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, Nikeserves

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, well be discussing
Nikes 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 dont normally see. Most of todays 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, Nikes 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.
Nikes 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 its 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 were
doing the two are separated. There arent many legal variables
which affect Nike, but we havent forgotten about the elephant in
the room:
It shouldnt surprise you to hear that, like most massive
corporations, Nike also dodges substantial amounts of tax [3]. In
recent years, there hasnt been too much of a crackdown on
this, but its 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:
Nikes mass production factories are, without a doubt, harming
the environment. Not only do they release plenty of aerial
pollution like most factories, but Nikes 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.

Thats 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.
Nike Inc. grows partly based on external conditions. These conditions are outlined in this
PESTEL/PESTLE Analysis of the company. The PESTEL/PESTLE Analysis model identifies the
external factors that present opportunities and threats in the remote or macro-environment. In
the case of Nike Inc., the PESTEL/PESTLE Analysis enumerates such external factors that
influence the companys strategic decision-making processes. As one of the major firms in the
global sports shoes, apparel and equipment market, Nike Inc. must address these external
factors to ensure business dominance in the industry, especially when considering the presence
of aggressive competitors like Adidas.

A PESTEL/PESTLE Analysis of Nike Inc. identifies key issues that the company
must include in its strategic formulation. To maintain its position in the
athletic shoes market, Nike Inc., must address the opportunities and threats
based on the external factors that shape the conditions of its remote or
macro-environment.

Political Factors Affecting Nikes Business

Nikes sports shoe business is subject to the effects of the political landscape. This
component of the PESTEL/PESTLE Analysis model deals with governmental influence
on the remote or macro-environment of businesses. The following political external
factors determine some of Nikes strategies:
1.
2.
3.

Stable political climate in most major markets (opportunity)

Expanding free trade policies (opportunity)
Improving government support for infrastructure (opportunity)

Stable political conditions in most major markets present opportunities for Nike to grow
its business in these areas. Also, expanding free trade policies facilitate better market
penetration overseas. Moreover, improving government support for infrastructure,
especially in developing countries, gives Nike more opportunities to expand its
operations in these markets. Based on the political external factors in this component of

the PESTEL/PESTLE Analysis, Nike Inc. experiences opportunities to improve its

market presence and global expansion in the sports footwear, apparel and equipment
market.
Economic Factors Important to Nike Inc.

Nikes business performance depends on the state of economies where it sells its
athletic footwear, equipment and apparel. This component of the PESTEL/PESTLE
Analysis model identifies the economic concerns that affect the remote or macroenvironment of the business. The following economic external factors are significant in
determining Nikes performance:
1.
2.
3.

Economic stability of developed markets (opportunity)

Rapid growth of developing markets (opportunity & threat)
Slowdown of the Chinese economy (threat)

Developed markets like the United States are relatively stable, thereby proving Nike Inc.
with the opportunity to continue its slow but stable growth in these countries. The
company also has opportunities to rapidly grow by increasing its operations in highgrowth developing countries. However, the rapid growth of developing markets also
threatens Nike by increasing labor costs in the companys supply chain and production
facilities. In addition, the slowdown of the Chinese economy threatens Nikes
performance, which is now significantly dependent on the Chinese market for sports
shoes, apparel and equipment. The economic external factors in this component of the
PESTEL/PESTLE Analysis show that Nike Inc. must emphasize global expansion
strategies while devising new ways to capture growth in developing countries.
Social/Sociocultural Factors Influencing Nikes Business Environment

Social issues impact the attractiveness of Nike athletic shoes, apparel and equipment.
This component of the PESTEL/PESTLE Analysis model deals with the effects of social
conditions on the firms remote or macro-environment. In Nikes case, the following
sociocultural external factors are most significant:
1.
2.
3.

Increasing individual wealth in developing countries (opportunity)

Increasing emphasis on product safety (opportunity)
Improving positive attitudes about leisure (opportunity)

In developing countries, Nike has opportunities to tap consumers with increasing

individual wealth. Also, the company has opportunities to develop safer products and
use marketing campaigns that highlight the safety of its sports shoes, equipment and
apparel. Nike can also adopt new product development strategies to address needs for
products for leisure activities. Based on the external factors in this component of the
PESTEL/PESTLE Analysis, Nike Inc. has considerable opportunities for product
development and business growth.

Technological Factors in Nikes Business

Nikes business changes according to technologies available for business processes

and athletic footwear, apparel, and equipment. This component of the PESTEL/PESTLE
Analysis model identifies the technological conditions that lead to significant change in
the remote or macro-environment of companies. The following technological external
factors affect Nike Inc.:
1.
2.
3.

Increasing R&D investment among firms (threat)

Rapid technological obsolescence (opportunity & threat)
Widespread use of mobile technology (opportunity)

The increasing R&D investment among firms threatens Nike, as these competing firms
aim to develop more technologically advanced sports shoes, equipment and apparel.
Rapid technological obsolescence also threatens Nike by putting pressure on the
company to increase its product development efforts. Nonetheless, this external factor
provides opportunities for Nike to integrate advanced technologies in its products. In
relation, the company has opportunities to integrate mobile technologies in its products
to capture consumers who frequently use mobile technologies, such as mobile apps
and online tools. The external factors in this component of the PESTEL/PESTLE
Analysis show that Nike faces considerable threats as well as opportunities based on
new and changing technologies.
Ecological/Environmental Factors that Impact Nike Inc.

Ecological issues influence Nikes remote or macro-environment. This component of the

PESTEL/PESTLE Analysis model deals with the impact of ecological concerns on
business performance. In the case of Nike and its sports shoes, apparel and equipment,
the following ecological external factors are notable:
1.
2.
3.

Expanding environmental law (opportunity)

Climate change (opportunity)
Increasing sustainability strategies among firms (threat & opportunity)

Expanding environmental law creates opportunities for Nike to improve its

environmental and sustainability programs, which are currently recognized as among
the best in the industry. The company also has the opportunity to use these programs to
address climate change, which affects supply chains and the appropriateness of Nike
sports shoes and apparel in certain regions. The increasing sustainability strategies of
firms threaten Nike by imposing more pressure for increased sustainability efforts
throughout the industry. Nonetheless, this external factor provides the opportunity for
Nike to further improve its sustainability standing. This component of the
PESTEL/PESTLE Analysis indicates Nikes opportunities to improve the environmental
impact of its business.

Legal Factors in Nikes Business

Legal terms influence businesses like Nike. This component of the PESTEL/PESTLE
Analysis model considers the effects of laws or regulations on the remote or macroenvironment of businesses. In Nikes case, the following legal external factors are
important in the sports shoes, apparel and equipment business:
1.
2.
3.

Improving employment law in developing countries (threat & opportunity)

Expanding consumer law in developing countries (opportunity)
Expanding health and safety regulations (opportunity)

Improving employment law in developing countries is a threat because it leads to an

increase in labor costs in areas where many of Nikes production facilities are located.
However, this external factor also provides an opportunity for the company to apply
higher standards for labor and employment. In addition, Nike has the opportunity to
improve its brand image by highlighting customer satisfaction in marketing its sports
shoes, apparel and equipment. Similarly, the company has opportunities to improve its
health and safety measures to address expanding health and safety regulations. Based
on this component of the PESTEL/PESTLE Analysis, Nike Inc. has major opportunities
to improve its brand image and corporate reputation.
Nikes PESTEL/PESTLE Analysis Recommendations

Nike Inc. must address a variety of opportunities shown in this PESTEL/PESTLE

Analysis. It is recommended that Nike must pursue a more aggressive approach to
international expansion based on free trade policies, with focus on high-growth
developing countries. This action can help address the potential decline of Nikes
performance in the Chinese market. Another recommendation is for the company to
invest more in research and development (R&D) to tap potential demand for sports
shoes, apparel and equipment integrated with advanced computing technologies. The
external factors in this PESTEL/PESTLE Analysis also highlight the importance of
improving Nikes sustainability and employment practices. These actions address
regulatory and sociocultural concerns and, consequently, improve Nikes brand image
and corporate image

PESTLE analysis of Nike

Published: 23, March 2015

Nike is a global brand specialising in the design and manufacture of athletic

apparel, footwear, accessories and equipment; it is headquartered in the United
States, Europe, and the Asia Pacific Region (Whitehead, 2012). Its products are

available through over 20,000 retail outlets, including those in its own footfall
outlets, e.g. Nike Factory stores (Whitehead, 2012). This study considers the
contemporary business environment ofNike using a PESTLE approach, paying
particular attention to any human resources management (HRM) issues that
may arise under each heading. Overall, it is argued here that Nike has attempted
to address various business and social challenges by harmonising its value
proposition to Consumers, shareholders, business partners, employees, and
the community. (Ferrell et al. 2009, p.417).

Political
In the estimation of some observers, Nike has benefited considerably from the
growth-orientated policies of the US government, which has maintained low
interest rates, currency exchange stability, and internationally competitive tax
arrangements (Whitehead, 2012). Nike has also benefited from cooperation with
government initiatives in terms of transparency in the global value chain; one
example of this lies in membership of the Clinton administrations 1997 Apparel
Industry Partnership (Wagner, 2009). As will be discussed further below, political
pressures have featured more negatively in concerns over Nikes employment
practices (Whitehead, 2012).

Economic
In common with all consumer-facing organisations, Nike faced challenging
trading conditions since the financial crises of 2008-9 and contingent economic
slowdown; this has applied in both Western markets (such as the US) and the
Asia-Pacific region (Whitehead, 2012). Conversely, Nike has used its established
brand equity to take advantage of growing consumer demand in emerging
economies (Whitehead, 2012). The corollary to this has been an expansion
of Nikes value chain in which it has also taken advantage of the lower wage
rates paid in those economies (Whitehead, 2012). Nike has defended the
contingent CSR critiques by arguing that it has provided employment in
otherwise underdeveloped economies, and paid the established local rate for
labour (Whitehead, 2012). In HRM terms, this implies a considerable divide

between the higher-value strategic and design function retained in the US, and
those in outsourced manufacturing (Davies, 2006).

Social/Societal
In the macro-economic sense, Nike (and its competitors in the sportswear
sector) are the beneficiaries of a growing societal preoccupation with health and
fitness (Davis, 1992). As Elliot and Percy (2007, p.52) indicate, Brands can also be
used to counter some of the threats to the self posed by post-modernity, such
as fragmentation, loss of meaning and loss of individuality. However, Nike also
faces continuing challenges arising from its CSR (corporate social responsibility)
position, chiefly related to the nature of its global value chain (Foster and
Harney, 2005). Nike was caught up in the ongoing debate around globalisation,
perceived by many pressure groups to be Increasing the inequalities of political
power and influence, as well as highlighting new dimensions of inequality
(Hurrell and Woods, 1999, p.1). From the 1990s onwards, Nikeadopted the
standard industry practice of outsourcing much of its skilled, semi-skilled and
unskilled manufacturing to emerging economies, including those in the Asia
Pacific region (Foster and Harney, 2005). Sweated labour (including that of
children) was allegedly being used in a manner that contravened both local and
international standards, as well as Nikes stated CSR position (Foster and Harney,
2005). Moreover, the corporations compliance with requirements regarding pay
and working conditions was brought under further scrutiny, when it emerged
that the relevant workplace and HR records were not being properly maintained
(Foster and Harney, 2005). In some circumstances, it was suggested that these
lapses were achieved with the connivance of local officials (Foster and Harney,
2005). To counter these allegations, Nikebegan to incorporate greater
transparency in its reporting, providing the locations of specific manufacturing
facilities (Carter, 2005). In 1993 it published its Memorandum of
Understanding, clarifying its expectations regarding the conduct of suppliers and
subcontractors (Hadjikhani et al., 2012). The point here is that Nikehas to avoid
being caught up in consumer boycotts, especially where these can be globally
popularised via the internet; as Goul Andersen and Tobiasen (2006, p.205) point
out, Within the framework of globalisation, political consumerism takes on a
particular significance, sometimes providing the only opportunity to influence

outcomes as trans-national companies are outside the regulatory powers of

national governments. In HRM terms, these kinds of lapses can also undermine
employee confidence in leadership regarding CSR issues (Schwartz et al., 2012).

Technology
In common with most consumer-facing corporations, Nike has been able to use
enhanced levels of digital metrics to analyse customer demand and revise its
segmentation accordingly (Myerson, 2007). In the optimum model, transaction
and supply chain event management are linked via SOAP (Simple Object Access
Protocol) and MPPS (Massively Parallel Processor System) systems (Myerson
2007). Meanwhile consumers will be able to make contact-less payments via
mobile phone platforms (Myerson, 2007). These processes may however
accelerate the speeding-up of the hollowing-out of the workforce, reducing the
amount of employment on offer (Davies, 2006).

Legal
Nike's growth strategies have relied on internationalisation and,
correspondingly, the corporation has to adapt rapidly to the legal and policy
frameworks in all of its trading areas (Legendre and Coderre, 2012). Countries
with a common law legislative framework (i.e. the United Kingdom and United
States tend to favour a less interventionist approach that supports the interests
of shareholders. Meanwhile, states which have code-orientated legal systems
(e.g. Germany, France and Spain), tend to acknowledge wider stakeholder
interests (Legendre and Coderre, 2012). However, Nike has still faced legal
difficulties in the course of its international expansion; following allegations of
sweated labour, it closed some factories in Pakistan and moved its operations to
Thailand and China (Grisini and Seppala 2010). However, the contingent
unemployment led to difficulties with the Pakistani authorities, as well as
criticism over the resulting unemployment (Grisini and Seppala 2010). As
the Asia-American Free Labour Institute (AAFLI) has argued, Nikes strategy is to pit
six factories against each other and have them compete for orders based on
who produces the cheapest shoe. The government doesnt protect the workers,

the union is complacent, and Nikelooks the other way (Hadjikhani et al., 2012,
p.23).
In 2003 Nike countered claims that it paid below the minimum wage in countries
such as Indonesia, stating that it had paid, on average, Double the minimum
wage as defined in countries where its products are produced under contract.
History shows that the best way out of povertyis through exports of light
manufactured goods that provide the base for more skilled production
(Jennings, 2012, p.156). Nike was subsequently sued under Californias Unfair
Competition and False Advertising laws, on the basis that its statements were
false (Jennings, 2012). Following initial defeat and later appeals to the California
Supreme Court, Nike settled privately with the plaintiff, prompting speculation
that it had done so to avoid further damaging revelations (Jennings, 2012).
Again, such crises can undermine the role that CSR has in harmonising the HRM
effort across the organisation (Schwartz et al., 2012).

Environmental
In formal terms at least, Nike maintains a positive position with regard to green
(i.e. environmental) issues, with ISO 14000-compliance presented as part of its
overall policy (Gallagher and Weinthal, 2012). Launching its initial sustainability
policy in the early 1990s, Nike appointed 100 sustainability champions to
oversee pilot projects in various aspects of its business, such as the reduction of
carbon emissions and elimination of waste (Holt et al., 2009, p.4). As Willard
(2002, p.80) explains, externalised costs, such as those arising from human
resources, Must be considered if the markets invisible hand is to reconcile the
basic conflict between making decisions based solely on short-term profit and
making decisions based on social and environmental responsibility. In HRM
terms, the involvement of employees in the operation aspects of environmental
policy is calculated to have a positive effect on both productivity, and the
psychological contract of staff (Schwartz et al., 2012).