pestle analysis of nike macro environmental factors

8/19/2019 PESTLE Analysis of Nike Macro Environmental Factors

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PESTLE analysis of Nike macroenvironmental factorsFor this assignment, I have researched the concepts by studying many books.

The definitions, and concepts as well as the frame works have been studied inthis way. To be able to practically apply the information I gained on variousorganizations, I have studied few case studies as well. Each question waschosen after etensive research and learning. !efore i finalized any question Imade sure i had full knowledge to deal with the question and the chosenorganization and i was confident that i will be able to cater its need better thanthe other questions.

For an organization of your choice conduct a

PESTLE analysis. For each environmental factor you need to identify and discuss any potential Himplications."ike is one such name, which is familiar to everyone worldwide. "ike designsinclude athletic footwear, equipments, apparel, and accessories. The mainheadquarters of the company are located in the #nited $tates, %sia &acific,and Europe '(oshi, )**+. %mong its )*, *** retailers some are "ike stores,"ike factory stores, -ole aan stores, "ikeTowns, and also the websites,which sell off "ike/s various products. "ike is one of the brands which is verywell known and well established at the global level. The brand carries a brandequity which is unknown to many other brands '-lancy, et. al., )***. The bestthing about "ike is that it is established brand in more than one countries. Inany country that it operates, it has seen improving sales and has done well.This is not without any effort. "ike has worked hard not only for this imagemaintenance but also towards achieving a versatile and impressive productrange.In order to conduct a &E$T0E analysis on an organization like "ike, youwould have to have a look at the organization/s business strategies fare interms of the macro environmental level.

PESTLE !nalysis of NikeThe focus should be on the macro environmental factors of "ike, as it is aninternational organization, so consists of political, economics, society, andtechnology.

Political !nalysisIt is the responsibility of government to create such economic policies, whichwill have a great effect on the growth of business. In this contet, "ike, has


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been aided greatly by the #$ policies, hence providing them with theopportunity to modernize their products '-ooter, et. al., 1233. %nd thissupport by the #$ government and also low interest rates, the internationalcompetitiveness of the ta system and stable currency conditions, help a lot inthe formation of the foundation, which might have been sensitive to the growthof the "ike.

Economic !nalysis0ike for many other organizations as well companies, the biggest threateconomically would be the economic recession. The recession always haveadverse effects on the growth and advancement of "ike. %s it is known thatthe #$ economy is facing a huge downturn, so in this contet the purchase bythe consumers are also decreasing down '4eller, )**). !esides #$, %sia/seconomies downfall too has its effects on the "ike, as many of its productsare being manufactures in the %sia as well. %nd consequently the voices of

labor work and martial/s are also increasing rapidly.Society !nalysis$ince people are getting health conscious day by day, so I order to remain fit,many of them 5oin the fitness clubs. %nd 5oining fitness clubs mean moredemand of the "ike products like shoes, etc. "ike has always been the firstchoice of people when it comes to buy something sport6fitness related. 7n theother hand "ike has failed to address the problems like that of the condition of labor and factory at different locations of the production in %sia '-lancy, et. al.,)***. This has its negative effects on the "ike ad its sale.

Technology !nalysis"ike very efficiently applies all the marketing and technology tactics. It, mainlyapplies, marketing information systems to the economics of innovation,differentiation, segmentation etc.$o, in short with all these, "ike has been able to maintain its name in themarket and it/s positing as well and works effectively on its production andmarketing to boost up its sale.

Legal !nalysis!eing a multinational, "ike has always maintained the business ethics. It hasalways paid all due importance to remaining environment friendly. 0egal

issues have been handled by "ike as per the surrounding they have beenoperating in. 8henever any company enters a new country, it has to worryabout the eisting laws and practices. $ame is true for "ike. 8henever "ikehas entered a new region or country, the local trade and other laws havemarked an impact over the way things are done at "ike. "ike however hasalways believed in staying away from problems. Every time they have entereda new country, they have done so after checking the local laws in detail. If in


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case the regional laws are totally against what "ike can offer, they have optedto stay out of trouble. For eample, the government policies with regard toforeign investment and franchise business are different in the developed worldand the under developed world. "ike has always paid attention to this issue.In case the government is too friendly or too strict with them, they havepreferred to take one step at a time.

Environmental !nalysisThe study of environment not only includes our overall environment of theearth but also the micro and macro environment surrounding a business. "ikehas proved itself responsible in all three cases. %s far as the globalenvironment is concerned, "ike is I$7 certified from global environment,pollution and carbon foot prints tracing point of view. "ike is a strong believerof green environment and as per requirement they have brought changes inthe way things work and the processes to ensure that environmental factor

has been taken care of. The ob5ectives behind them are fulfilling customer/sepectations, contributing in creating an environmental friendly atmosphere,motivational boost in employees and being on top of legislation. % positiveattitude has been indicated in a study towards social and environmentalresponsibility on part of companies around the world. "ike has proved it timeand again that it is a responsible organization.

For an industry of your choice conduct a strategicanalysis "y using Porter#s $Five Forces !nalysis#model. %ou need to identify and discuss the likely

H issues arising for organisations operating &ithin this industry.9ichael &orter offered a framework to the world of business that models anindustry as being affected by the five different forces. "ot 5ust the constructioncompanies but any company can use the five forced of &orter to develop abetter and more firm competitive edge over its competition and rivals in themarket and can use this to better understand the industry contet in which thecompany does business '&orter, 1223. Their strategic ob5ective is to developmarket sectors and target them individually. The eventual ob5ective is to use

organic epansion properly and then target even more carefully. 9oreover,another ob5ective of the same move is to make sure that a long termshareholder value develops in the partnership with the suppliers, communityand also with the employees. The company has successfully targeted pro5ectsand target market in countries other than the home country. The five forces of&orter for a construction company include:

ivalry


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plays its role, but also the power of the buyer to decide in favor of or againstthe firms dealing in this pro5ect.

Supplier Po&er % construction company needs a lot of raw materials = labor, components, and

other supplies which are not very easily available. They also have to find themost suitable suppliers who are able to provide them the right things, at theright cost on the right time. In case of the construction company there will be alot of raw materials needed and the company might need several suppliers indifferent countries since its global and working overseas too '9asi, et. al.,122+. $o, naturally, 5ust like the buyers, the suppliers also have a power inthis case. The construction industry for eample faces the impact of this power frequently. To keep the supply of required goods regular, the constructioncompanies have to stay in close collaboration with the suppliers.

'arriers or threat to Entry "ot only is there a threat from the current competition, but there/s also a threatthat new entrants might enter the market and concur a significant marketshare. This is called the threat of new entrants or the barriers to entry in theporter/s five forces. 8hen entering, the firms have to go through certain legaland financial issues and similarly leaving the market isn/t very easy either'4otler, et. al., )**>. In case of a construction company, the barriers to entryand the barriers to eit are both high because the cost involved in high andthere is a huge risk involved. It is important for any company in theconstruction industry or any other industry to find the legally correct ways toavoid such barriers.

For an organisation of your choice conduct astakeholder analysis. %ou need to identify thestakeholders in your chosen organisation( tocomment on their po&er to influence decisionsand to e)plain ho& these decisions may affect theH function.$take holders are the people who have direct stakes in an organization. Theyare in other words directly affected by the way an organization behaves in.The stake holders are not only the people who are financially related to theorganization in one way or the other. $take holders also include people whoare affected by the way an organization works and behaves in general. Thechosen organization in this case would be -arillion -onstruction -ompany.-arillion is a global construction company that comes under the -arilliongroup which was established in (uly 1222. The -arillion ?roup carved a nichefor themselves back in 1222 and are doing great ever since then. It was


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formed by the demerger of Tarmac. Tarmac is a known name as it was formedin 12*@ and has operated successfully. -arillion is continuing the samelegacy. They have been in the construction business since almost )* yearsnow and are successful at eecuting the -ivil -onstruction pro5ects related to9anpower Aeployment !asis and #nit ;ate !asis. This multinationalconstruction company has been linked to the construction of famous pro5ectsand ventures which include some important federal pro5ects, traditionalstructures, commercial and institutional buildings, development centers andmany more significant pro5ects. The company headquarters are howeverlocated in 8est midlands, #4 and it is listed in the 0ondon stock echange aswell."ot only is -arillion a resourceful construction company but also one that hasvery vast and etensive knowledge along with the eperience of the foundersof the company who have been in this business since ages. "ot only are thefounders and eperience and possess great knowledge but the entireworkforce is immensely skilled and is eperienced tooB The workforce at-arillion is committed to completing all their pro5ects and ventures within thetime they have given. In construction industry, time is everything because ifyou don/t complete on time, a competitor will do that and take away thebusiness 'Iriye, )**). -arillion makes sure that every pro5ect they undertakeis completed on time without compromising on quality issues or mattersrelated to safety and environment.

%lso, like every company has an area of epertise, -arillion group has itsspecialty too. It has gained epertise in large constructions and eecuting

large scale pro5ects and managing them. -arillion has associations with othermultinational firms overseas too and it handles pro5ects not 5ust in one areabut eecutes large scale pro5ects overseas too '4enneth, et. al., )***. %ndinterestingly, they complete all their international and overseas pro5ects in timetoo, which speaks a lot about their backing, resources and workforce.-arillion ?roup has been an important part of the ?lobal -onstruction$cenario right the beginning of the company itself. In its first decade afterinception, the company achieved a great reputation which has kept spreadingand becoming even better since then and spread across the 9iddle Easternregion viz, Iraq C 4uwait.

The second decade saw -arillion ?roup epanding its operations in otherregions like ;ussian Federation, "orth %frica and the -aribbean. -arillion wasselected as the sub=contractor on a particular labor rate for some of the mostimportant and precious pro5ects ever done in -anada. -arillion ?roupassociated with other internationally reputed companies during theconstruction of the aforementioned pro5ects. ?rand 9osque in 7man, ;ailwaytracks renewal in !ritain, Das 9arina otel in %bu Ahabi and ueen %leandra


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ospital in &ortsmouth are some of the important pro5ects recently finished bythis construction company. The company at present operates in divisionswhich include: !uilding, Infra structure, International and !usiness services'4eller, )**).-urrently, in its third decade since its inception and they are constantlyepanding ever since. They are now epanding towards the side of ;omania,#%E, and -aribbean Islands including Trinidad and Tobago. %fter successfullyeecuting pro5ects overseas, -arillion ?roup has been able to create a pool of eperienced and specialized workforce with great epertise and proficiency ineecution of the particular 5obs given to them with perfection.Furthermore, -arillion ?roup has picked up some very prestigious andsignificant pro5ects in !ritain itself, which include the construction and renewalof railway lines in contacts with "etwork ;ail.

%ny organization is not alone in the environment it works in. There are otherorganizations working in the same environment. There are people who areworking for this organization. There are suppliers and distributors and the staff directly working for the firm '-ooter, et. al., 1233. Then, there are the buyers,the customers. For -arillion, the stake holders are the owners of the company,the staff and workers, the people who will use the product they make, theinvestors, the creditors and the managers and board of directors. %ll of thesehave a direct impact over decision making. For eample, the customerfeedback is the backbone for not only this company but for any other companytoo. %ny decision is taken in the light of epected or already receivedcustomer feedback '&atterson, )**3. The impact of owners, board of

directors, creditors and investors is also known as they have their financialinterest and in case the company fails to offer profit, they can think of gettingtheir money out. The management and workers have lesser control overdecision making. 9anagers are usually eperts of their field thus they controlthe situation in some cases. %ny organization however which plans for longterm success has to be careful in this regard. If any of the stake holders thinkthat they have been totally ignored, this can be bad for the products thecompany tries to sell.

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pestle analysis of nike macro environmental factors

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