Nike's Rise, 1997 Decline, and the Tiger Woods Decision
This paper examines three pivotal chapters in Nike's corporate history. It first traces the brand's remarkable growth from its 1964 founding through the mid-1990s, driven by innovative product design, powerful branding, and bold market expansion. It then applies an ESTEMPLE framework — covering economic, social, technological, ecological, media, political, and ethical dimensions — to explain the severe decline Nike suffered in 1997, including the Asian financial crisis, labor abuse controversies, and damaging media coverage. Finally, the paper evaluates Nike's decision to retain Tiger Woods as a sponsor following his 2009 adultery scandal, arguing that this choice reflects lessons learned from the company's earlier overreaction to its late-1990s environmental shocks.
- Nike's Founding and Early Success: Origins, branding, and financial growth through mid-1990s
- Factors Behind Nike's 1997 Decline: An ESTEMPLE Analysis: Economic, social, political, and ethical pressures in 1997
- Nike's Decision to Retain Tiger Woods: Sponsorship loyalty as evidence of learned crisis management
- Conclusion: Summary of Nike's crisis lessons and strategic growth
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What makes this paper effective
- It applies a structured analytical framework (ESTEMPLE) to break down a complex corporate crisis into clearly labeled, discrete environmental factors, making the argument easy to follow and evaluate.
- It balances quantitative evidence — market share figures, profit percentages, sales totals — with qualitative examples such as consumer boycotts, media campaigns, and endorser scandals, giving the analysis both depth and credibility.
- The Tiger Woods section ties the analysis together by connecting Nike's past crisis behavior to a later strategic decision, demonstrating cause-and-effect reasoning across time.
Key academic technique demonstrated
The paper demonstrates applied environmental scanning through the ESTEMPLE framework. Rather than narrating events loosely, the student categorizes each external pressure into a named dimension, which models how business analysts systematically assess macro-environmental threats. This technique shows the reader exactly which forces — economic, social, political, ethical, and so on — contributed to a firm's decline and in what way.
Structure breakdown
The paper is organized around three distinct questions. The first section provides historical and financial context for Nike's early growth. The second, and longest, section applies ESTEMPLE to dissect the 1997 downturn across seven labeled categories. The third section pivots to a case study of the Tiger Woods sponsorship decision and uses it to assess whether Nike internalized lessons from its earlier crisis. A brief bibliography closes the paper.
Nike's Founding and Early Success
Nike was founded by Phil Knight in 1964 when he put his MBA project into practice alongside his former track coach, Bill Bowerman. At that time, established companies were manufacturing sports shoes in high-wage economies, whereas Knight's project showed that reducing transport costs could allow a company to source products from countries with lower labor costs. Keeping this in mind, Nike began importing shoes from Japan. However, when Bowerman invented the waffle trainer one night, the company transformed from an importer into a designer brand. The strong personalities and shared love of sport of both Knight and Bowerman played a significant role in defining Nike's purpose, and this attracted many confident, young employees to the company. Nike's logo became widely popular, conveying a "no-nonsense emphasis on speed and performance" and being recognizable to ninety-seven percent of people. The company's tagline, "Just Do It," also became the most recognizable slogan in America.
The early recognition Nike received enabled the company to establish its products with a sense of superiority that continued to grow and strengthen the brand. Between 1980 and 1997, the company's share price grew by 3,686%, and in 1988 Nike overtook Reebok to become the leader in sports shoes. Its market share increased from 32% in 1994 to 45% in 1996. In 1997, the company's group size tripled, generating nine billion dollars in sales and eight hundred million dollars in profits. With this success, Nike decided to position itself as a leader in sports and fitness more broadly, not just in footwear.
In an interview with the Harvard Business Review, Knight stated that the company had long considered itself production-oriented, emphasizing product design, but had come to recognize that it also markets its products exceptionally well — a key reason its sales had spread across the world. After making this claim, Nike also began to think of itself as a market-oriented company. The brand expanded further into retailing, opening Nike stores around the world and receiving strong initial responses from journalists and athletes alike.
Building on this momentum, Nike pursued growth through a joint venture with a Hollywood talent agency. The aim was to package events featuring Nike endorsers such as Michael Jordan and Charles Barkley, and sell these packages to media companies and sponsors. Nike's director of advertising argued that this would elevate the company's image and increase sales. By 1996, Nike was manufacturing everything from footballs and hockey sticks to sunglasses and batting gloves. The company's Vice President declared that Nike was no longer just a shoe company — it covered everything related to sport.
References
Business Week Archives. (2000, February 20). Can Nike still do it? Business Week.
Harrison, A., & Scorse, J. (2004). The Nike effect. UC Berkeley.
The Nike Company's position in athletics. (2011).
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