Nike Inc.'s Business Environment: A Comprehensive Analysis

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The Business Environment
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Executive Summary
Nike Inc. was discovered by Bill Bowerman and Phil Knight in 1962 and established by
name as Blue-Ribbon Sports. The goals and objectives of the organisation was to supply
brand quality product at low prices to the commodity to maintain a successful business
environment across the globe. The Nike Inc. mainly deals in the Sports wears, Athletes
wear and other accessories at market prices with 40-50% of sales in international
market.
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Contents
Executive Summary...........................................................................................................2
Introduction.......................................................................................................................4
LO2 Demonstrate an understanding of the nature of the environment that organisation
operate in...........................................................................................................................5
LO3 Illustrate and explain the impact of environmental forces on organisations at micro
and macro levels................................................................................................................8
LO4 Access the significance of impact of environmental forces at an organisation,
market, sector or industry level.......................................................................................11
LO5 Demonstrate an understanding of the requirements of a variety of stakeholders to a
choose organisation.........................................................................................................12
LO6 Measure and appraise the effectiveness of the responses of organisation to policy
actions taken by key stakeholders...................................................................................14
References.......................................................................................................................15
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Introduction
Nike Inc. not only manufactures its products but also distributes with their own retail
stores and also at online platform. The nature of environmental factors also affects the
organisational structure in which Nike runs their business with increasing revenue and
organisation growth. Internal and External factors also affect the domestic and
international market which affects the marketing and product ability that emerges new
innovation with the market trends. Nike Inc. attains premier position by acquiring
innovative products, quality manufacturing and strategic marketing.
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LO2 Demonstrate an understanding of the nature of the environment that
organisation operate in
In UK based organisations environmental analysis produce a vital impact on business
management. The nature of an environment for any organisation describes various
opportunities or threats in its external market outside the organisation. The main motive
of the understanding the nature of environment for any organisation helps in developing
new strategies and plans for better decision-making to compete in the hustle. The role of
nature of the environment improves the outlines of the industry to find more
opportunities and overcome threats. The nature of the environment from inside to
outside evaluates the strength and weakness of the industry. The environmental analysis
is basically arranged at internal levels and external level.
Internal environmental analysis refers to current situations inside the organisation that
consists of social and economical relation in between the administration and employees,
resource utilization. Internal analysis refers to capabilities and limitations of the
industry.
External analysis refers to the outside of industrial boundaries that consists of domestic
and international markets, customer support, sales and marketing etc. that are required
to develop. The main aspects of the external level are financial, political, economic,
socio-logical, commercial, etc. which is handled outside the organisation.
Public, Private and Social factors involved in the organisation structure help in
understanding the environmental aspects of an industry.
Public, Private and Social Enterprise sector
Securing contract that deliver service to public and provide earning stream from the
markets. The social enterprise is the business that serves to public demand with the
government funding. Social enterprises are the diverse income source which provides
better opportunities with less vulnerabilities. Private sector enterprises are the self-
owned start-ups that approaches new and innovative thinking and creates a competition
in the market. Public sector enterprises are stable organisation that are stable customers
which are paid according to contract and agreement terms with the influence of
government rules. These businesses are assured awarded in transparent and fair way.
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The wide verities of sectors that delivers to public, private and social services and with
partnership of government-
 The social and health care sector
 Transportation services
 Sports and Leisure services
 Refuse collection/recycling
 Fostering and Adoption
One of the major barriers that is faced by social organisations is the organisation or
industry is able to deliver services or has capability to meet goals and objectives when
public sources are having resource capability according to customer demand.
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The different structures in private sectors of Nike Inc. describes the various features
based on the company needs in global markets. In the private sector the Nike Inc.
establishes uniqueness in regional market conditions. There are following
characteristics that defines organisational structure of the industry in private sector.
1. Global Corporate Leadership: Nike Inc. involve global leadership with
corporate managers. In global sport marketing private retailers and online
distributers releases new products for marketing campaigns for marketing. These
leadership programs in private sector involves product merchandise,
administration and legal terms, finance and brand operations.
2. Semi-Autonomous Geographic divisions: The industry operations are divided
into segments based on regional markets. Each operational division divides the
product in different markets in various regions. That includes United Kingdom,
Japan, China, Western Europe, etc.
3. Global division for brand licencing: Nike organisation has two division for
brand licencing and converse brand in private sector. These converse diversions
are used to manage worldwide operations. It controls brand licencing in legal
terms at various sector merchandise.
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LO3 Illustrate and explain the impact of environmental forces on organisations at
micro and macro levels.
Nike is completed as Nike Inc. It is a UK-based corporate organisation that deals in
trendy and functional garments and sports wears that includes clothing, footwear,
accessories and other stuffs at all over the international markets. Nike organisation
serves innovation and aspiration to the sport lovers and athlete with wide range of
accessibility across the globe. Despite of having many competitors in market with
various resources, Nike has high guard organisation growth in extreme competitive
market.
The macro and micro environmental aspect on Nike organisations that influences
business growth-
Micro Environmental Factors:
Micro environmental factors in corporates is something in the regular environment
includes marketing strategies, customers, retailers, suppliers, stakeholders and
competitors. The micro environment is a local business terms that affects the marketing
and sales of an organisation in retail business.
Macro Environmental Factors:
Macro environmental factors refers to the outside the industrial boundaries that is taken
by administrations which holds the supply chain management to the international
markets. It represents the financial and economic views of an organisation.
PESTLE Analysis of Nike organisation: -
P – Political Factors: Political factors represents backend operations of the industry.
Most of the times political changes affects the business terms. The policies of the
organisation get affected by political rules. It helps in defining the product
manufacturing and profitable earnings to the industry.
 The UK based Nike has fantastic policies for better development that are
valuable to the organisation
 Political conflicts rely on the customs related processes and organises import
and exports
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 These factors include taxation on behalf of government policies at low interest
rates
E – Economic Factors: Nike supplies a wide range of better-quality products at
medium ranges, so these are less vulnerable economy and economic variables.
 In competitive market scenario, customer attracts to the cheaper products that
could be vulnerable to the big brands. This migrates the customers to choose
decent level of quality products
 Revenue’s of Nike are to some extend depends on the low labour costs in
eastern countries
 Due to the deep financial conditions, Nike spread the resources after investing in
small retail markets that can sell products at high rates
S – Social Factors: Social factors represents the public relation that are developed with
the trust and quality product in between industrial and customer perceptions. These
factors help in advertising the product in market at low costs. A good Social status
provides away for modern corporations.
 The increasing environmental awareness and assessment spread health
consciousness that allows individual to move for better lifestyle
 On other aspects, Nike delivers various product as per the customer demand and
requirements as it affects the criticism for production processes
T – Technological Factors: Technological factor gives the opportunities to industries
to innovate and manufacture best quality products in various ways. From designing,
manufacturing to customer interactions, technology provides assistance to continuing
growth in the market.
Technological factors that affecting Nike’s production-
 Social media relations that allows the things to spread all over globe in faster
way. Nike uses these social media to advertise their brand and products but it
can also demote the industrial values
 The technological factors remove barriers in marketing and fulfil the customer
demands by optimizing the targets and production and maximizes revenue
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L – Logical Factors: Legal factors involves political actions and patents that are
applied to the organisation. There many legal terms and variable that are associated with
Nike, that affects the company norms.
E – Environmental Factor: Environmental factors are ever growing concerns that
affects the organisation internal as well external situations. There are some
environmental factors which affects Nike as-
 Nike’s production on a large-scale industry creates harmful effects to
environment. The production industries releases pollution and harmful material.
 Nike adopting eco production tools to resolve threats to the environment
Figure 1: PESTLE analysis of Nike Organisation
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LO4 Access the significance of impact of environmental forces at an organisation,
market, sector or industry level
Strategic planning in an industry or for an organisation refers to the process of defining
strategies, making decisions and directions towards the organisation enhancement and
business growth. Various techniques are used in the strategic planning that includes
SWOT analysis (Strength, Weakness, Opportunities and Threats) and PESTLE analysis
(Political, Environmental, Social, Technological, Legal and Economic) that regularly
facilitates the organisational growth and provides effective marketing structures for the
organisation.
Strategic management is an art of crafting formulation, science, innovative ideas,
evaluation of markets, decision-making process that will help in achieving long term
objectives and business goals. It possesses in specifying mission, vision, policies, plan,
projects and programs that allocate resources to implement a successful business.
Porters 5 Forces Model to explain significance environment of Nike-
Nike continues their path in global markets for delivering product and sports and
equipment for all communities in market. Michael Porter implemented the 5-force
model to understand the effect of environmental factors for business. These five forces
models influence the current performance of industry in apparel market.
 Competitive rivalry or market competition
 Bargaining in between customer and supplier
 Opportunities to market development
 Threat to substitution
 Threats to upcoming entries
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