Nike Business Analysis: PESTEL Analysis and Change Factors

This report provides a comprehensive business analysis of Nike, a globally recognized sportswear and equipment manufacturer. It begins with an introduction to the company, its history, and market position. The core of the report is a PESTEL analysis, examining the political, economic, social, technological, environmental, and legal factors influencing Nike's operations. The political section covers government policies and international laws, while the economic analysis focuses on recession, revenue generation, and acquisitions. Social factors include brand consciousness, working conditions, and the rise of female consumers. Technological advancements and social media promotion are discussed in the technological section, while legal battles and labor issues are addressed under legal factors. The report then analyzes Nike's preparedness for changes, considering market alignment, product development, and the need for employee training. It also explores the company's ability to adapt to changing consumer trends and maintain its competitive edge. The analysis concludes by offering insights into Nike's potential strategies for sustained success in the dynamic global market.

RUNNING HEAD: NIKE BUSINESS ANALYSIS
Nike Company Analysis
Name of Student
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Author Note:

1NIKE BUSINESS ANALYSIS
Introduction:
Nike Inc is one of the most globally reputed supplier and manufacturer of sportswear and
equipments. A United State based company, Nike was founded in 1964 and the headquarter is at
Beaverton, Oregon. Nike is arguably the leading supplier of athletic shoes and apparels and the
world’s leading manufacturer of the sports equipments (Kreng and Wang 2013).
It was initially at the time of formation named as the Blue Ribbon Sports and officially
came to be known as Nike since 30th May 1970. The nomenclature of the company has been
done after the name of the Greek goddess of Victory, Nike. According to the Analysis of Forbes,
the brand value of the company is about 15.9 billion dollar until 2017 (Godwin, Kalapana and
Valli 2013). The brand is known widely by its Swoosh or the Nile tick logo and the famous
tagline “Just Do It”. The swoosh logo is considered to be the most reputable athletic sponsors of
the world.
On the rankings published by Fortune 500, the company ranks a position of 89. However,
though the company has emerged itself as the largest supplier in sports equipments, it has a
competitive market. With other established brands like Adidas, Puma, Reebok and other personal
brands possessed by the celebrities, Nike has to face a tough competition (SANUSI 2013). . The
company must focus more on the analysis of the external environment closely.
The report thus aims to conduct a PESTEL analysis of the company and understand
whether the political, economic, social, technological, environmental and legal factors are
suitable or unsuitable for the sustenance of the company. the report will further analyse the
possible factors that can demand changes in the organisation and operations of the company in

2NIKE BUSINESS ANALYSIS
order to sustain. It will also analyse the preparedness level of the organisation to tackle the
changes.
PESTEL ANALYSIS:
POLITICAL
1. Changing international
laws
2. Political unrest in Asian
countries
3. Favourable US
government policies
SOCIETAL
1. Brand consciousness of
the consumers
2. The rise in female
consumer
3. Conditions of the
factories
Change Environment
Vision
Strategy
Benefits
ECONOMIC
1. Economic recession
2. Revenue Generation
3. Acquisition and
Subsidiaries
TECHNOLOGICAL
1. Technological
innovations’
2. Not much active in
promotion through social
media.

3NIKE BUSINESS ANALYSIS
Political Factors:
Favourable Policies of the US Government:
The policies taken by the government immensely impacts the business especially those who have
a global expansion. The US government has always put its focus on developing the growth
oriented policies for the companies which helped them to grow internationally. The stable
governments, the regulations pertaining to the trades and the competitive tax arrangements of the
international trade by the Federal Reserve helps any company to grow effectively. since Nike is
recognised as one of the most environment friendly organisation, it receives a handsome amount
of benefits in the taxations (Ayoub 2015.).
Political Unrest in some of the Asian Countries:
The maximum number of the factories of Nike has been established in some of the emerging
economic countries of Asia that are developing at present. The main areas of Asia where the
factories has been set up are Vietnam, Thailand and Indonesia. The political unrest that are
emerging in Thailand since the last few years had been a major area of concern in for the
organisation of Nike. More than 35 companies are facing a huge uncertainty in the land of
Thailand (SANUSI 2013). The situation in Vietnam is equally gloomy. The protests, political
turmoils and the corruption of government in some of the areas of Indonesia and Vietnam have
disturbed the supply chain process of the Nike Inc.
Changes in the International Laws:
There has been a considerable amount of changes in the international laws due to the
rising threat of terrorism all over the world. Various countries have sought for the imposition of
new rules and policies as precautionary measures in order to counter the growing threats of the

4NIKE BUSINESS ANALYSIS
illegal occupations within the border. This has caused the increase in tariffs in some of the most
crucial countries that are the main target market for Nike. United States, the headquarter of the
Nike company is one of the biggest target for the terrorist activities and thus, they remain under
strict constraints. At present, due to the changing laws, Nike is unable to produce their products
to the Iranian Market to the Iranian football team ((PANDEY 2017).
Economic Factors:
Economic Recession:
The economic threat is the largest threat to the company of Nike Inc. the recession that
has presently affected US and Asia, is negatively impacting both the manufacturing and the
marketing of the groups. The increased material and the labour cost is a matter of concern for the
company.
Revenue Generation:
Nike has to operate in a strict competitive market and thus, in order to provide some
competitive advantage and in order to generate more revenue, it has to maintain a lower level of
the labour cost since the increase affects the generation of revenue negatively ((Singh, Jindal and
Samim 2013).
Acquisition and Subsidiaries:
The company has the advantageous side as it has already acquired a number of
companies and subsidiaries that operates as a domain of apparel and footwear industry. the
purchasing of the companies has strengthened their base in the world. Nike owns Converse,
Brand Jordan and SPARQ (Godwin, Kalapana and Valli 2013).

5NIKE BUSINESS ANALYSIS
Social Factors:
Brand Consciousness of the consumers:
The consumers in the present era has been brand conscious and quality conscious. They
do not mind much on spending for the quality products. Nike inc. is generally considered to be
the symbol of status and quality. This has positively affected the company to grow. Nike had
been the first company that has introduced innovation in the footwear industry. the perfect blend
of style and technology has led to the present success of the company.
Working Conditions of the Factories:
The company has often been accused of neglecting the poor condition of the workers in
the factories particularly in the Asian countries. It has been argued that the working conditions in
these areas are hazardous for the workers (Peretti and Micheletti 2014). The initial denial by the
company to admit this or taking any responsibilities worsened the situations further.
Increase in the Female Consumers:
The main strategy of the company in recent years has been to target the growing female
consumers. They are at present, designing the shoes and sneakers for females. It includes the
expanded, unisex sizes on some of their classic Jordan styles and the hyped designer
collaborations (PANDEY 2017).
Technological Factors:
Technological Innovations:
The innovations in the field of technology has given the brand a considerable mount of
competitive advantage. The company can focus a lot on the research and development progress
of their product and aim at making them more comfortable and user friendly (Wagenaar 2017).

6NIKE BUSINESS ANALYSIS
Promotion through Social Media:
In the present era, social media is one of the crucial factor for connecting the companies with
their potential customers. Nike at present is evolving in their handling of the social media
platforms in the effective building of their brand and strategy.
Legal Factors:
Legal Battles with other Companies:
The legal battle between Nike and other companies like Adidas and Puma is a matter that
is known to all. Nike has accused Adidas and made lawsuit against them for taking away the
property secrets and the marketing plans of the formers.
Child Labour and Minimum Wage Conflict:
The company has been accused of the illegal usage of the child labour at its factories that
are located in Pakistan and Cambodia. They were used for preparing the soccer balls. It became a
global issue of concern and glare. In Indonesia, the company was accused of giving lower price
than the standard segment (Nwakanma, Ude and Unachukwu2015).
Organisation’s Preparedness for the changes:
From the Pestle analysis, it has been found out that the Nike company has some
environmental advantages as well as disadvantages that affects the business and its operations.
The company is a globally reputed one and is working in a market that is highly concentrated.
Thus, in order to remain relevant and make considerable profit, the company needs to consider
some changes in their practices and marketing strategies. Change in an organisation is often
viewed as a dreadful factor for the employees as change means a shift from what has been

7NIKE BUSINESS ANALYSIS
happening for long and with what people are accustomed for a long time. An organisation have
to primarily make its employees and stakeholders prepare for change and then initiate the
change. According to Kurt Lewin, the normalisation of change and making the employees a
positive mindset towards change largely depends on the leader of the company. they must first
unfreeze the team. This process refers to the initiation of change and making the employees
aware that a change is coming to take place. The next step includes the actual change in
procedures or operations. The final stage is again the freezing of the change process until a new
change emerges.
In the changing pattern of global market and the trends of consumers, Nike needs to
consider the factors of change. The changes that are likely to approach to the company based on
the changed environment are:
1. Changing of their market alignment:
It has bee evident from the economic environment analysis of the company that it is
lagging behind in the proper generation of revenues in the market. This means that other
established companies will take up the opportunity and emerge as the leading brands (Jacobs
2015). Moreover, in order to sustain and make the organisation a profitable one, generation of
revenue is crucial. The lagging economic condition of the company owing to the increased
production cost and the economic turmoil in various countries can affect the alignment policy of
the company. The initial policy of the company was to develop a flagship store. However, at
present, it may have to change its policies and look at the potentials in the low price markets.
This change may significantly affect the organisation and the employees as well. the
employees of the company have a sense of pride and privilege of working in the company. Nike

8NIKE BUSINESS ANALYSIS
holds a symbol of status. The catering to the lower price segments may dilute the company’s
status which may be resisted by the employees (Singh, Jindal and Samim 2013). Moreover, the
changes in policies regarding the ability of customisation of shoes by the customers will require
extra competencies from the employees and workers. Not all the workers may have the readiness
or competencies to cope up with the change. Thus, the company needs to device training and
development programs and render proper leaderships for the motivation of the employees.
Development of the products:
As pointed out earlier, Nike has a number of competitors in the industry. Moreover, in the
era of globalisation, the customers have generated a shifting trend in their choices. The company
always has to remain updated about the recent trends in the market in order to cope up with the
market demand (Zollenkop 2015). A company that cannot meet the demand of the current
market often tends to become outdated. This factor greatly impacts the change in Nike. Nike is a
brand that sustains on development and the fashion sense that they have. Fashion is changing
regularly and thus they need to diversify their product and bring innovativeness not only in
product but also in the marketing strategy.
In the development of the products, the company has made itself significantly prepared.
Previously they had teamed up with Apple for the launch of Nike+, a digital sports kit that has a
sensor attached to the running shoes and a wireless receiver that connects to the ipod. Thus, the
company has developed their sustenance strategies by teaming up with other companies or
making innovative product customisation by themselves (SHTAL, BURIAK, AMIRBEKULY,
UKUBASSOVA, KASKIN and TOIBOLDINOVA 2018). However, these activities of change
need to be initiated concerning the competencies of the employees.

9NIKE BUSINESS ANALYSIS
Social Media Platform:
In today’s world the usage of Social media as the tool of promotion and communicating
with the customer is of utmost necessity, particularly to reach to the Gen X customer. Nike at
present is lagging behind in their usage of social media platforms. The changing trends of people
in remaining active in social media like facbook or twitter and the trend of other companies to
keep their customers updated and interact with them using social media may largely impact the
operation of Nike.

10NIKE BUSINESS ANALYSIS
Reference List:
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and TOIBOLDINOVA, Z.G., 2018. Methods of analysis of the external environment of business
activities. Revista ESPACIOS, 39(12).
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In Operations Excellence (pp. 9-23). Palgrave Macmillan, London.

11NIKE BUSINESS ANALYSIS
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SANUSI, K.A., 2013. DEPARTMENT OF BUSINESS ADMINISTRATION FACULTY OF
MANAGEMENT AND SOCIAL SCIENCES CARITAS UNIVERSITY AMORJI-NIKE
ENUGU.