NIKE

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9.1 - Women at Nike: Understanding How to Create a Female-Friendly Environment Key Information: Gender Difference at Nike: Nike's Transformation of Sexist Culture: Designing for Women: Ziad, Victoria, and Xi 19% 81% Women Men • Women purchase 81% of all athletic apparel. • Additionally, women purchased 67% of men's apparel and 91% of children's apparel. • The market for women's footwear and sportswear is a 14.5 billion dollar industry. • Despite the overwhelming evidence demonstrating the magnitude of the women's sports and footwear industry, Nike largely ignored the market until the late 1990s. • Nike made products for women, but produced what was convenient, instead of what a female consumer might want. • Nike was composed of male athletes selling shoes to other male athletes, and subsequently were slow to realize the spending power of the female market. • Following Nike's management realization, the company wanted to be a leader in the women's market. • This change was also prompted by economic troubles, but the company had a big task ahead of them as they dove into an unknown market. • Nike listened to women to understand the market, and the feedback demonstrated that women wanted athletic apparel that they could also wear outside of the gym, that the clothes and shoes should match, and that women are interested in yoga, dance, and cardio activities (such as running). • Nike came out with NikeWomen's "Shop by Outfit," but it is no longer available. Chapter 9 Case Study: Summary (GROUP 4) Nike's Marketing Strategies for Women: Nike's Failures: Nike's Takeaways: 9.2 - Supply Chain: Understanding How to Create a Profitable Supply Chain History of Supply Chain: Business Contract of Manufacturing: Ziad, Victoria, and Xi • Nike also heard in the feedback that women did not like the NikeTown stores. • Nike's response was to redesign NikeTown stores to be attractive to their female consumers, to open up 12 NikeWomen stores, to invest in the NikeWomen website, and to produce shiny catalogues mailed to over a million homes. • The NikeWomen stores and the catalogues have since been discontinued. • First failure was in 1987, Nike had an advertisement which told woman to stop eating "like pigs." • After the flop, Nike tried to be more sensitive, sensible, and successful in their marketing to women. Nike realized that women prefer advertisements that feature moving stories, rather than female athletes. • Nike has learned women are different, do not like being ignored, care about performance, value coordination/fashion, want dedicated shopping areas, like catalogues, and do not want to be told they eat like pigs. • Nike has responded to their takeaways successfully, and unsuccessfully. • Phil Knight's Stanford business plan envisioned a company that would focus on the products, design, and marketing, not manufacturing. • Nike's business model is still sound, and the idea that outsourcing labor to developing countries for economic reasons is still implemented often. • All Nike footwear is produced outside the United States by contract manufacturers, who must ensure the products are up to the exacting standards. • A graph of demonstrating where Nike largely produces its shoes can be found below: Links in Supply Chains: Nike's Technology in Supply Chains: Ziad, Victoria, and Xi 13% 21% 30% 36% China Vietnam Indonesia Thailand • Supply chain is crucial to the company, and to have a successful supply chain Nike creates a line of products, promotes them to retailers, takes products orders from retailers, uses orders to plan a production schedule, outsources, ships products, receives products at its warehouses, and ships products to retailers. • Normal challenge is for to supply quality products to consumers as quickly as possible, and do so in a way that is profitable. • Solving this challenge requires communication and cooperation. • Schedules are extremely important, and they are managed by a contract manufacturer who purchase raw materials, transform the materials, and transfort the finished products. • The Nike and its contract manufacturers most depend on each other to be efficient. • Nike relies on three complex software systems to manage supply chains. • The i2 system - helps company to forecast demand. • The SAP system - helps company manage orders from its own customers. • The Siebel system - facilitates sales and customer relationships. • Nike 2001 - initiated its new i2 planning software - failed miserably - millions of excess - and millions of surplus. Plummeted by $100 million - knocked 20 percent of stock price. • Managing supply chain most important important thing in a company. 9.3 - Advertising Chain: Understanding the Way Nike Advertises History: Nike's Focusing on the Customer: Sports Marketing: Nike's Campaign Trail: Ziad, Victoria, and Xi Nike's Production of Shoes (By Percentage) • Mid 1980s - sales topped the $1 billion mark, but company was operating at a loss and 10 percent of staff had to be laid off as the casual footwear attempt was a failure. • Nike was no longer number one - as Reebok overtook Nike with their women's aerobic shoe. • Phil Knight reflected and realized that Nike's problem was not their shoes, but rather their attitude towards customers. He realized they needed to innovate according to the desires of customers, and began to prioritize marketing. • Nike then became a company that focuses on both advertising to gain customers, but also innovating in order to have quality products to retain customers. • Better marketing played a key role in Nike's resurgence. • The usage of sports world celebrities to endorse their products was very influential, especially in the case of Steve Prefontaine. • Sports marketing is quick, easy, and effective. It works because the professionals wearing the merchandize authentic the product, the athlete is a walking advertisement, the connection between the athlete's talent and fashion choices, and the feedback from the professionals. • Buying a nike product is buying Nike's brand. For every dollar Nike earns, Nike spends 12 cents on advertising and promotion. • Marketing efforts incorporate Nike's designing of innovative products, pricing, target market, awareness campaigns, retail stores, website, brand, and connections. • Wieden + Kennedy is an advertising firm Nike hired in 1980, and Nike owes much of its success to them. The two companies work together to create meaningful content. Nike's Branching Out: Ziad, Victoria, and Xi • Nike now builds ads into movies, and has an integrated marketing platform. • Nike has cutback on traditional forms of advertising and now focuses most on advertising online, on social media, and at events. • Nike's goal is to connect with consumers, and so they adapt accordingly. • Nike has won many awards for its advertising campaigns, but they have also made many mistakes. They have had advertisements encouraging in line train racing and featuring women running away from chainsaws. • Nike still prioritizes the product, as Knight felt the product is the most important marketing tool. Nike now succeeds because of their products and their marketing.

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Case Summaries: (10.1) Athletic Shoes, Apparel, and Equipment: Nike's Industry Athletic Shoes o American teens buy about 3 pairs each year, while adults buy about 1.8 pairs o Charles Goodyear: made the modern sneaker possible, invented sneakers with his "vulcanization" process (shoes with rubber soles and canvas tops) o Bill Bowerman: discovered the art of jogging Athletes and the AthLeisure Market o Fitness Boom of the 1970s → people began to participate in various forms of physical activity → booming market that could supply all the new athletes with shoes that would allow them to get fit and stay healthy while doing it o AthLeisure Market: new group of shoe consumers in the 1970s, wanted "'authentic' athletic shoes even though they didn't intend to wear them for sports or anything else overly strenuous" o AthLeisure Market was even larger than the sports participation market Today -- 80% of all "athletic" shoes are purchased by people who don't wear them for athletics o The new athletic shoes created were a lot more expensive than the previous ones They were made with lighter materials, featured air bags and waffle soles (improved technology) Created by "performance shoe" companies (i.e. Nike and Adidas) The companies flourished... Allowed the companies to establish brand names and capture the endorsements of celebrity athletes Became extremely adept at advertising and other forms of brand promotion Apparel and Sports Equipment o Strong brand awareness launched shoe companies into the market for apparel The industry discovered that people who identified with a particular brand of shoe could also be interested in clothing from the same company o Adidas was the first shoe company in the clothing business -- 1960s o Brand awareness also helped the same companies enter the sports equipment and accessories market The Industry Today o Sales in the global sporting goods market jumped from $43 billion to $54 billion in 2010 Main companies: Nike, Puma, Adidas Small companies: New Balance, Sketchers, Asics, Eila, K-Swiss, Saucony, and Vans o Most companies outsource their products from independently owned factories in developing countries They sell through specialty athletic shoe stores,sporting goods stores, and discount retailers Additional methods -- selling directly to customers through their own stores, outlets, or web sites (10.2) Product Innovation The "Innovation Kitchen" o The "Innovation kitchen" is Nike's center of creative activity, which is located on the Nike campus. o Nike's 75 designers work in an active and lively atmosphere there. These designers use simple tools like pencils instead of high-tech equipment. o The designers do not need to worry about business, and instead, their job is to improve athletic performance. They want to create something "cool" and to help athletes perform better The Sport Research Lab o The Sports Research Lab is in a way similar to the innovation kitchen o The job in the research lab is to raise the level of athletic performance and to prevent sports related injuries o Nike uses a 13,000 square foot facility where state of the art technology is used Category Product Teams o Category product teams consist of designers, product developers, sports research experts, marketing specialists, engineers, accountants, coaches, athletes, consumers, and others) o "The team prepares a product definition report specifying desired product features, target consumers, and suggested price" o A designer creates an idea around the product definition report o Engineers create a prototype -- a physical sample of the product. The team reviews the prototype, refines it, and prepares manufacturing specifications, where are then sent to a Nike contract factory o The team tests and changes the prototype and returns it to the factory for revisions if needed; once the changes have been made, the team approves the product o The product is manufactured and shipped to retailers, then sold to consumers Missteps o Not everything from the Kitchen and the Lab is successful although Nike has done very well in introducing new products. For example, Nike's very first shoes performed terribly. Other examples include the equipments in the inline and ice-skating markets and the outdoor and extreme -sports markets. Nike does not enter new markets by itself; Nike enters new markets through established companies.

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Team: Geared For Greatness Marin Cherry The Business World Sunday, July 26, 2015 6.1_Principles How to Make Money D--- Near Automatic • What? - Nike Principes issued in 1977 1.Our business is change. 2.We're on offense. All the time. 3.Perfect results count—not a perfect process. Break the rules; fight the law. 4.This is as much about battle as about business. 5.Assume nothing. Make sure people keep their promises. Push yourselves; push others. Stretch the possible. 6.Live off the land. 7.Your job isn't done until the job is done. 8.Danger Bureaucracy Personal ambition Energy takers vs. energy givers Knowing our weaknesses Don't get too many things on the platter 9.It won't be pretty. 10.If we do the right things, we'll make money damn near automatic. • Why? - First employees needed more detailed directions when conducting company activities. - While 13-year-old Nike was prospering, Knight wasn't satisfied and wanted to be number one and beat Adidas. • How? - Knight assumed the principles would foster the behavior that would get him and his company where he wanted to be. - By 1980, Nike had surpassed Adidas and dominated the U.S. market. New Statements for New Missions • What? - Nike's new (and current) mission statement is: To bring inspiration and innovation to every athlete* in the world. *If you have a body, you are an athlete. • Why? - When toppled from the top spot by Reebok, whose sales of soft leather shoes for women took off in the mid-1980s, Nike's new mission—namely, "Crush Reebok" helped Nike regain industry leadership. - Knight then issued a seemingly strong and visionary statement: Nike, he announced, would be "the world's leading sports and fitness company." - Because Nike already was the lead, Knight revised his mission statement and qualified "athlete" with Bill Bowerman's words. • How? - The statement performs nicely the basic functions of both a mission—a declaration of what a firm is and stands for now—and a vision—a statement of what it will be in the future. 6.2_Knight_Leadership The Inspirational Eccentric in the Japanese-Style Office • What? - Phil Knight was far from your typical CEO. He was unique in the way that he was a laissez-faire leader. He practices a more hands-off approach and provides minimal direction to subordinates. - 1.Figure Out Your Job. 2. Do It. • Why? - Knight believed that it was freedom that allowed his employees to thrive. • How? - This method was effective mostly because of the inspiration that Phil Knight provided with his employees with. They would never want to disappoint him. - Therefore, when Perez was appointed as CEO of Nike, the company began to fail because he became more acclimated to a traditional CEO position while at SC Johnson & Son. - Perez was eventually replaced by 25-year Nike employee, Mark Parker, who was able to bring back their original mission. This eliminated the culture clash and put Nike back on their feet and at the forefront of the athletic industry. Discussion Questions: 6.1 1.) What was Knight trying to convey in the principles outlined in 1977? How did these principles aid Nike in surpassing their greatest competitor, Adidas? 2.) Do you think that Nike's current mission statement: "To bring inspiration and innovation to every athlete* in the world. *If you have a body, you are an athlete" will remain effective in future markets? 3.) In principle 8, Knight outlines possible threats to the well-being of the company. Do you think that these "dangers" are logical? Why or why not? 6.2 4.) Should other companies mirror Nike's leadership style or is this laissez-faire method something that should remain unique to Nike? 5.) Given that Perez was CEO of SC Johnson & Son, why was it that his leadership qualities were unable to effectively transfer into his role at Nike? What is it that makes a Nike CEO different from other CEOs?

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Team: The A Team Nike Cases 7.1&7.2 Summaries 7.1 The Benefits of Working on Campus include: Nike's benefits ranks 90th percentile fulfilling most of the employee's needs three weeks' vacation in year one and seven weeks after 19 years a fiveweek sabbatical after 10 years and every five years thereafter Medical, dental, vision coverage, life and disability insurance, and a 401(K) retirement savings plan are supplied Employees are allowed to dress casually when working Nike campus offers a wide variety of facilities for the employees Lance Armstrong and Bo Jackson facilities offer a variety of sporting resources like basketball court, squash court, weight rooms, putting green, athletic training facility, spinning studio, and etc. Nike employees can spend much time with their kids, as the children are allowed to be dropped off in the morning and picked up at any time during the day Joey Paterno Child Development Center→ Center for employee's children There are many activities for the children including a toddler pool Nike's campus also offers cafes, restaurants and stores 7.2 Diverse Approaches to a Competitive Advantage Positives of a diverse workforce competitive edge, sparks creativity, attract talented employees from all around the world, improves ability to relate and connect with diverse consumers, improve the Nike brand, keep the company in touch with its consumers, tackle productdevelopment and marketing issues Promoting equality Nike's Global Diversity Executive Council Run by Mark Parker, CEO, and Charlie Denson, President Council that reviews, communicates, and holds employees accountable for diversity policies Global Women's Leadership → set in stone to support women's careers and advancement at Nike "The Potential is Yours" → a workshop attended by all US employees to understand concepts of workplace diversity Nike also encourages individuals with similar backgrounds to form employee networks of different races, genders and sexual orientations "Maximizing Diversity and Inclusion" → workshop for US managers to increase the value of diversity Nike is one of only 13 companies to receive a perfect score on the Human Rights Campaign Foundation's Corporate Equality Index Report Card and Game Plan in the USA 48% of Nike employees are women and 45% are people of color A survey showed that most members of the Nike organization value diversity and believe that a diverse workforce contributes to innovations and creativity Nike still needs to strengthen its ability to retain diverse groups of individuals, particularly females managers at the senior level Nike's Future Plan Improve data collection systems for diversity targets Increase minority and female representation at management levels Include diversity goals in all business plans Hold managers accountable to meet diversity goals

Nike Case Study 1.1

What is the story? What key ideas did Knight have in his business plan? • Realized that runners did not like Adidas and Puma • convinced that someone could make track shoes of higher quality and lower cost • combining german quality and japanese efficiency • visited japan and met Onitsuka, president of tigers, and persuaded him to grant him the distribution on the west coast of the US • kept connection with Onitsuka while running 'Blue ribbon' and formed Nike • focused on serving athletes as their main customer base

2.1Working Inside the Lines

● Nike has their own policies that employees in their company should abide by that encompasses everything including ethical questions called "Inside the Lines." ● These rules are strictly enforced and breaking them results in severe consequences. ● "Inside the Lines"consists of the following: ○ ""Thanks" or "No, Thanks": Bribes versus Gifts" ■ Nike has strict rules about what is a bribe and what is considered a gift ■ To be considered a gift the object has to be of nominal value i.e. Super Bowl tickets are not considered nominal. ○ "To Share or Not to Share" ■ "Conflict of Interest" ● Don't break the law by giving away confidential information (insider trading) ■ "Conflict of Loyalty" ● Have to abide by Nike rules, be loyal to company ■ "Questions of Honesty and Integrity" ● If unsure, don't do it ○ "To Blow the Whistle or Not to Blow the Whistle​" ■ Report it, if you feel uncomfortable, you can submit an anonymous report ● All employees must agree to these policies and to make sure that these regulations are not forgotten, it must be renewed every year ● 2.2The "Just Do It" List Nike's Corporate Initiatives ● Nike donates money, personnel, and special skills to help a few selected initiatives. ● Nike is involved in charitable activities in many countries. Countries are chosen for programs based on their needs ● Nike believes children should be active no matter what financial or personal situation they are in. Nike is very committed to helping young people stay active. ○ They are active in several places including china, where they try to bring sports to migrant children ● Nike does lots of work with education, helping high schools everywhere account for lack of funding in their physical education courses. ● Nike donates substantial money to better their communities. ○ They even bring many celebrities to help promote sports and activity(I.e. LeBron James). ● Nike uses the power of its brand to assist it's causes. ○ 70 million yellow LIVESTRONG wristbands were sold at $1 each with the proceeds going to the Lance Armstrong Foundation (which supports cancer research). ● Nike is active in gender equality and poverty ○ They work to give women a fair shot by assisting with education. ○ They work so that women are treated fairly. ○ With the money donated by Nike, women are able to get an education, allowing them to make some money as well. ● Nikes design incorporates ways to do things sustainably and to help the environment. ■ Consider the environment in the design of innovative, high performance products ■ Cut down on waste generated from the manufacturing process and reduce materials used ○ Reduce the use of toxic substances ■ changes the production process to be sustainable ● i.e how long a shoe would take to recycle ■ reduces the use of adhesives in order to make things alto degradable ○ They reduce their use of PVC to cut back on emission of poisonous gas ○ They uses materials made from recycled materials 2.3Jump Starting Corporate Responsibility ● The Defensive Stage ○ There was a time where Nike was brought under criticism for labor practices in Asian factories that manufactured their goods. the first stage was Defense ○ in the 1990 Nike was brought to defend itself for its sweatshop practices in china ○ Critics say workers were: ■ 1) under age ■ 2) underpaid ■ 3) subject to poor working conditions. ○ Nike was heavily criticized by the Media ○ There were even a boycott by consumers, and protests in college campuses. ○ Nike was very defensive towards the issue, stating that since they did not own the factory they were not directly responsible. ○ They did however say that Nike managers were in the factories to confer that owners were abiding by the companies code of conduct ○ There were also routine independent inspections ○ Nike pointed out that they improved the country's way of life. ○ Nike did not address the fact that there was in fact a problem in the factories. ● The Complaint Stage ○ Nike eventually did accept there were in fact incidents and room for improvement ○ Nike said they treat the factories as if they owned the factories at which they work ○ They pledged to improve working conditions by: ■ 1) Raising minimum age to 18 ■ 2) Regulate air quality control ■ 3) Monitoring programs now involved nongov. organisations ■ 4) Education programs were expanded ○ Nike created a new labor relations department that would deal with all incoming problems ○ Upon notifying the public Nike was disappointed to find the public did not believe it was enough, they were not trusting the company. ○ The managerial stage ○ Founder Phil Knight created a managerial team to address the problem ○ Their first task was to examine the firms behaviour ○ They found that company's pay incentive payment procurement managers responsible for getting products manufactured and into inventory ○ They found that when they are in a rush, they will ignore the bad labor conditions ○ They altered the program to reward managers when the factories follow the code of conduct ○ They learned that labor issues must be treated on all levels, and all managers should be held to high standards. ○ They created compliance teams to help adhere to these conditions, they really on a non profit "fair labor association" to insure high standards ● The Strategic Stage: ○ While it is clear to Nike that there is still ample space for improvement, a lot has changed over 10 years. And this is what led to an improved image of the company. And they intend to keep improving as time goes on. ● The Civil Stage ○ Nike decided to take a leadership role in changing working conditions in the entire industry ○ However not all other companies followed Nikes lead, as they still have bad practices and go to enormous lengths to hide them ○ Nike has listed comprehensive reports on their website showing improvement in 700+ ○ A large problem in factories today is the division there of. If three companies hire the same factory, routine checks are often redundant, and if the companies don't act together, they cannot properly imprint change to the factories working condition. ○ If these companies were to work together, change would come at a much higher rate ○ This would be valuable to the factories as they get a better reputation for their improved operations. ○ This would also be better for 3 rd party organizations as they could check the data being given by the larger companies ○ Many companies that resist will soon have to conform due to public scrutiny. ○ Nike is now however a leader in corporate responsibility