athletic shoe market. Nike's primary objective, however, was to becomethe 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 researchand development company that depended on independent contracting firmsto produce the goods developed and marketed by Nike. It is thisorganizational focus that is at the heart of both Nike's strength and the

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company's vulnerability. The major problems and issues confronting Nike atthe beginning of 1992 were as follows:

1. Marketing and research and development:

a. Distribution. A key Nike objective is the development of control of thedistribution of the company's products on a global basis. While the companyhas made significant gains in this area, problems remain.

b. Product/target market relationship. Nike defines its athletic shoes asperformance products, and identifies the target market for these products aspersons pursuing fitness regimes.

GOING ESTABLISHMENT :

The most telling events for Nike didn't take place on the track, however. Thebrash guerrilla marketer, famous for thumbing its nose at big-time sportingevents, was showing a new restraint. Eight years ago in Atlanta, Nikeambushed basketball sponsor Champion (a brand of Sara Lee Corp.) bysneaking giant Swoosh signs into the arena. When the cameras panned thestands, TV audiences saw the Nike logo loud and clear, while Champion hadnothing. 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 theEstablishment when it comes to global sports marketing. With revenuesexceeding $12 billion in fiscal 2004, the company that Philip H. Knightstarted three decades ago by selling sneakers out of the back of a car at trackmeets has finally grown up.

The kind of creativity that led Bill Bowerman, the University of Oregontrack coach who co-founded the company with Knight, to dream up a newkind 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'sa whole new ball game. Gone are the days when Nike execs, working onlittle more than hunches, would do just about anything and spend just aboutany amount in the quest for publicity and market share. Scott Bedbury, aformer Nike marketing chief, recalls pitching his advertising budget toKnight 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

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the one question he hadn't prepped for: "How do we know you're asking forenough?" That year, Nike spent a jaw-dropping $48 million. The brashinnovator of sports marketing may still open the checkbook wide -- as it didwhen it signed basketball phenom LeBron James to a $90 millionendorsement contract last year, but those grand gestures are far fewer at thenew Nike.

In the past few years, the company has devoted as much energy to themundane details of running a business -- such as developing top-flightinformation systems, logistics, and (yawn) supply-chain management -- as itdoes to marketing coups and cutting-edge sneaker design. More and more,

Nike is searching for the right balance between its creative and its businesssides, relying on a newfound financial and managerial discipline to drivegrowth. "Senior management now has a clear understanding of managing the

creative process and bringing it to the bottom line. That's the big differencecompared to the past," says Robert Toomey, an equity analyst at RBC DainRauscher Inc. in Seattle.

What is Supply Chain?What is v

The network of firms that bring products to market, from companies thatproduce raw materials to retailers and others raw materials to retailers andothers that deliver finished products to consumer. Economic value is addedthrough the coordinated management of the flow of physical goods andassociated information at each stage of the chain.We can say that a value chain is a string of companies working together tosatisfy market demand

FILLING THE ORDERS :

Nike also overhauled its supply-chain system, which often left retailerseither desperately awaiting delivery of hot shoes or struggling to get rid ofthe duds. The old jerry-built compilation strung together 27 differentcomputer systems worldwide, most of which couldn't talk with the others.

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Under Denson's direction, Nike has spent $500 million to build a newsystem. Almost complete, it is already contributing to quicker design andmanufacturing times, and fatter gross margins -- 42.9% last year, up from39.9% five years ago. Nike says that the percentage of shoes it makeswithout a firm order from a retailer has fallen from 30% to 3%, while thelead time for getting new sneaker styles to market has been cut to six monthsfrom nine.

Meanwhile, Nike has started paying serious attention to its handful ofacquisitions, once treated as more of an afterthought. After buying up ColeHaan 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 theiracquired 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 mothership 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 grew51%, 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'sdependence on hit shoes and could help Nike turn in a more consistent

performance. That's why Nike is eager to snap up complementary brands asthey become available. In mid-August it paid $43 million for Official StarterProperties, licensors of sneakers and athletic apparel whose brands includethe budget-level Shaq label. "What we're trying to do is move toward moreof a consumer, no cyclical model," says Blair. "The key is trying to find theright balance of discipline, innovation, creativity, and structure."

Nike has also had to grapple with the touchy topic of sweatshop labor at the900-odd independent overseas factories that make its clothes and sneakers.When Nike was getting pummeled on the subject in the 1990s, it typicallyhad only two responses: anger and panic. Executives would issue denials,

lash out at critics, and then rush someone to the offending supplier to put outthe fire. But since 2002, Nike has built an elaborate program to deal withcharges of labor exploitation. It allows random factory inspections by theFair Labor Assn., a monitoring outfit it founded with human rights groupsand other big companies, such as Reebok International Ltd. and LizClaiborne Inc. that use overseas contractors. Nike also has an in-house staffof 97 which has inspected 600 factories in the past two years, grading them

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on labor standards. "You haven't heard about us recently because we havehad our head down doing it the hard way. Now we have a system to dealwith 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 thecompany's single largest market. Under Grossman, Nike is making sportsfashion a core business, something unthinkable until recently inside Nike'smale-dominated culture. Thanks to stylish athletic wear -- think tennis starSerena Williams at the U.S. Open -- Nike's worldwide apparel sales climbed30% 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 risingdemand. And adidas-Salomon has redoubled efforts to attack the NorthAmerica basketball market, where Nike has a 60% share. Taking a leaf from

Nike's book, Adidas just signed three NBA all-stars: Tracy McGrady, TimDuncan, and Kevin Garnett, each of whom will have his own sneaker. Onthe technology front, Adidas has unveiled the Adidas 1, a $250 shoe slatedfor December that has a computer chip that automatically adjusts the fit asthe wearer runs.

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Nike aims to keep pace in the techno-battle with Nike Free, a shoe still beingtested, that makes runners feel as if they were barefoot. It's inspired by the

barefoot runners of Kenya, who have proved that shoeless training buildsstrength and improves performance. Meanwhile the company continues torefine its Shox technology -- a special cushioning system first developed forrunners, 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 theU.S.

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