PESTEL Analysis - Nike - published: 29/07/2020

Extract

[...] Although Nike wanted to anticipate the blow by setting up its own factories directly in China, the economic crisis is also being felt throughout East Asia, causing raw material and labour costs to rise. Nike products then experienced a price increase of between and 10% of the initial price in 2019, provoking controversy in countries like France, where customers are offended by prices that are already very expensive at the outset. Product sales then slow dramatically, but marketing and product innovation still allow the brand to take its place. While the Pestel analysis has demonstrated the positive influence of the political factor, Nike still has many adjustments to make economically. [...]

[...] Environmental programs are being created, and Nike has chosen to fight global warming. To this end, the company wants to improve its supply chain in the manufacture of shoes and clothing, for example by favouring shorter circuits. However, these decisions are not unanimous, as they are considered insufficient by its customers and competitors. The company is once again threatened by its lack of effort in the sustainability of its products (programmed obsolescence very/too fast), which could, however, save the purchase of additional goods. [...]

[...] Nike has also developed a new brand: Golf. As its name very clearly indicates, the company sells golf balls, golf clubs and clothing specific to this sport. This new revenue is driving the company to expand its sales area, which is consistently attracting golfing clientele. The reason the company chose this sport is simply because golf is the sport of the clichéd rich. This affirms the brand's desire to have a luxurious image. C. Nike's Pestel Analysis Framework Like any brand, Nike's growth depends on factors outside of the company, including environmental macros. [...]

[...] The advantage of digital technology is that it reduces the need for manpower as well as its costs. However, it also means fewer jobs for people, which is a major social problem these days (people replaced by machines). We can conclude that on the technological level, the company still has many opportunities, but that it must be able to confront the threats and find solutions if it does not want to continue to undergo technological developments. E. Ecological/Environmental The environmental sector is a factor that increasingly affects the French population, but also that of many other countries: it is now a global issue. [...]

[...] In this way, it will enable Nike to target potential threats to avoid them and respond to opportunities for the company over time. II. Nike's detailed Pestel analysis A. Policy What are the criteria of the Political sector? The main question that needs to be answered is the political stability of a country, as this plays a very important role in the economic sector of a company. However, it also concerns fiscal policy, foreign trade (European Union, but also worldwide) or social protection. Nike is a world-renowned company that is very much subject to government political effects. [...]