Nike Inc.: PEST Analysis, Challenges and Recommendations

This report offers a comprehensive business analysis of Nike Inc., a leading sportswear and equipment supplier. It begins with a company background, detailing its founding, headquarters, revenue, and key products. The report then delves into a thorough PEST analysis, examining the political, economic, social, and technological factors impacting Nike's operations. Key political considerations include US government policies and international tax arrangements, while economic factors involve labor issues, competition, and currency fluctuations. Social factors focus on brand consciousness and consumer trends, and technological aspects highlight innovation and digital media. The report also includes a competitor analysis, assessing Nike's position relative to rivals like Adidas and Puma. It concludes by identifying significant challenges such as increased financial losses and high competition, and provides strategic recommendations for inventory management, market identification, and overcoming these issues.

Company Background
Nike Inc. is a sportswear and equipment supplier brand that is based in United States (Childs and Jin 2018). The company was
founded by Bill Bowerman and Phil Knight as “Blue ribbon Sports” in the year 1964 but was later renamed as “Nike” in 1970. It is
headquartered in Washington, Oregon, USA. As per the report of 2018, the company earns a total revenue of 36.39 billion US
dollars. Along with manufacturing the equipment and sportswear, Nike operates certain retail stores under Nike town name. It is
world-wide popular for its “Just Do It” trademark and the “Swoosh” logo.
PEST Analysis
Competitor Analysis
Challenges and Recommendations
Political
The US government has always initiated the set of growth-oriented policies that have assisted the firm to
grow and expand itself to international borders (Thomas 2016). There is a stable government in the
country and the international competitive tax arrangements done by the Federal Reserve promotes
company growth. Since, Nike is widely popular for its environment friendly business strategies, the
company gains considerable tax benefits.
There is political unrest in some Asian countries and this is of a major concern for Nike as about 35
factories of Nike are located in this area (Hoshi and Kashyap 2015).
Change in international law is yet another topic of concern for Nike. In last decade, the international law
has become more stringent with ever increasing threat of terrorism globally. Due to this reason many
nations have imposed new rules for countering the increasing threat of illegal activities within their
territory.
Economic
The economic boom and increase in living standards, cost of production in the Asian countries has raised
to a significant extent. Issues of labour are common in the Nike factories. In the year 2014, the company
faced a strike as majority of it Chinese factors stopped the production due to low wages. Also, in 2017,
labours at Nike claimed to be facing verbal abuse and wage theft (Robbbins 2018).
There is a high threat of competition and recession.
The stability of international interest rate and currency exchange influence the profit margins. Higher rate
of inflation at domestic level and fluctuation on rate of currency always been a detrimental factor behind
the annual profit margin of the company.
Social
The modern customers are becoming highly brand conscious and Nike has always been associated with
stature and quality (Mehta 2014).
The modern consumers are becoming fashion and health conscious and as a result, each year, number of
people joining gym for maintaining their body, physique and health is increasing to a great extent. This
boosts the sales of Nike.
The number of female customers is rising and Nike is targeting this demographic by devising new
strategies.
Technological
Nike has always been a pioneer to introduce innovative products that enthral the whole world.
Technological innovation helps the company to set ahead from their market competitors and refine and
augment the process of production (Gawer and Cusumano 2014).
The company is focused on digital medium and uses online apps and media for reaching the customers
and make its products popular.
Factors Nike Adidas Puma Fred Perry
Financial
Strength
-1 -2 0 1 2 -1 -2 0 1 2 -1 -2 0 1 2 -1 -2 0 1 2
Staying Power -1 -2 0 1 2 -1 -2 0 1 2 -1 -2 0 1 2 -1 -2 0 1 2
Organisational
Culture
-1 -2 0 1 2 -1 -2 0 1 2 -1 -2 0 1 2 -1 -2 0 1 2
International
Marketing
-1 -2 0 1 2 -1 -2 0 1 2 -1 -2 0 1 2 -1 -2 0 1 2
Quick Response
Capability
-1 -2 0 1 2 -1 -2 0 1 2 -1 -2 0 1 2 -1 -2 0 1 2
Strong Research
and
Development
(R&D)
-1 -2 0 1 2 -1 -2 0 1 2 -1 -2 0 1 2 -1 -2 0 1 2
Challenges Recommendations
a) Increased financial losses in the past 5 years-
Nike incurs a high level of expenses in terms of
inventory storage and process of acquisition
(Betti et al. 2017).
Inventory management will ensure that the inventory
management costs are effectively managed with
irrelevant costs that eliminated. Nike must fine-tune its
inventory to ensure that it stock goods for short time
prior to being used in the process of manufacturing.
b) High competition- High level of competition within
the business market is almost eliminating the company
from the business market (Mahdi et al. 2015).
Identification of the new niche markets will help Nike
to get away from the saturated markets.
c) Decline in the brand power- Many of the attributes
and features of Nike are not appealing to the modern
customers.
Performing upstream market research and identifying
the hierarchy of the attributes in terms of performance
expectations and conducting discrete choice analysis
with customer feedback will help Nike to overcome the
issue.
Product
•Quality and
reputation
•Highly effective
and comfortable
•Sporting events.
Price
• High end
product with
high price
Place
•About 700 shops
around the
world.
•Multi-brand
stores
•Exclusive Nike
stores.
Promotion
•NFL and NBA
•Nike basketball
•Strategic alliance
•Gold, Soccer and
FIFA World Cup

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