sitliF HarvardBusinessSchool 9-392-105

W
NIKEtn Transition(A):
TheAscendancyot Bobwoodell
\lr 18r& nE busino han, n.t akry wuh,Knieht.so w e nd CaihCto
adn dohCn nesaht duq.nq And4 hersFseying. its thrEnupthltta6 ;r, natttr
tn.tNaud soI n nt tunginga tht atn! gEk at ptuenthstaLttjax
Bobwmdell COO
'n"
k ) tu.pie a"ounprcn r . ' l 3 r P h " n € h ' d . p D ' n " oB o bW o o d " N I X E I
p,".io,l!, .o9 ^t\.-ct rads" {q" aor,olca,! oe.u.. w.flrnis
orRlb o'j "r h" .ld r'L.rd n 'te loll ^i'C r< r nh-.wmddl
, ' t u c c l Ardo . o p " ^ r l o m d s o l c L \ I l L t o b F 6 - - 0 1 'ollhdInlj'porrP'oD
il'i_Kn'E '. s lo -^ ! . 01 lo '3" . qn ' rps' u; :r ffilns
nanufactu n8.apaciryii chrnr

rht pdbd tumed od to!e,!4!!!tj9rNlrc. Not only dkl invotorv blildup pmve
".i|. d n ad I n , n : . 'r i ! . r!&l).ca ln p.d r'on lr%'odTo'
z - ! L - ! L r ! ] 9N. l r i j t l ; v i h ,sc"s- r3.\"" . roi' r,' c. r-
saneDeriod a vearearlier (see
Exhibs I andz rornnan.ial
inronnarion
andErlibu 3 forri
s ia md^e a' d NI(E 5 m4rler
' ; " * " r","''e f * h-h'r"{; a:,-,.' ..
-*d iir"r'"' "-a ^r" +, t "
r*. h. d'-h;*. h.--. " ".tF;'r

Bob Woodelland rhe New Challenoes

Theorganizarion lron theonethatPh

rhaiBobWoodellinhernedhademlvedconsjdeiably
Kii€hr ftared in 1964 KniBhr$aded NIKE o. the basisota paperhe had wrir(e. h Stairordt
\ 4 B cp ' o c . n . T h i p " p 1 , , - r l ' l ' , ' r i ' . t , - .
'.j!r9;. ,-q!B-lf,,"=.*F - 'r'. -treuun-C r.;;. '"i;iii"' "il ir' r'

R6adAskkrfuenflu9nlrpnp{.d

037.NtxElE3)"a t NiKElEi)"
inai3ce6.alld rh. GxrEol lolr l hisgmrp op.f&d n, n,jimr pihlf,pnpu.ial ras-!ion_3.d
oL ts\tr T[-.4.r
dNm memts dp n:n:eem€in qn.jii;r-rPFrdJ cri

rlr oouiD/|eLl rrt nnr .r 'lt o' sd,td oo is flllls dn{4

I'r 1e33,
| 'so ro' riq
' o- ,i:e\l v'iel'JpF' oBio.\ooLl O' , '

deLl becanie pa ided he had nDjob dernpt ion bryon.l ?

Sei.nlaerca'nlnr \virh tuierr '!ou
a nrimb( ofrh. Lixne ot hur
lhilsa do shod rsnr d{illldo loo! Gm uii,{leL ri,{
lcarncdofKniehts dcsi.. ro nltkc him jiresmsi ir r rrdn€ silh LhcCiig or Fou' r'lat,1033 :
posibjrir] woolell ha.l r\q be|{ ell rrrll.r trfll r, tlntuuiS!
Wiihi. drtu tr epks,lv@dell:g,ed rd Kniehfsde.rioi sasfi,al

'r.1"' 1,e .,: , Y 'di

".j " , on
mjre5$.' rid lopp.d 8.ing r. .Fr:rin8 n..ri,3r urh woodell l.triallt Knisbt ro'ked
nDiuradqn,B p'ojeds r china a

I rni 1! e!!Jlo,,r ihe

rnnsr br,! ! | ro -6 r a
13 DU'15' p oDrr .1
, %- 1"' o | "', |]-

.q g I r'o a. ,Dh
d-i4nons.Hcs bcs, qn's b ru
bFak My!!le 's r,l)u

'di.d.x('isnerv'in'e
ivo orher Caneotliour nronltElirh \trnhearr Xni!]{ hia,ollalio'aredro' Dan} lean Rob
stm$crorn.rk.in,s rra Dd ll:16 of'n'iur:.'unt.p,4ri.ds

wdkhe rihe rrerrrreir;; An,h; pP.;r"tp*.]h-r b le-" I,,a*;',r-.;sh

l(.ichr{is nill rlr ClO tr e nivro diy ho$ srs loftb.dv eL*rhetalread!kisv
T h a ( r l n u s h r | , ( c \ o r $ r i d L n E r l i n e n , k { k u ' i . L r l ! l ) : sann . l $ , l l l o o k f e i o
onerl,in3 rlErr€ll] kkesrnn(

HBscd!\o $5 0$ ^||1t 1]j,

 Myapproad'$allorryloirr.n|fy

olren.Jnishrhaveb.cnDro.alo
:riakerrrn,gsup. Asfou cra;dcEo hc.oul;do

rv.o(k[ addedd]d ihr .tifinn der uN .ompound.d by dF

. ,

colhaeu4 l, jnnn.ise rcsp.d ft,, woodel D lk Donrhoe,a m.n]b{ of rlE board.l

.Do, .r. b' t6n.
wooderrsmai:g..nc nyteArc rbomrirr,addfA

| .r ,o !.utd I
".
'|'':d\"-Bj
rnn ors didnLkDdr lrnv b e{ 0,qrr rnl r Jon I knolvn rq \!He leuE a,or L
lDr ue npd,"dbdo b n,,.iiiai sfi;,inn=

r'ianl caEh vi? prGidenr drrr hPdrvoGbn 3s : .handsofl

rdonr rhink \!ood. tr runae&n..r nyrcl$as \ranc tjun rink rrjar

.
3 rharruy w. had a brn.h or edlepieneus
.don in dF \!ort.tR r.ur rlur nate.lniredion
rrr{,arrrmmPrirK,rsbr

onc or wqrten s .adt .lrdrscsrv tubs ,rembe.ship

and
'r P ltl b 5 l::do!
."-.'1" I,Pfo,,rf uod ,,:
0, br;

l1;.'"'''.''''|'g'''''''|a'|''|iPnc;6dd

\ry purposeG h minf.,.r rrr NJKF,Dro.es.f debarinqnF iss,e. or

ts, ,,,Dr, , .o sq g,Dr , . ,D.t" I b:'
'g'prop6' c
'no,. ,rsponsit)rry tor egrjjtc rf rtf tolnv ad.l pro..dt,ar conrnftee r,.s
 NrrEhrnieron(^), ft!aFid'nrydbobw@ddl

Eroup. By reany hlking about it, 9 our of I 0 tin6 the answer wrll b€.one clear
And we ve sot.n some oore ptople involved notjun the o€aniarion .han but
pmple vho aF cornc b .ontjbde 'z

Policie. and P6.eduEs cohnifie: the H.y syslem'

The Polid and PDcedu6 codmir@e (PPc)wd a rewlv 6tablished bodv whe cha4e e6
**.l;i
.H"Ii:i'i,lrrH:#tr","1ffi
:x*:il'1il:H$+--,m#Ig4*,"-"'."fi
leaveotrb*nce, temination, and conpedtion

wmd.lllsd rhePFcto{o oui rheddailsof the mu.h needed pouciestbut con$h'na

' n P d 1 d F n t r s y. n u | ) l o s i n . f 4dno' l6p6iden wmd"llaoprovad
Pir F.mmndd'ofu on i(l ler d 'd cduid io'altsnb '\an"l polkie! df,d
' l ds"d'hpgp' p {irh add6"3 NI(rr To d r r n l o"Mn'' pFbhn noq g rom4 ia'IIKF
$ d.rv d'*i{ ,omp"1-rojurm.tid Althouefo )P.^. n..v mdEgA\ b.li.\edrhd d ro-
r6-;-rd;firfiiin6. .r,F- 'o oe\elopora 5.d al^,v rol' dq"d o r
rhesh@lofa d€epdislikelor "synetu

Alrldah Ml..E had a foml .omPensationprosdm ror i6 radorv worke6 and dituiburion
end66.(herem.Tn" fo mdn n r c d a r l ' ' d n J d lF v " ^ t a n d ? ,
r ?rt deFm Fd i 'fot6--- Cp initEEFnrtrd;:ir;lni:l tularJ ' @ " oudc" ro '4 ' n"tu8-
qho.hce how to apponlonit amonarho* heor_shesuperyisedrltssys M ds]8nedo:ullE
KnishtsphilGophy, paylhepee4notrhejob._

ln p6crice. how€vsi indilidlal managd tendedro Siveemploves abdt tne samep*cenrage

raise. M.s emDlovesbelievedrhn weE in.qu ies within theonpanv and manvmnagen r€'eiled
(tjn rn6
on6 {ru r'om o nPd,mF onedrs uo !9,14q!!!L!r !!!Lll-ll6 lPn NIK- salr'a
F*bot $^,ry G; nrrnaNIKLEiF[ne; TAd dqeropm"nt!le.l

cedge Podcr,who chanedthe Ffc said:

Iverybody has heard stones tllu$mting the ln.oBhrencis fa.ed bv

employes And nct nanaaeN .an rcount ihe dil.mmas &ev !e laced in tryins to
bal;; a humm BpoNrbrljq' b t]le onpany we shouldnl have to 6cht rhis
barle eachtine a siruanoncomesup. TheF shouldbe a policvrhafs risht ror!s
tharcaptuftswharthecompanyis lrcanpnbablvdeallrhabodq0%orrhecaes'

Befoft h*oning pBidenr, w@dell playeda stota role in $e ommlrlee ovsEjng me sarary
budeerallo6rlons for the 193! firai year: he Hayes,Manns.and Xui
60; n naeen and deided how nuch of a Eis. ro re.omnend rhat Knieht eiv. 6.h emPlove
Woodelldesrib€d rhe pm.es d lan blr unwo*able asa pema.ed s,skm:

we ried ro.0161 6any ot rhejnternalandertemalinequjris andrrankrvI

think we did a prcty eood Job But thcre was a brg problem w h how rhe pd6s

,HBscseNo 3€5036,-NIrc(B).'
 \ras perceiled.Peoplerhou8hr'Th6c euysdont know me,orny job. Horv.an
rheynzke a rar dedsionabournry salary?"And ir ws a nishrmre tookinEatatl
s D 'ealI Nan(edroSorhoughthjsasaini

Tr'us,in July 1933Woodellappointeda Prc sub.omnftee ro add's

agah In rall 1933 l! idenriied .ompmsarion objsrivA Gc Elnlbit 6) and rymiually $gg6ted
adoptinga tomal sy$en dryeloped by FIay Assdar6 a .onDrrsiion onsuxins lim. The syst€n
mbd m.h Fb on the bsis or thre hdon rt,tuiEd lor all jobs, k.ow lDu. poblen $lving, and
a@u abiljry "Jobtoln6 weE asiEned b a.h lob, dd b{au* ttu* were deremined by Hay s
obJe.dvenatioiar {andards NIKE\ pay sysrem.ou1d be .ompared ro 4 m0 o k' u.s .ompaniesr
i pe'en 3 palNi'hjobpoinrs

Respondingto BusinessProblems

ch.ngingMarkeiForces

Durins ff{.1 }tar 193,r,denand growrh eros{r ii rrie tui n*rtroe nrarke( NIXE! .ore
botis refldins adirie-ij m*n* p'it"***. * nraeaemerafit 6;;dtuhrshed a
eeneraltirnes bmm afoseroindudeorhersFotu. Ni.hesesncnBlikeaembics
andoun shmsbegan
e aembns d$e$ts. ror.xanipteg
.a'^, '- 1.tr".poph.scdr.h d 5 r . o r' " d , r " , " r..-rrF-d-ra
\ r i d e n e o b o r , o r n od o r , i 6 s c b ' % ' d ,)hn,,, iB .o. r'y,ibr?.r.wrF,n.'
orthe* tendsonNII..Es prdud n'ir )
Y
oU?PAdF\''@noA'o
., "stur;;:6jE
"|;l-;;a;;-
speifi.all lor $omen Laun.hcdin l9s2 die 'trner8i]i lnradeof nylo' 'nd suede)and ihe
'Frcesqle
imadeorga'n'enrlea(hed[ned Raboks sl?s rrcm s]3 'nillionir 1933(o 166niillro. in
l931.and$307nrllion rn 1035.wrile dE $n samentl€rhers?s.omfonabre andfeqlnednobreakii
penod.ii arsorrcre od qun|dy sdx. nimy coisun,erspreterld .omfonabk Rclbok wiih hDl6 ro

A!4!!gb!l-qg-in9 NIKI had produftd 3 p,!'oryp.:edhis n'oe i, re33 The fadoris in

Ko:Ler_Fole.q ra 'Fh.h-,,1-bo,1 ,.o\-ld r";-, ....,.,\" ,nd.

'5o,8rif,e!,oo'll.-Fobi tJ, !tJ. . d ' d' d

\'d.b"dF \r( 're- dirc+!4i! 1s'L' i '.,ob hT un!." t n ec*pd
Eir4

we could nill be purhrs and rarkabou'dtrr.s rhnr{ere ror runnet an.r

arhreres.
Aid anybodyNho didn t makei the\*] $e ,n e l w6 a foor.rle also
ld,evendrouehwe \eresellinea lor or earbaee.
yas u*d by an arhlerero psrorm.wlrichwisabsolurebull.

^bouch i's shc sue leo€llrllql(!.RehoL rD{li i61 nrvs dlva

-s,q' 8,1;a 'd r"s,. -; -" d.-,i; ,"dr '#,, oe_hT|';; r;-in-;-i=,r

i HP,s 0r -NIKL1!r.
cae No.335
 N'kE irEr5ircii^)

.pd)'oq s!1.
'11l\ ' 'o"\p.dFl
rine. rhe Exekr fa.lity had so$ into a tai y conplex op.mtjon ho
,ri,"i^ ptr r; 'a ft ' turcA f b Ir'' r'l
"
d;vdoDdPnrrhercandintmducedtn(hlodh procedues
ror setinc seledshos to ma'ker
"nd{

lhesrioe inveniorytuilddpdutlEd fiE(irmded DranaseiFifsatenfio

- " * h . r l ; r , i l a ; ; 1 9 3 4l u i . ' n o ; $ a r e r r { e , v i n e i 6 l a q e n F u t u E o l d e r i n A u c u i r 0 s 2 r o r
Novenb{ l gsz dclive' y, rhenarket$vi dEd lhc ditfi.ulryb{anc apparem in N{arh1933andbv
rheendofrh.6s.lyeronMay3r,Ns3.bwnron6ha!€.hedrl Droipars

D'- 4' glljd rcDD

J on oce i lJ ' l" r'rr.obrr'!
".'di;t.-'
P"ror,.n l d.sf l a--" -l
,.., e ^ D e n r . ". , I ' , H"-'r"d lr"o'31 r"
". ",ie\
al,{dr va; i e32,NIKI ddsed ahod 6 m llionpaiF or 5ho4 rof whichir had_no ordca simP\ 'o
huiLduD;tu. v sidi non Kord r:dorts Wekdeu sc wr. odennBekms sid NPLsonsoN'
rd{ei dodds;hat ue tio'drr wen ere ]o!rd eid shms ljke ihe o.?ania. Raadtun'ex. All 'oun\'
andBtuiD"s?.ondNPl$;wasoplimisltrldrheprcdtdl6uywasnillpopularandhtinticipded
nLrii ode6 fon nnemdional operdi.nsto rakrup$heorrlresla.k. Inre'nadonal ordeshrd 8'owo
I gmL{h tha. dorusd' ordcs
I',d{d.ldouphiobrnn(io.ala.muntdlororlv20%orelcsiemario.alFututuso'deuro'd'livsv
-,".",^*n.
r-. ;- ^ L I e.".. r, ad ,,r 01p;' | '. i,
o - b ' ' x ."o "I n;

_
4t N allvc lg!)as
!&.ndr s v 0ie s,oNinsinvenlo'yas a.an.er rl'arrYd eoingb
(Nmined bc.aus no.h orn ras rouehro sll aihki5ur shes andalDre! Hcw5arsoaure{rr
' ' u d '' s l n c r L. 'o '3P o'd ' '
, '.1 LL' o u h ' . 4 o oq . . ( r Gd l l f n d 'i'eo'_
uI,eve. noreinleDroryandp6sin

Mv aoorofth tras. hfs do lhat w

rh'\,rF;6i;.on do A.ddF(:uhd N€ rv.rc doine ror six non(hs Bu! eve.v
al mts on \o'r \o_d'
.":,rd.r. b"..-'.-. p p o p l a. i l v l A r ' q o ' l .
,esonal 'el.riondrps. Nly rtunra on $as, sere havinc toubl. doin8 thn crap
ao rin I 'l' I and
i.drine tadory ddeEl b{:6e ekrybotly hd 8ot 3 rcasoi whv
rconrysuyrhatd, doit lKnishrlisrouehroed ahnldql,
 NXEhTFBT qtr(a! rio^e.idiqorBobwqodr I

In r 933,NI(E sord[s sh@srhbuch a v'ieq/ or ft6ite6-frcm spsjatbJ

n"' Id 'd'!-D Fn .r.rn6rirq:9!ts!3-j_:jrl|!p:ni-a . o r g]ellai roe'r|pdh^
tud d orc d,c \ \r(t . fra't4inc p'd ' 4 \4.d"t p, iprdtiadsa td.
rhen *ith obsoleresrdk, an,i rh6e who did not order rhmuSh ihe Futu€ proemm @uld .or Sajn
a'Gre-D]lKEsftlr'p6Fxrar produ.s NIKE! shndad rerailcG prct narciis were abou!409(_
rcnprPd \ ' I r\" 15%.50\ lkj +pe.Fc I on ,hr d o r\"nduj\ k.ddidol iU/
"-'l"F
c"r N{ d. J r';:15; im p!9 ;n,- ,r...
".
repreknbrivs. snarl reEih6 tnerr€-fiaiimEily-nnEppy
Njrh MKE. Forexamplerhi preidenrof
FkerFeer
In..,a 25sroreathreri.
shoedailer,complainedl

NjKEbuirrthe.ompanyon our back. we rookrheirpmdudbackin t976

andsid rhisisrhebe*thineou hereandivorked
rathard rose| i(

Bu! when NIKE Bor hoi n went ro rhe bie eul!. we txtle Suyswerent
-
f€kd q€rr r mddPs Lruys \ monls nadv;
,dv;n€,iii,a;a
ron.q$d,op", rcb;F-n v4.;;|"-;;.. ' |^:i... \ rL;i;,,
;tffiffirEmn Corrhen a'cy w4e dosingou h.( tire
Dc HdF...or., !d,-i, tdtaS\ .i,"dh-.

rhd,rf Utrh€[ w rr ].rtbkr rlcd.dilta;iJ rr1(re.

Tr'.!4 N I K E\ d m g 4 d - . ' s " J D . d d I F o ) ' o 8 e r € ,q , r h ' h e
r o . l . ' ' e l ' ' h ' o . E h' F r . r F r . " ' g t , \ . ' S ' r i r
.hainby hiuinsthar.on5un'e.. Aftt jr r?s veryerredi!. l" rr'
Resrodng
rheBrandMagic
oS"
wmdel:nn hh na.acpmed r6n deidcd to rm6 on Enoni8 $me of rhe "naer' (o
NIXEi brand imageb! 6kinB RobSrmss b fiBUreour a new sbaree/ and hptefrenr .

In 1933Srms*randasrMll grcupra€-AedrlF t934sunnerotynpks tnL6 Ancd6 tora

majorDubli.jrybinz'toliehrrh.&.ondsraeeorNiXE s 'ftkeL Woodellandsrmserbetj.vedthara
sucessful advdrj5ing crmpaign sould bftarhe eme tire rio rhe NtK[ brand fo. six 'nondE and Aive
ihe.omFny so'neor lhe nc ir needed ro d*stop a nes produdti.e lDevcropinC onermk abourtg

The.anFi8i rt'ar b€sanin L6 A4etes ! h a slew of !tsual ,avcdis.menb ms expandedro

indude l0 majorm4rcpoljran aros. Thjs c i6 campaien_fearured.otorrd oversiz.d -ouLmgeols"

dhhft feab loh n M.Enr@. nany rim* rhe t l.s open an{tWnnbbdon rsnnh dE 'npjon. ap!€med on
tlrasids otNeN Yark buildin$ r'earinsnrer dorliesrnd lookingtjkc a homdosn boy-weadns
Nlx!] The ,nuBh .orbined no rex!, ior di.t ic] arpmpt to sel sp*ili! shft' in!€d. ihey shpt
csbblnheda rink ii rhe.oisumo: nind bd$.en rh. arhteres 3nn MKL Thd canlpaicninduded
f'!.rorions Jorollnrpnarhleres. Inrhesanrls(rrrselvs 53NiKEsuppoiedanrtcr$won65m?dak
o , " @ ,n , , i d t , . 1 c T J u c l t o , i J s q \ o l , s . , I . o h n p . p , o , o , . o ,
".(r rF c.,,6
 Wh.. you Aked wrEr rhe sh.e or rhh Olyniptrcanes rR' peoples?j.l
Nlru convere |td paid ts nillion ror rlra ri€h ro be dE ofli.ial slro! ol rl'c
olympns well nobodyworConvsr I donrthink$esrvonepairorcoire*
out thcrclin talk aid fiekrevei6l

,;","."; , ",, .*,P.; ;dq, r I

lcds.d, Wc rc.os ad iftcr
i gold nl.drls !v6 emd lor our im.ee bd nklMrii'rg ro, ol]!:sl)@

''LoadinglheWagon wilh Apparel

fronrDern,b$ 1930h
:al$ fmd rdually de. iiiie in
d produ.rlineotarhlpri.pcrlof,n,nr(dolhn'g{indudt,s'!iniis
shotu,{trmups j6e}r 5Ksj!a1|vs Jrd tstr'iso its)inr.oi'ft'rlr. arl'Lanuftdorhes6hn6.
s*cddrs,ja.kds,and p. s) lidd8otr. dnnmrnill] frn s2n,illiDii r!?3 r. $r07Dillioi Ln1933.
'nd ele5 Epft*{divd nennbd

ritiv! andnmr?et rcaens.tm. for.ooin,uiosm,phdj5on

-run
the shoe(onlFny for exfnrplc,nilr'i l:lB.r
our ol fe,a. l\4edNlliiLe,
lomlriiroE such6 Adidasreltsd.n atp:(lror d r\{[ A {}t.reles N{argiTi. rheappaPl

ed rhat rrr line *oukr n!( !,nrib

Wooddlsnphast.d w,"evenru:ll}rva ropurendr'ing bek ino
doNr" orlier prcble'ns.
roo in dclr\c'ingcm.{s. V'nigcm.d

\rc.tr,.i,a,,:e,,-r ,.rqpr,, ..h ;.d;"," ". -ia rr'

con.ep(\!a! b4eJ on r tundaDen ",""!

inrponananeU.5ho!dndb|lo'3ueresp{ia1qnoG'lh!:p]r]jr|I
,cep..!r!"oF h, rr'j-r.o od' ," 1 '. . .4 b@n_!r
\jl , glar!r-!ji;i-n;d "-- . d

PrdusilsEdj]{o b(mr a najor probhniin 'hn busincs ln o'd.r b.oirFie. NlKf

q .k iumtroundlrcnn doriesonipparelortlcE Tyt)Gll!. at)j,{eltu".,iesrskedro' ode,:
neede.l
Nl(r rnenro D.\!an. r3d.,resros

Int thc (ailof tr dos.' s on. leidor t)d ir ToSerrheshonP'

s 03!.rd 13!0[]. Njni 1il-aid

 lead tine. MXE neddl to-daqqqlee orddB tor invmtory in advanceorsalrand asume a kser

stll. de'nandCmMh had ber inpr4sive, middle.manaBe^reponed ftrl endNsiasfr for rhe
pmducb and th€ buins prwide
fr€rin8 in D@mbs 1933,Woodell and Hays pmpord ta Knient and lat.r rhe Er or the
,namgemenriean drar Nll'!tr a€e,r$ively $ow.ppaFl tor rhe Fall t934 se6on. By inBtinc m
addnional ll5 milliontot20nillionin invenrones
andbudgerrnBanorher$25nillton h sdnjnB el6,
.dvenisins, pronorjon. aid other oFmring expens6.woodell thought appaftl .ould bo6t sl6 by
' rf ' I dIti1cvd 13 JldD\v001'r'onr'r1'T'a,No)paF
\"Y .!g.alljq-a-!.

-1 wecouidnr convircevendoc 0rnjlkand rhepeopbrhdtwe wouldbuy

yi. rhebrsiie$ rrseemeddni.ulousilFr ilyou weE i.
**\: rhe businesrhat you uerenr ablero buy dre apparcllwirh shon leadrimslyou
waeoD' we.o'nnitied ro buyas mud' apparel
{in advan.elasourmarkerincands

wlh w@den\ backing,NIKE co nh a ven€ean.e ln

Dember 1933.rheo'npany adoptd a bokl,nN tineline for tu Fall 1931appapl*ason. (S€e
Erbrbit 9) The pl€mn qunkry arabrished (he .o'rp.iy s dedibiliiy N h lendoF dd Frajlen.
.e Booki,e po8rai' for apprll rvlrh . '€l Flrurts pogan.
Preljously, najor osronreu bookinc ts lveks aheador dre rarg{ dellve,l darere.eiveda 5%db@unr.
Aftei rh. chan8arhe niloun( lor FutuE ord!6 *as inmscd ro 11%ror a rournDnrhadlance
I rcn'ahed ro be sei khdher NIXE had ihc .apabil is to rum appml into a

Sh.reholders Meeting, 19a4

Dert)ir.w@dellt to dhappaini In
panrlrar,iet in.o,nehaddoppen.lanninsty.
and by sp.ine 1034 Phil Knight found hirelr
irc'osncrydmwnba.kino $e b'si's

Da]: before die Augusr 193,iannual nerin8, KnEhr w.s anxids abour r.poninE NrKEr
Invenbries had beendsing ae,in (ho8h r1r sprjng,and alrhouCh
rheyrvde dedi.8 by sunrier w lvedns rundanenralbusins
problem! wih nak i ' a{linAjun der D6k v.ru!. sharehordenmuld m
rhe sh@ .onrpany rrsreht wondeFd hoN he woltd an$fr to shapholders .on.em: wd
sines aid of rhe oBinizaoon? was his new coo perfomins
elldrile\? And shar roreshouldKnighr beprayin8in rhe.pe,?rioi iow?
Brnibx 1 NIKE,Inc.Qu.rte y lncon€stdemd (r m noB,ercprpershm)

M4q F.te Nd6 (4!e6

<@,F/.!i!a 34,!ea @ lsls

6@"\1.5.8i @

.Fddbyd4Ee(ffiegnodb$&Al
src:sEfu&fuc'c@d
 N|KEh r66[d (4r fi. a.6d.trq o. Bobwooddr

lm|bttz NIK!, In.., QualterlyBnra@Shsd(t ntutd3l dd seler.d FjnarctalRar6

s!rc'sbddefuE'col@|4gffsd!h6
 NriE n rrBdon (^I ft! esndlnq d Bob wooddl

E htbu3 NIKE, In.. cdewritd Depl.rron of Olganiu tion Char! S€Prehber1933

f;;;l
I-:"1
t"--;;:l
I-'t

N|KEu.s.amrdc FoM' sars (mniong) I 530

 {rKEhtudd (r)r tn.b!nd4dBdwo4[

EI] bjtr BobWoodsll sM€tjng Clfud Rote l,,teno,AlEun rs. r9s3

MEMORANDUM
To Lsq,sg iRoM. sobw@del

RE Fdd.] ctub Melbg cEund RurB

FTRSTMIEnNC:WEDNESDAIAUG6T24,2:30pto.
MURRAYIBoARDROOM
I Disds o,ry inpoturt,ssueno buns..J
'
ffr#*ffi"ffi s1
#,i:r"iir*
[#,*##H"g'tT,trltr
" ffi ;ffi*,rj,ffiii;|.1ttr,5Jf
.fl.J,{:Jii}...H;iliifi
:j"T:f-"
ffiffi F,i#*f,ft
Wff..glmff
.NOTENlW
tk![.fl:#$#
TIME]

tu nkE €4'Ns c€a No.s5s (6@, @d,

t,

t
lrrnbitG Report,1933
NIXE,Inc. Conpssrion Subconmitree

I NIXE hasgrown ro the poh! (maybe*en beyond)or needi4 a mom tornaliad

sy$em orelary adninhbation for both *enpt a'd noierenpr Jobs

2. Ahough rhee are sone unique apsb to the .ompensationpoblem at Nl(E.

non ofrhe needsae lairly srandardand .a. be addres.d bv a $ructured bur
r.ry flexlbleconpentatlon sYsbn

3. The Hay srsreD oljob evaluatjonand salary addinrstEtion nfr6 NI(Ek goals
of estabx:blne inremal equity, enemal comPdnivens nextbilitv and
nanaEedzlmtd.

l. A conpensadon syden sholld allow NIKE to a.hirye intemar equrv in

slane9eqlrvalsr pay dn36 ror equivalentjobs.

2. Salan6 should b. in a onpdijvd ranSewxr simil jobs in the extenal labor

3. The sy$em should be dJbJe to a(omnodare the bmad and 'apid chary6 in
NIKE\organizarionand pesonn€lpla.emenr'

4 lhesynemshouldallNtopda.agenenrto.dntft,labor.ots

5. Pay should be a,'ed to petodrre and/o{ .onribution ro rhe su.css ot rhe

o€anizdion.

6. Thesystemshould be orsrsb,t

7. Employes should be ableto pemeiveI hesysem as being " 6L "

3. ]ne sysremshould bc 6y e adrl',sier

-rhe
9. sysen sholld allow for delsgatioior individualelary decisioNro rhe
aPPmprkt. mdagerial lelol.

10. The salary adminnt6rion sysrem should work ia .oten wirh orher rords or
.omp€nsationstablnhed ai NIKE

Purch.seand inplemenr the Hay SalaryAdmhishtion Svnem (atinaGd co! or insbninC

tuc€: aKE Gt',xBs c4€ No sse(mryr!{*r'

 *.".,".

B
$ I
66EA

gag

;- s I g

a
E

3 .,E ii: F
i;E;:ggiEB;Fi 3
lyhrbtrs 5'r ofNIXI s ApparelDnison, rq7'lrq33

{snrrron)

6$u: d6k@p ic d; a ne$c d Fdd vddc (m (ad @ hd to b sM4

Exhib g ApparelSeason
Timelin.

sepl

oibraD r2tr3
rzrsls3 Frsrpddon buy(40% Mana0e6admeennqs

.apaciv rcrcasrher2rre

zts4 Fi3r Fdu,eso'ds6 dueiz and&r

zlte socondpdldonbuy(3 secoodprcducrionbuv(ba$don

bral) FururcsoIn€E)
31/34 sedid FturG odats due(Yr aid

3/isa4 Advan€ bookinssde (ro

seaon)
4n€4 Finarpbdudroibuy(30%o' torar) 41D4 121
rh d FduGso'detens 11111-

so!rcs NtErFrfNBsos Nosdo (.o]t94Eodd

NXE h rFEIdon (a! rh. aoondlnly d Eobwoodnl

Appe.dtxA Ma .t PyftnidCon.ept

eiellgls e!Eb49rs

sponing

NIKE! nanaged liesed rher@rrear narkd asa pym'nid. rvnh a snall peakGdious arhler$)
and a brcad ba* (he mrllioB orAmeri€ns who wore adl€ric tootvear o'' tla srd ror €sual wear).

NIKEk markerincphildophy !6 to developladins.edee pmd!.6 and pmmoterhsn ar the

bp ofthe pymnid. By 3e$na sedousathlet6 ro war NIKIS podud' NIKE naintained. nonA
pGition at rhe rop of rhe pymnid wj 6 b'and repurarlonw(h lhe

In 1932,NIKE speni abour 3% of 2tNd5 NIKE aho

advenisedin running nagazin* and spoMred .o.op advenistB pmB

43 rhd ofrpany 3rew, ir pushedp6du6 and drerrburion doM lurther inro thr py6mid.
selling rhouah wrd6 .h&mls rd b ne{ 9ps or c6tomeE. NIKE mnaBe6 tded to mhtatn
nysnque by awiding rhs bohon of
 MI{E EXERCISE

CaserNile (E),9-l8s-033

l. W]@tis yourappEisl of thecms ofrou,s establisbmmt

#a taskfore to
evieY Nilek cuent situation?

2. In ,!u judendt, whstr€ thetunduaral qu€sriorufeilg Nike s ofthe endof

Cse: Nike in Trrsirion (A), 9-392-105

1 Ho{ aplopriaie w6 BobWoodel1,s

appoirfrror s Nike,sCOOi! Jue 1983?
2. How{ill Phil Knisht evalMteWood€Il,s
ffrsr t5 montls? Hov snouldne

3. wlat actid shouldKrjglrt lakenow?

 NIKE
srd Ouarter(February) Results
($ millionsexceptEPS)

w'42 FY '83 Chanoe

Sales 199.2 19.4"h

Cost of GoodsSold 115.0 140.8 22.5%
Gross Profit 51.8 59,4 12.7
SelllngGen'l & Admin, 41,3
Net lncome 11,1 9.3 (15.5)
Earnings/Share $ .31 $ ,25 (19.4)

19833rd QuarlerProductLlneSaleslncreases
{vefsusSameQuarterin PriorYear}
1992Sales
$ mllllons
Funnlng 3.4%
Court (22-7) 204
cleated 176.5 14
Emerglng 52.8 120
Apparel 36.S 70
International 1212 4!
Total 19.4 694
 NIKE
3rd Quarter(February)Besults
{$ millionsexceptEPS)

FY '82 FY '83 Chanoe

Sales 199.2 19,4%
Costof GoodsSold 115.0 140.8 22.50/.
GrossProfit 51.8 58.4 12.7
SellingGen'l& Admin, 23.4 33.6 4 1.3
Nei Income 11.1 9.3 (15.5)
Earnings/Share $ .31 $ .25 0 e.4)

19833rd Quar:erProductLineSaleslncreases
(versusSameQuarterin PriorYear)

1982Sales
mlllions
Runding 3.4% 236
Couft 122.71 204
cleated 14
Emerging 52.8 120
Apparel 36,9 70
International 182 _{t
Total '19.4
694
 TOPNEWS

TheSwoosh
Stumbles

Nikeplunked downmillioisonsoflware to ziptherighishoesintotheright

stores.Whyis it sotoughto finda pairofAir
Force0n€s?-*"-*.*""**-*-,

lr ..
dutrrlQria|iutldjdrotsQtr.

!,r Pndnli iF Pr!! rlrhdL. rr

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l'trij|iltil,jijlPrn!hhi['h(
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cmaldknizLjg$lins1b4gh
 TOPNEWS

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ltebsi!?renrs I pdi de6rrcnp

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saF he3 np y rers h, asa y4 ) wbi€ver rherc*oi Knishrhspory(mrErs
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ior wedne h s s!tsbs$ iln 3bd eve

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sadylr 4 b ioi dsien aid ro{erhs ru
smadebyNkelfuEn.big96Ipbydi

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havero frid Bw ru(ds ro bcre Geebx)
d he do*jeb lor h6 job cli od io, him

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orcdud:id drhorh,amhaderiredd,isHedarstriarcs,B4dmaidsq
mmaod he omnmy! €bi dds n $
aiorher 3ary end4;e cid KnshI s rormd sdeil) *as Peniv Pa&, vho hd@d

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rep€dbya|a6e|eolenpbysFrMDblbk4
m adlary! am;.h b bc ne$ Aid 'h
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