A PESTLE Analysis of Nike

Nike, fully known as “Nike, Inc.”, is a US-based transnational corporation which provides trendy, functional sportswear across the globe. Having been founded in 1964, Nike serves to “bring inspiration and innovation to every athlete in the world.” [1]. Despite being one of the largest sport apparel and accessory companies in existence, Nike has to keep a high guard in its extremely competitive market. In this article, we’ll be discussing Nike’s standings and potential future through the lens of a PESTLE analysis, which looks at the Political, Economic, Social, Technological, Legal, and Environmental factors that affect an organization.

P is for Political

Political factors are especially important to the backend of a company — the part we don’t normally see. Most of today’s political changes only affect how a company can produce their goods or how much profit they make, for example. To us, this may seem insignificant, but Political factors decide the survivability of an organization. For Nike, some of these are:

The United States, Nike’s ‘home country’ so to speak, has fantastic policies for growth which are especially valuable to this corporation. These include low-interest rates and well arranged international tax agreements.

As a company that produces and sells physical goods, Nike is, however, always subject to changes in tax and manufacturing laws.

Various political conflicts can always make customs related processes difficult, or prevent imports and exports.

E is for Economic

Nike sells a well-respected medium range product, so they are less vulnerable to economic factors than others, but nevertheless here are some of the Economic variables:

A market collapse could mean bad news for Nike, along with many other big brands. Consumers may choose to switch to lower-end, cheaper products if this were to occur, or even just as a decent level of quality becomes easier to produce.

Nike’s revenues are to some extent dependent on the low cost of labour in Far Eastern countries. This is changing, though, which might mean higher Nike prices across the globe come with the development in Less Economically Developed Countries.

With its ‘deep pocket’ of finances, Nike has the resources to chase after small emerging markets in which they could sell products.

S is for Social

Public Relations has never been more relevant than today. A good social status means a lot for modern corporations, so it’s definitely worth considering these factors:

Worldwide increases in ‘health consciousness’ means that more and more individuals are moving towards better lifestyles. These people will undoubtedly buy plenty of sports apparel, something which would make Nike very happy.

On the other hand, Nike receives much criticism for its dubious production processes. In fact, the issue of Nike sweatshops is so prominent that it has warranted an entire Wikipedia article on the topic [2].

T is for Technological

Technology gives companies the ability to innovate in so many different ways. From interacting with customers to designing products, technology provides value to organizations just like Nike. Here are some of the Technological factors affecting it:

Social media allows things to blow up or whittle away faster than ever. Nike is doing well with using social media to build their brand, but it can be a double-edged sword if used incorrectly.

Nike also gets the opportunity to use valuable information based metrics thanks to technological advances, allowing for them to optimize targeting and production, and maximize revenue.

L is for Legal

Legal factors are sometimes grouped together with Political factors in ‘PEST’ analyses, but in a PESTLE analysis — which is what we’re doing — the two are separated. There aren’t many legal variables which affect Nike, but we haven’t forgotten about the elephant in the room:

It shouldn’t surprise you to hear that, like most massive corporations, Nike also dodges substantial amounts of tax [3]. In recent years, there hasn’t been too much of a crackdown on this, but it’s still valuable to consider.

Also, Nike occasionally meets legal repercussions for its shady marketing practices, which include false discounts [4].

E is for Environmental

Environmental issues are of ever-growing importance. Of course, there are only a few factors which affect Nike with regard to this, but they are worth stating:

Nike’s mass production factories are, without a doubt, harming the environment. Not only do they release plenty of aerial pollution like most factories, but Nike’s production centers occasionally go as far as directly polluting rivers [5].

However, Nike also shows promise of a change in their current practices, with a strong resolve to become more ‘eco’.

That’s a wrap for this PESTLE analysis of Nike. They may have a strong brand and healthy finances, but they need to pay careful attention to the morality of their practices and watch out for other growing, cheaper outlets. Do you know of any other factors which might be relevant to Nike? Be sure to leave them in a comment down below.

Image “Janoski” by Leo Hidalgo is licensed under CC BY 2.0

[1] http://help-en-us.nike.com/app/answers/detail/a_id/113/~/nike-mission-statement

[2] https://en.wikipedia.org/wiki/Nike_sweatshops

[3] http://www.marketwatch.com/story/heres-how-apple-nike-and-others-avoided-620-billion-in-taxes-2015-10-06

[4] http://koin.com/2016/04/19/nike-faces-5-million-class-action-lawsuit/

[5] http://phys.org/news/2011-07-nike-adidas-suppliers-polluting-china.html