Phil Knight and Bill Bowerman met at the University of Oregon in 1957. Five years later, they

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Phil Knight and Bill Bowerman met at the University of Oregon in 1957. Five years later, they formed Blue Ribbon Sports to manufacture high-quality running shoes. In 1963, they began selling Tiger shoes, made by Onitsuka Tiger in Japan, in cars at track meets in the United States. The company became Nike in 1972, named after the Greek goddess of victory.

Nike grew rapidly and by 1979 secured 50% of the US running shoe market; the company went public in 1980. The shoe maker expanded into other sports with Michael Jordan's Air Jordan in 1985 and the elliptical in 1987. Nike signed Tiger Woods to a $40 million endorsement deal in 1995 and continued his prowess in most major sports. Nike acquired competitor Converse in 2003 and currently competes with shoe makers Adidas, Reebok and others. The company continued to expand its product offerings into a variety of sports-related categories, including apparel, clothing bags, two-way radios, and even heart monitors. Nike's late 1980s advertising slogan, “Just Do It,”

Today, Nike is the number one shoe manufacturer in the world and controls more than 20% of the sports shoe market in the United States. The company designs and markets shoes for basketball, baseball, golf, cheerleading, volleyball and other sports, as well as Cole Haan dress and casual shoes and a line of sportswear, in about 200 countries. Chairman, CEO and co-founder Phil Knight still owns majority shares in the company. Much of Nike's success can be attributed to its endorsements, including such notables as LeBron James, Kobe Bryant, Michael Jordan and Roger Federer.

Nike products are distributed through approximately 23,000 sporting goods and footwear retail stores in the United States and 30,000 abroad. The company operates around 700 company-owned stores, which accounts for around 15% of revenue. The Nike brand accounted for 87% of revenue in 2010. Nike also operates 24 distribution centers around the world, and approximately half of the company's revenue comes from outside the United States. Nike veteran Mark Parker has been CEO since 2006.

Because most of its shoes are made by contractors at low-wage companies, Nike has been a constant target of human rights activists who cite low wages and allege child labor violations and poor working conditions. Nike has taken steps to improve conditions, but critics continue to say more must be done.

Case question:

1. How important are Nike's expensive sponsorships to the company's success? Are sponsorships really worth it? Explain.