Nike is an American based Multinational Corporation that is founded in 1964. Nike was formerly known as Blue Ribbon Sports and founded by Bill Boweman and Phil Knight. Nike is engaged in designing, manufacturing, marketing and sales of athletic footwear, appeals, equipment and accessories. Its Headquarter is situated in Washington Country, Oregon, United States of America. Before starting Nike Pestle Analysis, let us explore it.
On fortune 500 list, nike.com position in 89 which was previously ranked 88. Nike is the sportswear powerhouse, proved itself the largest supplier in sports footwear and apparels. The Nike Inc. marketing value as on 29 March 2018 was $108,094. During FY18 Nike Inc. generated 36.36 billion sales/revenue which is 6.6% higher than FY 2017 34.25 billion.
Though Nike is the largest sports footwear and apparel company but has a competitive market. Nike competitors include Under Armour, Puma and Adidas. It must watch its external environment closely. You can also read my article swot analysis of Nike Inc.
Nike Pestle Analysis
So without any due let us understand Pestle Analysis of Nike and have a close look at political, economic, social, technological, legal and environmental factors that affect Nike performance.
Nike Political Factors
Due to US Sanctions on Iran, Nike the American footwear and apparel manufacturer and marketers will unable to produce the equipment to Iranian football team. According to a company statement, “Sanctions applicable to Nike have been in place for many years and are enforceable by law”. By this corporation can have a negative brand image in the minds of Iranian and other consumers.
The recent Nike campaign “Just Do It”. The Ad displayed Colin Kapernick; face with a tagline “Believe in something, even if it means sacrificing everything”. This player Colin Kapernick has some past issues of Injustice and racism. Nike should stay away from any political issues that affect customer emotions and create controversies.
Fortunately, the U.S government policies helped Nike to advance it products. Policies like low-interest rate and favorable international tax agreements provide strong foundations for Nike growth.
Nike is facing frequent changes in manufacturing laws and tax rate around the world.
Nike Economic Factors
Economic recession is the biggest threat Nike might face in the near future. The US and Asian economic recession can affect Nike since the company is manufacturing its products in Asia and the US. During the recession time labor and material cost also face an increase.
Nike has a competitive market, generating more revenue means low labor cost. It has to maintain the low labor cost, though increases in many countries and can affect the revenue generation.
Over the years Nike has a balanced stock performance i.e. growth in EPS and revenue. But no stock is risk-free even the Nike. An increase in competitors and currency movement can negatively affect Nike performance.
Nike Social Factors
Nowadays, people are more and more health conscious. People don’t compromise on diet and health-related issues. People are joining fitness clubs that have a positive impact on the footwear industry. When people join a fitness club they will need shoes, appeals and other fitness equipment and Nike is the number one choice in the fitness industry for long.
Nike has failed to address and improve the poor working conditions for labors, low wage rate and factories conditions in different countries of Asia. This is known as the sweatshop. Due to social media platforms consumers have more access globally and this part of the problem is not good for Nike. It can badly affect Nike brand image and sales.
Nike Technological Factors
Using technological innovations give brands a competitive advantage. Technology can be valuable when developing a product, inventory management system, accounting systems and interacting with customers and development. Here are some technological factors affect Nike.
Nike’s leadership status is mostly relying on the implementation of information technology in different field from designing, production, marketing to distribution.
In today’s competitive market social media connect companies with customer faster than ever. Nike is embracing every social media platform in brand building strategies.
Nike Legal Factors
Legal factors affect large business globally and Nike is one of them. Though Nike is always trying to comply with international laws it is not possible all time. Like in America and Western world laws and regulations are friendly for business like footwear industry. Asian countries have complicated laws to comply with.
Product quality laws are also different from country to country. In past years Nike faced many lawsuits of labor abuse, low wage and bad working conditions. Legal issues always affect your brand image and brand reputation.
Nike Environmental Issue
The importance of environmental issues is gradually increasing. Environmental issues affect Nike as well.
Mostly Nike’s mass production factories are creating pollution and other environmental issues. Chinese Environmental campaigners were blaming many largest clothes and apparels suppliers including Nike and Adidas. These companies are creating a negative impact, not only polluting the air but also poisoning Chines Rivers like Yangtze and Pearl Rivers.
Nike was able to respond positively and promised to ensure environmental friendly policies by its suppliers.
I have tried to provide relevant information about Nike Pestle analysis and external environment analysis. Despite the fact that Nike has maintained its brand image and strong financial position it should comply all the laws and regulation. If you have any other factors related to Nike external environment, please let us know.