Nike's Business Environment: SWOT, PESTLE & Decision Making Analysis

This report provides a comprehensive analysis of Nike's business environment, focusing on the interrelationship between organizational functions, structure, and objectives. It examines different business structures and their complexities, highlighting the advantages and disadvantages of inter-functional relationships within Nike. The report identifies the positive and negative impacts of the macro environment on Nike's operations, utilizing the PESTLE model for a detailed analysis. Internal and external analyses are conducted to pinpoint Nike's strengths and weaknesses, exploring their interaction with external macro factors. The application of SWOT/TOWS analysis is justified in relation to its influence on decision-making. The report critically evaluates the impact of both the macro and micro environments on Nike's organizational decision-making processes, providing a thorough understanding of the business environment within which Nike operates.

Business environment.

Table of Contents
INTRODUCTION ..........................................................................................................................4
TASK ..............................................................................................................................................4
Explain the relationship between various organizational functions and how they related to
organizational objectives & structure.....................................................................................4
Analyse how the structure, size and scope of different organisations link to the business
objectives................................................................................................................................6
Provide a critical analysis of the complexities of different types of business structures. .....6
Analyse the advantages and disadvantages of interrelationships between organisational
functions.................................................................................................................................6
Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples. .........................................................................7
Apply appropriately the PESTLE model to support a detailed analysis of the macro
environment within an organisation.......................................................................................9
Conduct internal and external analysis of specific organisations in order to identify strengths
and weaknesses.......................................................................................................................9
Explain how strengths and weaknesses interrelate with external macro factors..................10
Apply appropriately SWOT/TOWS analysis and justify how they influence decision-making
..............................................................................................................................................11
Critically evaluate how macro and micro environment impact on organisational decision
making. ................................................................................................................................11
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
The report aims to provide a whole understanding upon business environment. A
business consist a huge environment in which they work to satisfy their aims and objectives. This
environment has complex characteristics and dynamic factor. It emphasise on bringing change,
satisfy customer, regulate innovation and adhere all the legal constraints. An organisation need to
identify various factors which could impact its environment This report is going to focus on the
environment of sports industry. Nike is on of the top most brand retailer works under this sector.
It is an American brand which was established in 1964. the company deals in sport equipments,
clothing and apparel, accessories, footwear for both men and women. The report is going to
analyse different types of organisation and its purpose, scope and size. Also, how business
structure is indifferent and how organisation function interrelated with each other. Therefore, an
internal and external analyse is going to conduct through using Swot and pestle model. This will
help in analysing capabilities and potential for company to achieve its objective to expand and
innovate in competitive environment.
TASK
PART 1 is covered in flag sheet
Explain the relationship between various organizational functions and how they related to
organizational objectives & structure.
Every organisation is having various department and with the help of them they conduct
various tasks in order to offer a new product in the market and interrelationship of various
departments of Nike explained as follows: Finance and production- finance is the unit which is concern for procuring and
allocating the funds so that they can have smooth running in their business operations. On
other hand, production unit is engaged in introducing new product in the market so that
they can retain high availability and growth. In relation to Nike, finance department
allocate the fund for the production department and on the basis of this they can hire the
innovative and advanced technology for their production in order to get higher success in
the market. These two departments went ordinate effectively so that they can have the

sufficient fund in order to produce the products that can meet the needs and wants of their
customers. Human resource and marketing- HR unit is concern with the hiring the deserving
candidate by analysing the skills and abilities of the individual so that they can give their
best in attaining organisational goal. They are majorly concern for the recruitment and
selection of the employees within the organisation. Marketing unit is related to the
advertisement of their product and services to the large audience so that they can
contribute in generating higher profits and revenue in the market. These two departments
make the best of their resources so that talented employees can promote their brand in an
appropriate manner and contribute to the growth and success of the company.
 Research and development and Information technology- R&D unit is concern with the
conducting market research so that they can analyse the needs and wants of the customers
and the emerging trends of the market so that they can effectively often best product to
their potential customers generate high profits and revenue. Information technology is
related to the use of computer in digital media so that is easy for the company to operate
their business and an appropriate manner (Moşteanu, and Moşteanu, 2020). When These
department effectively co-ordinate with each other then research and development
department can get the innovative and digital tool for research and development so that
they can with the market leader in front of large audience.
Organizational structure
It is the pathway of the system which allowed the company to distribute their various
tasks in the subgroups so that various operations in the organisations can be carried out in an
appropriate manner and different types of organisation structure are given below: Hierarchical structure- it is the organisation structure in which one way communication
takes place and leader and manager assign the duties and responsibilities to their
employees and they are liable to follow them. There is no right which is given to the
employees for their valuable feedback and suggestions as autocratic leader establish such
type of structure in their business.
 Flat structure- it is the type of organisation structure in which all the employees are free
to give their valuable feedback and suggestions and top level management is having full
control over the decision making power. Nike as following this type of organisation

structure in which there is a less intervention of middle management in order to get
effectiveness in the business.
Analyse how the structure, size and scope of different organisations link to the business
objectives.
The organisation have different structure, scope and size due to having different
objectives. These factors are linked to organisation aims as the much organisation will have large
size, the more they will have opportunities in market (Lyu, and Hwang, 2017). Scope of a
company shows its wide reach in national and international market which reflect that
organisation could make expansion and growth. It helps in achieving business objectives as size
and scope matters to take business decision appropriately. Nike has global brand name and large
market growth which helps them to fulfil their objectives to look for globalisation and opening
new stores.
Provide a critical analysis of the complexities of different types of business structures.
Business structures defines how organisation leaders regulate guidance, employees
welfare and influence other to achieve goals and objectives. There are different types of business
structures such as flat, divisional, functional and matrix. All these structure ascertain different
roles, responsibility, obligation, chain of command and direction. Flat structure focus on giving
independence to employees and eliminate any middle line of communication. It is effective for
employees but will lead to affect in taking complex decisions. This may create chaos and
conflicts.
Analyse the advantages and disadvantages of interrelationships between organisational functions.
There are a lot of business functions which are interrelated to achieve mutual objectives.
These departments include marketing, finance, production, Human resource and IT. All the
departments work collaboratively by making effective communication, plans and decision
through consulting from each department.
Advantages of interrelationship: The Nike could make cost effective budgets to manufacture
great products through collaborating with marketing department which will help the managers to
identify customers needs, trends and specification.

Disadvantages: these interrelation of departments may lead to create confusion as every
manager will have different strategy for respective working which might get impact from other
departments strategy.
Identify the positive and negative impacts the macro environment has upon business operations,
supported by specific examples.
Macro environment consist a huge engagement from market. It consist all the market
uncertainties and elements which has direct or indirect impact on the company. It perform both
positive and negative impact on the organisation. A business firm needs to create a lot of
function due to which they miss out important factors which crease causes and risk for their
growth and expansion (Bahoo, Alon,nd Paltrinieri,2020). Nike has global position which shows
that the company runs operation at different areas so that, it will be demonstrate through
conducting Pestle analysis and its positive and negative impact:
Pestle analysis of Nike:
political factor: this factor consist many political interferences in terms of taxation regulation,
restrict on trade of import and exports and other duties. These interferences in highly requisite in
US country due to having many trade restrictions. Sports industry has impact from these barriers
which impact on companies profitability. Nike is a private sector firm which has many positive
and negative impact:
Positive: Nike has positive impact due the major profitability come from US countries.
They attain highest 41% of revenue from US. The company has large products and services
which has positive impact in the eyes of customer.
Negative: Nike is affected with the highest trade tariffs from US. It is being one of the
highest tax duties which shoe industry needs to pay off. This result in low profitability.
Economical: this factor consist contribution of business in the economy. The sport industry pays
vital role in contributing in US GDP.
Positive: after the pandemic, Nike is one of the organisation who have survived in the
highly inflationary market. They have cut down the job opportunities which reduce cost. the
company decide to re grow through making e-commercial presence in which it sustain in
contributing in economy and its profitability.

Negative: Nike has suffered from severe decline in sales and economic welfare by
cutting job opportunities. It has stop economic growth due to reduction in the income of
customer.
Social: This factor emphasise on society ad its needs and wants. Sports industry is highly
fulfilling society need by servicing great quality products and manage all the trends. Nike is
known for the best brand in sport clothing and shoes. But it also has some positive and negative
impact:
Positive: Nike has positive impact from the customers due to having interesting culture
and product categorise. It serve great quality clothing and footwear which make a reputed brand
name in society.
Negative: the company negatively impacted by a dynamic changing trend in the market
which leads to make re development of products as per new culture and values.
Technological: as per this factor, organisation needs to look fro technological interference in the
company. Sports industry is also facing need for digital outlook to take advantage of many
opportunities in the global market.
Positive: Nike has huge technological outlook as they involve social media
communication, promotion through websites and blogs. This all lead to create a standardised
image in the eyes of customer.
Negative: Nike is still lacks in adopting E-commerce effectively. It involve collaboration
and mediator control which leads to cut their profit margin. Therefore, they are in serious need
for adopting E-channels to reach directly to the customers.
Legal: this factor includes any obligation and provision under the countries law. sports industry
require to ascertain many laws in order to accomplish their objectives effectively. Nike regulates
their operation in number of countries which contains a lot of provisions that may create cause
on their business environment.
Positive: Nike is obliged to take all the provision and laws of the US. This impact on
employees welfare and their retention. Therefore, the company has positive influenced due to
attaining internal smooth functioning.
Negative: Nike has faced legal constraints in the past years in which it has identified that
the company comes under poor workplace conditions. Due to which many employee left the
organisation and impact on its reputation. Also, the company came in allegation of patent

infringements with Adidas which has also create cause and regulate restrictions and
compensations from Nike.
Environmental: The company needs to be aware about environmental regulation.
Environmental protection must be the foremost aim for sports industry. This will influence in on
their profitability and image among customers. Therefore, Nike has various protocols and
practices in relation to corporate social responsibility which has attained highest possible
outcome for customer as well as it has gained some negative interventions also.
Positive: Nike has becoming environmental conscious from the recent years. The
company involve sustainable production in which they avoid plastics and make commitment to
use 100% renewable energy. This impact greatly on companies goodwill.
Negative: Nike is facing negative impact due to Nike gets synonymous with sweatshops
which is the only impact on the company or else customer has high expectation form the
company. Nike is preparing to achieve all the standards of sustainability.
Traffic light chart
This chart helps in analysing the activities which business performs in their day to day
activities. This chart reflects the colours that indicates signs for Stop, Caution and GO. In context
with Nike, the chart on the activities is presented below:
Red Yellow Green
This colour shows that, Nike
needs to stop taking decisions
for some activities which are
not in favour of organisation.
The Nike needs to stop
developing products which are
not in trends. This will impact
on their profitability.
This shows that, there are
some activities which require
proper attention. These are
customer behaviour, brand
management and marketing
functions. Due to high
competition, Nike needs to be
caution of rivals strategy of
promotion.
This colour shows that the
company needs to continue the
operations. Nike needs to more
collaborate with sports
celebrities and involve in
collaborations with
technological advancement.
Nike needs to stop the impacts
of political crises through
taking effective decisions by
The company needs to be
attentive about the market.
Also, economical issue must
The company needs to carry
out sustainable practices much
often.

maintaining relations with
countries.
be resolved through taking
decisions for better products.
Apply appropriately the PESTLE model to support a detailed analysis of the macro environment
within an organisation.
Pestle analysis is very helpful in analysing the macro environment factors. These factors
plays vital role in impacting large business functioning. The organisation has to take decisions
after knowing at all its surroundings so that, no time, cost and strategy will get wasted.
Therefore, Nike has many positive and negative impact of macro factors which majorly involve
economical crises, political interferences and legal constraints. Political factors shows high taxes
in US countries which impact on Nike production (Acar, and Özşahin, 2018). Also, social and
environmental factors does not have negative impact over company as it attains highest
satisfaction from customer in terms of products, quality and sustainability.
Conduct internal and external analysis of specific organisations in order to identify strengths and
weaknesses.
Internal and external analysis helps in identified the complex and huge business environment. As
it cause direct relationship and impact simultaneously over companies profitability. Therefore,
after analysing positive and negative elements from pestle analysis. There is need to analyse how
well Nike internally within their operations. It will be done through using SWOT analysis:
Swot analysis:

This model is helpful to analyse the internal surrounding of Nike. As the company has
large functioning which consist many factors that are some of their strength or weakness.
strength weakness
 One of the major strength point for
Nike is that the company has
competitive image in the market
(Ershova, 2017). As company believes
in taking risks and inspire customers
through their most comfortable shoes
which are made for every person who
could walk and run.
 The brand is known for serving quality
and highly durable clothes even at
reasonable prices.
 The company has faced poor working
condition as labour find to be
demotivated and work in poor situation
in oversees. This practice impact on
their brand name.
 Nike was known to be a luxurious
brand but it becomes the weakness for
company as customers merely wants
high quality but in less price. It
somehow impact on companies sales.
opportunity Threats
 Nike has allot of opportunity in terms
of entering into Chinese and Indian
market. This could be done through
segmentation the market in terms of
their culture, values, demands and
threats.
 Nike has advantage to adopt online and
E-commerce platforms. This will gain
competitive advantage and occurring
customers attention.
 The company facing threat over labour
condition and strikes. It impact on
companies image and reputation of the
Nike. It eliminate globalisation from
the reach of company.
 The company is facing competition and
rivalry threat in terms of product
quality and prices.
VRIO ANALYSIS

About Nike described below – Nike is multinational association that works in design and
development and marketing and sales of footwear and services. Nike is founded in 25 January
1964 Eugene, Oregon , United States.
Value – Value means the worth of business. Nike is the most Popular brand in the sports shoes
industry. The company's popularity has expanded in the world because of the quality products.
Nike is offering different varieties of products in the shoes market like For Example The Jordans
which is popular in the youth like Air Jordan Max and Air Jordan High. The company is also
partnering with the popular football clubs to attract the consumers.
Rarity – Rarity means the uniqueness in the company what it is doing different from other
companies. No other companies are making different quality and designs of the shoes which
Nike is providing to its customers and that's the major (USP) Unique Selling Proposition of the
Company.
Inimitablity- Inimitable means an expense for any company to duplicate the products of their
successor's brand which is very difficult. Nike is making some quality products and to copy their
shoes is very difficult in the market.
Organization- It means the company is using their resources to its fullest and they are
capitalising their resources to their capabilities. Nike is organised in every manner the company
is successful in capturing the market. Nike organisational structure is very Diversed their
structure makes them to enable adjustments according to deal with the market differences.
Explain how strengths and weaknesses interrelate with external macro factors.
Political factors: The Nike is facing political issues but it is connected with the strength
of company. As Nike has huge product segmentation which might impact on their trade and
exports.
Economical factors: The company has less profit margin due to ever changing demands
of customer for best quality and less price. This impact on economic condition of the country as
Nike could not much contribute in GDP.
Social factors: Nike is known for one of the best quality product which is the strength for
company. It helps the firm to achieve society's positive impact In external environment. But the
company could not be the luxurious brand holder due to changing demand of customer for less
pricing policy.