International Business PESTEL Analysis for Nike Inc

This report provides a PESTEL analysis of Nike Inc, an American international business. It covers political, economic, social, technological, environmental, and legal factors affecting the company's performance. The report also suggests strategic responses to the identified issues.

INTERNATIONAL
BUSINESS PESTEL
ANALYSIS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
PESTLE analysis.........................................................................................................................3
Strategic Response to PESTLE analysis.....................................................................................6
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
International business means movement of goods, services, technology and human capital
across different countries or national border. The business which have its operations in more than
on country is known as international business. This presentation is based on Nike Inc which is an
American international business having headquarter in US. The company basically engaged in
the designing, development and manufacturing of footwear, apparel, sports equipment,
accessories and other services. The purpose of Nike is to provide inspiration and innovation to
athlete and move the world forward through the power of their sports equipments. Nike Inc is
worlds the largest athlete apparel company having its operations worldwide along with the net
income, total assets, total equity and number of employees of US$2.54 billion, US$31.34 billion,
US$8.06 billion and 75,400 respectively in the year 2020 (PANDEY, 2017). The organizational
structure follows by Nike is hierarchical which is further broken into three key segments such as
global headquarters, regional headquarters and subsidiaries. The competitive strategy of Nike is
cost leadership strategy with the help of which defend their market position and gains a
competitive advantage.
PESTLE analysis
Political factor:
The political factor of Pestle analysis helps the company to analyse and understand
degree of government intervention and how it affects the present and future of the business. The
government policy of US is fantastic which includes the low interest rate and well arranged
international tax agreement. Basically, US market is a core market for Nike company because the
company generates around 41% of the revenue because of low tax rate policy. But on the other
side, because of the government decision regarding US-China trade it was estimated that the
companies such as Nike need to pay high tariff on imported raw material. The impact of which
the American customers bear an additional cost i.e., around $7 billion per year. It is because 10%
of the Nike goods are produced in the China and are imported in the US from China (Riwayadi,
Deliabilda and Panahatan, 2021). Another issue faces by Nike company because of this change is
diversification in supply chain and further because of the trade restrictions the company unable

to sale its goods to China customers. The overall impact of this over the company is that their
sales and profitability get highly decreased.
Economical factor:
The economic factor involves the variables such as economic growth, interest rate,
inflation rate and unemployment rate impact over the business performance. The unemployment
rate of the US in the year 2021 is 6.3% which was drop by 0.4% from the previous year (Alina,
2020). The impact of this over Nike company is that the company basically get high skilled
labour force at low cost. However, because of Covid-19 the government has imposed lock-down
which leads to temporary closure of business. The impact of such change over the business is
that their sales has decreased because the spending pattern of the consumer has decreased. The
companies have cut their employees salary along with that various consumers has also lost their
job which has largely affected their savings and buying pattern. Products of Nike company is
high in price which is only targeted to high income people and after the decreased disposal
income and spending pattern the sales of Nike is also decreased. It is identified in the research
that availability of cheaper substitute products is a threat for the company like Nike because
consumers prefer more decent and low cost products.
Social factor:
The social factors majorly affects the sales of the sports equipment industry that's why it
is advisable to the companies that have to map the social condition of countries in which they
operate. The various social factors includes are safety emphasis, lifestyle attitude, population
growth rate etc. People of different countries are more focused towards their health and thus their
lifestyle has changes which have impact on health. This factor is an opportunity for Nike because
they provide products such as sports equipment which promotes the health approach among the
people. The aim of the company is to promote the health and fitness among the people which
further result into the increased brand value of the business (Abdulla and Borar, 2017). However,
the social issues faces by Nike safety issues regarding the products. Nike needs to change their
production process in order to produce safe sport products such as footwear etc. It is because the
consumers trust over Nike and maintaining their trust is the first priority and responsibility of
consumers.

Technological factor:
Technological factor consist of innovation in the industry. It considered the research and
development activity in this factor. It also involves the digital and mobile technology which is in
trend as per market research. It delivered new methods of the dispersion or segregation,
fabrication and logistical. Technological factor delivered capability to innovate or organize the
services or commodity (Grose, 2021). With the assistance of the technological support the
organization can deliver the services in the effective and efficient manner. Technology supports
the Nike in interacting with the customers as well as values to the organization. The organization
innovates the commodity as per the availability of the technology. In context to increase the
brand value the organization use online platform, like social media. The organization utilized
Facebook, Instagram, Pinterest, google etc. to increase the brand value. Through the technology
the organization is connected with the potential consumer but over utilization is harmful. The
organization have opportunity to modify the manufacturing process and client service sector.
The company is pressurized to increase the scale of production and development efforts. The
organization have opportunity to reduce the risk of the company. Nike highly invest in the
technology for research and development of the organizational product.
Environmental factor:
This factor is highly concern with ecological impacts on businesses. The organization
will be environmental friendly under this factor. It consists of atmospheric condition,
temperature, climate alteration, impureness and natural disasters (Matovic, 2020.). Many of the
product produced by the organization is recyclable. the organization utilized the raw material
which is of plastic. The organization delivers eco-friendly as well as sustainable commodity to
the consumers of the organization. Extension of environmental law create the opportunity for the
organization to improve the plans of action regarding the environmental programs. The
organization produces adequate amount of air pollution. Along with this the administration also
realize chemicals in rivers which create water pollution too. The creation of the pollution
decrease the brand value in the marketplace. Due to deforestation and banned on leathers
commodity affect the organization. The organization promise to provide the bag which are
environmental friendly. The organization have opportunity to attract more customer by reducing
environmental waste. The organization faced regular pressure from NGOs and environmentalists.

The organization develop plan of action to deliver the services totally environmental friendly in
forthcoming period which is challenge for the organization. The organization developed various
strategy for waste management.
Legal Factor
This factor consists of legal forces of the market. It covers the relationship of the
organization with the authority or the governing body of the nation. It consists of various rules
and regulation of the marketplace impose by the governance of country. The business is
operated with the permission of the authority only (Yusop, 2018). Industry regulation, licences
and permit, labour or the employment law , intellectual property is the elements of law. The
organization need to follow all the norms of international market as every country have different
lawsuits. The company have opportunity to deliver high standard for labour and workers. The
organization have opportunity to scale up customer satisfaction by expansion of the consumer
law in the developing country. The organization can lead the opportunity by offering good health
and safety regulation to the workers under employment law of country. The case of false
discount offered by organization ruins the picture of brand in the market. The another threat the
organization faced that is tax evasion which need to ratify on the urgent bases to improve the
brand value in the marketplace. The organization follows all the norms of the market in order to
acquire the attention of the consumer.
Strategic Response to PESTLE analysis
On the basis of the analysis of Pestle factors, the strategic response advisable to Nike Inc
is application of appropriate pricing strategy. It is the duty of Nike company that they have to
adopt the value-based pricing strategy rather than premium pricing in order to keep their
customers with themselves even at the time of financial crises. For this, it is further advisable to
the HR function of company that they have to hire employees which helps in reducing the
unemployment rate. Further, in order to solve the economic issue of high tax rates the finance
function of Nike need to analyse the various investment options for tax benefits. It means in
order to reduce tax expenses the company need to reduce their profit and for reducing profit the
finance team of the company need to raise their funds more from debts rather than equity. The
consumer of Nike able to get the same products at cheaper cost from somewhere else which is a
threat for the company (Husak and et.al., 2020).

In order to resolve this issue and adopt value-based pricing strategy, the finance team of
Nike need to work together. The production process need to be improved by company which is
the duty of HR department (Abdulla and Borar, 2017). For this, the HR team of the company
need to analyse their current workflow and further implement the training and development for
the employees. With the help of training, the employees of Nike able to complete their targets on
time without wasting too many resources. The reduction in wastage of resources will leads to
reduction in the overall cost of production and improves production process.
Human resource management
The management of human resources department is managed by the mangers of the
organization. The manger plan, coordinate, cooperate and direct the various plans of action in
order to achieve the goals of the organization. The manger of the organization examine or
analysis the threats and opportunities of the company to lead the international market fully
(Andre, 2020). In order to solve the technological threats employees of the firm keep tracking
the activity of the customer on the product. The analysation of the negative reviews given by the
consumers on online platform is resolved by the employees on the regular bases. The leader of
firm work on the demands of consumer and manufacture the goods as per the interaction with the
customers. The employees regularly asked for feedback through the online platforms such as
Facebook, Instagram, websites etc. and work on it. The manger took major steps to resolve the
environmental threats and acquire the opportunity for further growth of the business. In order to
protect the planet the organization focused on chemical element, waste, H2O and chemistry.
The organization aim to deliver fully renewable electricity and fleet electrification. The company
gathered all the waste from the consumer and recycle as well as donate them. Along with the
organization work the manger engaged the workers in the environmental protection work. The
manger of the organization start focusing on the decreasing the child labour with in the firm. The
leader form rules and regulation for the employees in order to treat the customer in fair manner.
The company determine the false discount issues and started delivering the right discount offer
through the online platforms. The institution allows the female participate in the organization
with almost 50% participation ratio ( Grünig, and Kühn, 2015.). In order to build impression on
the customer, the firm invest in pre-tax income. The organization maintain equality among the
employees under the legal system of employment rules.

CONCLUSION
From the above report it will be concluded that the organization identify all the aspect
that impact the growth of the organization. Through the pastel analysis the organization identify
the threats and opportunities of brand. The organization increased the brand value by working on
threats and the opportunity. Furthermore, human resources management and finance department
took major steps to resolve the issues analysed in the PESTAL analysis. Both the department
play crucial role in addressing the issues in a adequate manner (Alsaffar, 2020).

REFERENCES
Books and Journals
PANDEY, B. C., 2017. Nike Inc-Complete Analysis: SWOT, PESTLE and Marketing strategy.
BookRix.
Riwayadi, E., Deliabilda, S. A. and Panahatan, M. B., 2021, August. PESTLE ANALYSIS OF
FINANCIAL TECHNOLOGY IN INDONESIA. In International Conference on
Innovations in Social Sciences Education and Engineering (ICOISSEE) (Vol. 1, No. 1).
Alina, F., 2020. THE IMPACT OF COVID-19 ON PROMOTION OF BRANDS. In The science
of the XXI century: challenges of the contemporaneity [Еlectronic edition]: proceedings of
the all-Ukrainian scientific and practical student conference (Kyiv, May 14, 2020)–Kyiv:
Kyiv National University of Trade and Economics, 2020.–477p.–English, German. (p. 38).
Abdulla, G. M. and Borar, S., 2017. Size recommendation system for fashion e-commerce.
In KDD Workshop on Machine Learning Meets Fashion.
Husak, V. and et.al., 2020. Information System for Recommendation List Formation of Clothes
Style Image Selection According to User's Needs Based on NLP and Chatbots.
In COLINS (pp. 788-818).
Grose, V., 2021. A Practical Guide to the Fashion Industry: Concept to Customer. Bloomsbury
Publishing.
Andre, R., 2020. Practice 4. Define the Business of Business. In Lead for the Planet (pp. 129-
164). University of Toronto Press.
Yusop, Z.B.M., 2018. PESTEL analysis. COMRAP 2018, p.34.
Alsaffar, H., 2020. Nike’s Marketing Mix and PESTEL analysis in China.
Matovic, I.M., 2020. PESTEL Analysis of External Environment as a Success Factor of Startup
Business. ConScienS, p.96.

Grünig, R. and Kühn, R., 2015. Global Environmental Analysis. In The Strategy Planning
Process (pp. 89-96). Springer, Berlin, Heidelberg.