1. INTERNATIONAL CLASS PROGRAM
Global Financial System and
Midterm Paper
Course Facilities : Alia Setyorini
Due Date : June, 6th 2012
“ I hereby declare that the attached assignment is my own work and understand that if i am
suspected of plagiarism, cheating or any form of Academic Misconduct, my work will be referred
to the Board of Examiners, which may result in me being expelled from the program.”
Name Student ID Signed Date
Reno Saputra 09125007 June, 6th 2012

2. Table of content
1. About NIKE
2. NIKE’s Products
3. Going Global
4. Financial
5. Foreign Exchange

3. About Nike
Nike is a major publicly traded clothing, footwear, sportswear, and equipment supplier based in
the United States. The company was founded on January 25, 1964 as Blue Ribbon Sports by Bill
Bowerman and Phil Knight, and officially became Nike, Inc. on May 30, 1978. It started with a handshake
between two visionary Oregonians - Bowerman and his University of Oregon runner Phil Knight. They
and the people they hired evolved and grew the company that became Nike from a U.S.-based footwear
distributor to a global marketer of athletic footwear, apparel and equipment that is unrivaled in the
world.
When Nike co-founder Bill Bowerman made this observation
many years ago, he was defining how he viewed the endless
possibilities for human potential in sports. He set the tone and
direction for a young company created in 1972, called Nike, and
today those same words inspire a new generation of Nike
employees.
Nike world headquarters is located near Beaverton,
Oregon, a suburb of Portland. So while the Pacific Northwest is
the birthplace to Nike, today we operate in more than 160
countries around the globe. Through our suppliers, shippers, retailers and other service providers, we
directly or indirectly employ nearly one million people.
That includes more than 35,000 Nike employees across six continents, each of whom makes
their own contribution to fulfill our mission statement: to bring inspiration and innovation to every
athlete* in the world. In the year 2000, Nike had contracts in 46 countries with 565 subcontractors. The
company was enjoying 45% global market share. It had various outsourcing units in Taiwan, Indonesia
and South Korea.
Nike have established their Brand successfully, the brand alone is valued at $10.7 Billion making
it the most valuable brand among sports businesses. The Nike brand itself is the biggest strength of Nike.
Its other strengths include international operations where it is expanding aggressively, innovation of
new products and ability to connect with its consumers.

4. Nike markets its products under its own brand, as well as Nike Golf, Nike Pro, Nike+, Air Jordan,
Nike Skateboarding. Along the way, Nike has established a strong Brand Portfolio with several wholly-
owned subsidiaries including Cole Haan, Converse Inc., Hurley International LLC, NIKE Golf, and Umbro
Ltd.
Nike vision
The Nike goal is to carry on his legacy of innovative thinking, whether to develop products that
help athletes of every level of ability reach their potential, or to create business opportunities that set
Nike apart from the competition and provide value for our shareholders.
Nike mission
To bring inspiration and innovation to every athlete in the world. If you have a body, you
are an athlete.
Nike’s Product
NIKE’s athletic footware product are designed primarily for specific athletic use, although a large
percentage of the products are worn for casual or leisure purposes. NIKE place considerable emphasis
on high quality construction and innovation in products designed for men, women, and children.
Running, training, basketball, soccer, sport-inspired casual shoes, and kid’s shoes are currently NIKE’s
top-selling footwear categories.
NIKE also sell sport apparel and accessories covering most of the above categories, sport
inspired lifestyle apparel, as well as athletic bags and accessory items. In term of performance
equipment NIKIE sell with their own name including bags, socks, sport balls, eye wear, timepieces, and
other equipment designed for sport activities.
Brand acquisitions

5. As of November 2008, Nike, Inc. owns four key subsidiaries: Cole Haan, Hurley International,
Converse Inc. and Umbro. Nike's first acquisition was the upscale footwear company Cole Haan in 1988.
In February 2002, Nike bought surf apparel company Hurley International from founder Bob Hurley.[14]
In July 2003, Nike paid US$309 million to acquire Converse Inc., makers of the iconic Chuck Taylor All
Stars sneakers. On March 3, 2008, Nike acquired sports apparel supplier Umbro, known as the
manufacturers of the England national football team's kit, in a deal said to be worth £285 million (about
US$600 million). Other subsidiaries previously owned and subsequently sold by Nike include Bauer
Hockey and Starter.
Going global
The increasing market demand make the founder of Nike think to expand globally in order to
fulfills and support both in terms of marketing, production, and sales to aligning and realizing the
mission that has been embedded and committed by Nike. Nike, with 41% market shares (Reuters, 2010),
dominates the global market for the athletic footwear and apparel earned the revenue of $ 19014
million in year 2010 (financial report, 2010). The company is outsourcing all of its work without hurting
the quality of its products; Nike still is a market leader. The international sales of the company are more
than 60% of its total revenue enabling the company to receive 51% gain in the profit (business week,
2007).
Going global has benefited Nike through various aspects the chief ones among them are
increased market share and customer base. Going global offers the advantage of targeting new group of
customers whose preferences meets Nike’s products and reduced labor costs. The diverse product
offerings are one of the biggest advantages to Nike for its global expansion (business week, 2007).
The global revenue of the company has increased a lot but the business practices in U.S markets
are not very favorable as they were before the recession hit the country. The company has to face
challenges like increasing costs, freight charges and fluctuating currency rates (Nike Inc, 2011).

6. The company’s success in the international markets is the collective effort to connect its brands
to the emotions, culture, and endorsement with the local celebrities. Nike joined United Nations project
to promote human rights in the year
2000 since then the global image of
the company have improved
enormously and earned it more than
1.1 billion dollars revenue from its
business in Asia (Czinkota, 2008).
Financial Report
Almost every year Nike have increasing their revenue, it represent how great and promises of
Nike performance time to time. This revenue is cumulative from Nike brand and other subsidiaries
brand (Converse, Umbro, Nike Golf, Hurley, and cole haan) Nike earns more revenues from its
international operations than its
domestic market. Nike earned
about $ 10,4 billion (57,85%) FY
2011 from its international
operations, compared to $7, 58
billion (42,15%) from its
domestic market. International
operations appear to be a key
driver of Nike's growth. Nike's
international operations are divided into 3 different regions. The EMEA region oversees operations in
Europe, Middle East, and Africa. The Asia Pacific Region oversees operations in East Asia, South Asia,
Southeast Asia, and the Pacific. The Americas region oversees operations in South America, and North
America (excluding United States).
Europe, Middle East, & Africa (EMEA) is headquartered in Hilversum, Netherlands. In terms
of revenue, the EMEA is Nike's second largest region. EMEA region contributed about $4.8

7. billion in revenues for Nike. Of these, footwear revenues contributed $2.9 billion, apparel
revenues contributed $1.6 billion and equipment revenues contributed $292 million. FY'11, 27%
of Nike brand revenue was generated by sales in the EMEA region. This region is also the third
largest in terms of manufacturing. EMEA region employs about 6,000 Nike employees, and has
about 104 contract factories. These factories in addition, employ 29,242 workers.
The Asia Pacific region is Nike's third largest in terms of revenue, and the largest in terms of
manufacturing. Nike has 13 branch offices and subsidiaries in the Asia Pacific region. China has
become both a source country and a vital market for Nike. Asia Pacific region has 3,282 Nike
employees approximately. The region also has 252 contract factories located in North Asia, and
238 contract factories located in South Asia. Combined, these factories employ 550,821
workers. Nike's revenues for year 2011 from its Asian operations were about $2.7 billion. Of
these revenues, approximately $1.5 million were from footwear sales, $1.1 million from apparel
sales and $175 million from equipment sales.
The Americas region is the smallest in terms of revenue 2nd largest in regards to
manufacturing. The first Nike shoe ever contracted out was done in Mexico in 1971. For year
2011, the region provided Nike with revenues of $2.73 million. Of these revenues $1.897 million
were from footwear sales, $657 million from apparel sales and $182 million from equipment
sales. This region has approximately 1076 Nike employees and additional 44,568 workers
working in 137 total contract factories. Nike has branch offices and subsidiaries in five countries.
NIKE’s involvement in Foreign Exchange
Nike as a company that has been jump in the international business must have own
strategies in the global business world which they concern on, the involvement of foreign
exchange rates would have a direct impact on the performance and corporate profits. NIKE
global activity that requires the currency that can be used globally as a reference for countries
that have involvement of their business in order to facilitate business transactions. Wage labor,

8. raw materials, production costs, and distribution costs to retailers, where retailers are located
outside the U.S. and spread across parts of the State making the mobility of companies rely
heavily on foreign exchange.
Foreign currency exchange rates influence NIKE’s revenue. For instance, in 2011 Gross
margins of NIKE fell to 44.5 percent from 44.7 percent in the year-ago quarter, caused by higher
discounting and foreign exchange impacts caused by factors involved. NIKE estimate the year-
over-year change in foreign currency related gains and losses included in Other (income)
expense, net combined with the impact of changes in foreign currency exchange rates on the
translation of foreign currency-denominated profits did not have a significant impact on Income
before income taxes.
References
http://www.123helpme.com/view.asp?id=47254 (competitive advantages)
http://www.nytimes.com/2009/12/18/business/18nike.html?_r=1
http://www.nike.com