Nike PESTLE Analysis - External Environment Analysis

Running head: NIKE PESTLE ANALYSIS
Nike PESTLE Analysis
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1NIKE PESTLE ANALYSIS
Table of Contents
External Environment Analysis (PESTLE) of Nike........................................................................3
1. Political factors............................................................................................................................3
1.1 US Government Policies........................................................................................................3
1.2 Unrest in Some Asian Countries............................................................................................4
1.3 International Law...................................................................................................................4
1.4 Stable Political Climate.........................................................................................................5
1.5 Free Trade Policies................................................................................................................5
2. Economic factors.........................................................................................................................6
2.1 Shifting Profit Margin............................................................................................................6
2.2 Risk of Recession and Competition.......................................................................................7
2.3 Increased Productions Cost....................................................................................................8
2.4 Labor Problems......................................................................................................................8
2.5 Slowing down In Chinese Markets........................................................................................9
3. Social factors...............................................................................................................................9
3.1 Brand Conscious Consumers.................................................................................................9
3.2 Increase Female Consumers................................................................................................10
3.3 Health Conscious Consumers..............................................................................................10
3.4 Fashion Conscious Consumers............................................................................................11
3.5 Importance on Product Safety.............................................................................................12

2NIKE PESTLE ANALYSIS
4. Technological factors.................................................................................................................12
4.1 Origination...........................................................................................................................12
4.2 Marketing Methods..............................................................................................................13
4.3 Mobile Technologies...........................................................................................................14
4.4 Increased R&D investment amongst competitors...............................................................14
5. Legal factors..............................................................................................................................14
5.1 International strategies.........................................................................................................14
5.2 Labor challenges..................................................................................................................14
5.3 Unfair Competition and False Advertising laws.................................................................15
5.4 Improving employment law in developing countries..........................................................15
6. Environmental factors................................................................................................................15
6.1 Reduced wastages................................................................................................................15
6.2 Business sustainability.........................................................................................................15
6.3 Renewable energy................................................................................................................16
6.4 Environmental legislation....................................................................................................16
References......................................................................................................................................17

3NIKE PESTLE ANALYSIS
External Environment Analysis (PESTLE) of Nike
This section of the study will investigate and analyze the external environment in which
Nike operates. The external environment is also commonly known as a PESTLE analysis.
However, there are other variations as well such as PESTEL, STEEPLE, SLEPT and PEST.
However, this particular study will only use a PESTLE model to investigate and analyze the
external business environment for Nike.
1. Political factors
Political factors do have an evident and huge impact on any business. Nike like any other
companies representing the irrespective types of industries is also affected by an unstable
behavior of world politics. The political factors impacting the Nike business will cover US
Government policies, unrest in some Asian countries, international law, stable political climate
and free trade policies.
1.1 US Government Policies
The recent indication of Trump to avoid joining the TPP (Trans-Pacific Partnership) may
certainly create a Lot of challenges for Nike. TPP include those countries with which Nike is
largely associated with an import trade. Notably, a huge percentage of footwear for Nike is made
in countries included under the TPP. According to Bloomberg, Vietnam alone is responsible for
a 40% import of sneakers for Nike (Businessinsider.in, 2018). In such circumstances, the
announcement to separate from TPP will certainly leave no clues for Nike to head for. The tariff
charges on Nike are already higher than any other footwear and sports apparel brands in the
United States. In addition to such high tariffs, an announcement to discontinue TPP will further
raise the tariff charges. TPP was brought for the purpose that tariff and non-tariff barriers are

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reduced between the countries included in the pact. Notably, Nike has only close to 8% of its
total factories in the United States (Businessinsider.in, 2018).
1.2 Unrest in Some Asian Countries
Unrest in some Asian countries like Vietnam is a threat signal and a wake-up call for
Nike. The unrest is due to the anti-china protest in Vietnam. The unrest might endanger the
supply chain operation between China and Vietnam. Notably, some of the footwear apparels in
Vietnam are manufactured in China (Kien, 2015). A political unrest in such circumstances just
suggests that the supply chain operation between China and Vietnam will get affected from.
Exports from Vietnam to the United States have increased by 14% in recent times. Some of the
exporting goods are also being manufactured in or imported from China to Vietnam. According
to the Footwear Distributors and Retailers of America (FDRA), the local tensions around the
South China Sea is a matter of concern and could actually affect the import of footwear and
apparel to the United States (Yee, 2017).
1.3 International Law
International laws are set and designed by GATT, NAFTA treaties, European Union and
the others. International laws govern mainly the setting of ethical standards for business, ethical
guidelines for global marketing & market entry, rights & responsibilities of investors & buyers,
the setting of trade policies and a lot more (Kolk, 2016). It just indicates that any variation being
brought to the international institution will certainly impact the international business. For
example, Nike had the advantage of TPP in its trade relationship with Vietnam. TPP allowed a
reduction to the no-tariffs’ and the tariff barriers between the United States and Vietnam. It was
an advantage for Nike considering a fact that the company is required to pay a minimal tariff on

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imports. However, the Trump’s decision to quit the association with TPP may certainly
challenge the leveraged benefits and could be asked to bear the elevated trade tariffs
(Businessinsider.in, 2018).
1.4 Stable Political Climate
Nike’s footwear apparel manufacturing is largely being taken care in the Asian and
emerging countries. As stated earlier, only a few portions of the entire manufacturing of Nike's
apparel is done in the United States (Subotnick, 2017). In such circumstances, it is important that
emerging nations and Asian countries with which Nike is in the trade relationship with bear a
stable political climate. An unstable political climate affects the consumption, investment and
economic growth in emerging nations. The maintenance of political stability is expected to put
challenges due to income inequality, high unemployment rates in few countries and rampant
corruption (Lee & Sehoole, 2015). For example, income inequality affects the buying capability
of consumers which would not be a good thing for Nike as the company has its shops largely in
the Asian and emerging nations.
1.5 Free Trade Policies
Free trade policies is another very critical factor which affects the trades practices. The
United States, in particular, entered into 14 different free trade agreements (FTAs) with 20
different countries. Notably, a close to 70% of the entire exporting of goods and services from
the United States are done with the FTA partner countries. On the other hand, a close to 80% of
the goods and services are being imported from FTA partners. The numbers are even bigger for
footwear apparel which is close to 98.4% as reported by AAFA (American Apparel & Footwear
Association) (Anderson & Yotov, 2016). It is truly understandable that free trade agreements are