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AN ECONOMIC PROFILE OF NIKE

Nike Inc. (NKE) is one of the best known and heavily advertised brands in the world. Nike designs, develops and markets footwear, apparel, equipment and accessory products. Nike principally targets athletic footwear and athletic apparel. Nike’s product categories include running, cross training, basketball, soccer, sport-inspired urban shoes, and children's shoes. It also makes shoes designed for football, golf, baseball, tennis, walking, skateboarding, bicycling, volleyball, wrestling, hiking, outdoor activities, cheerleading, aquatic activities, and other athletic and recreational uses. Nike’s athletic apparel includes sports apparel and accessories covering sports inspired lifestyle apparel, as well as athletic bags and accessory items (http://www.nyse.com/listed/nke.html). Nike’s products are specifically designed for athletes, however many consumers who wear Nike products do not always participate in sport. Amongst the youth culture especially, Nike has become a fashion brand. This makes Nike a luxury product rather than a necessity.

The SEC (U.S. Securities and Exchange Commission) reports that the fiscal year for Nike ends on May 31. The Central Index Key (CIK) for Nike Inc is 0000320187, and the Standard Industrial Classification (SIC) is 3021 - Rubber & Plastics Footwear (http://www.sec.gov). Nike reported a gross revenue of 14.9549 billion dollars for the May 2006 fiscal year (http://moneycentral.msn.com/investor/invsub/results/hilite.asp?Symbol=US%3aNKE). On the basis of the research done for this paper, it can be said that Nike has never claimed bankruptcy. See figure 1 below for the stock values over the past three years.

Figure 1 – Nike stock fluctuations over the past three years (http://moneycentral.msn.com/home.asp). See Appendix 1 for the full table of values from which this graph is derived.

Nike has competition from every sports and sports fashion brand, since it produces goods for such a wide range of activities. However, Nike has two major competitors, Reebok and Adidas, who can directly compete with Nike’s range of sports gear. Internationally, Adidas and Nike stood fairly even with regards to market share (http://moneycentral.msn.com/content/P125034.asp). Nike has a thirty six percent market share of the U.S. athletic footwear market, which is triple Reebok's and quadruple Adidas' (Sporting Goods Manufacturers Association International, 2005).

Figure 2 – A graphical representation of the market shares of the major players in the U.S. athletic footwear market.

Athletes who use Nike’s specially designed shoes for their specific