EXTERNAL
ENVIRONMENT
1
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Contents
Introduction to Nike............................................................................2
PESTEL............................................................................................... 4
C1 Nike External Environment....................................................................5
C2 The Internal Environment..............................................................14
Corporate culture of Nike.........................................................................14
Two most important factors that have a huge impact on the business.....19
Corporate social responsibility (CSR)/ Ethics..............................................20
Corporate social responsibility Environment..............................................20
Corporate social responsibility effective to customers..............................21
Corporate social responsibility of employees.............................................21
Corporate social responsibility Effective to investors.................................21
C3: Competitive environment...................................................................25
C4: Situational analysis.....................................................................34
Nike SWOT analysis..................................................................................34
Nike porter's five forces...........................................................................39
5Cs analysis...................................................................................... 42
Nike’s 5cs................................................................................................43
Learning aim D: D2............................................................................ 54
D3: Pricing and Output......................................................................67
Introduction to Nike
Nike, Inc. is an American multinational corporation that is engaged in the design,
development, manufacturing, worldwide marketing and sales of
Benecia Rodrigues
footwear, apparel, equipment, accessories and services. The
Benecia Rodrigues company is headquartered near Beaverton, Oregon, United
States. The founders of Nike are Bill Bowerman and Phil Knight. It was founded on
January 25, 1964.1
1
https://en.m.wikipedia.org/wiki/Nike,_Inc
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The Scope of the business activities is, Nike is an international company. 2 Their
shops and website are accessible all over the globe giving people the opportunity
of shopping in Nike; the global reach would also create more awareness. This
could build Nike a good identity and more people would shop at Nike as it
becomes popular. This would increase their purchase volume which would
therefore increase their revenue and profit.
The Nike brand is valued at £24.05 billion and contains 73,100 employees
(2018).3 This means Nike has a huge variety of departments meaning there will
be jobs for many people, depending on their skills and knowledge.
Nike is a secondary and tertiary sector.4 Nike is a secondary sector because it
involves manufacturing e.g. Shoes, clothes and equipment. Nike relies on the
secondary sector in producing their goods. Their products such as shoes are
made in huge factories by workers. Nike is also a tertiary sector because the
products are sold online and in store and delivered which makes the business
more successful due to the easy access. People can purchase items anytime
online as the system works 24/7. In the tertiary sector the products are
distributed around the world and driven to stores such as JD, FOOT LOCKER and
more which then are purchased by customers.
Nike produces good quality shoes, clothes and equipment. Nike also provide
services such as MENSBasketballLifestyleRunningFootballTraining &
GymSoccerBasketballSkateboarding, WOMENSLifestyleRunningTraining &
GymBasketballSoccerSoftballSkateboarding, RISK-FREE
PRODUCT TRIAL, EXPERT FITTING, TRIAL RUN and NIKE.COM ASSIST. 5
Nike falls in the sports, clothing and equipment industry therefore they have
intense competitions and many competitors. Competitors such as New Balance,
Skechers, ASICS, Reebok, Adidas, Allbirds, Puma, Rothy's, FILA, Steve Madden
and Under Armour.
Nike business contains 73,100 employees. There are different departments that
the employees work in such as cashiers, finance, management, etc.
2
https://www.ukessays.com/essays/marketing/international-business-management-report-Nike-marketing-essay.php
3
https://www.businessinsider.com/Nike-most-valuable-american-fashion-brands-2018-6?r=US&IR=T
4
https://uk.answers.yahoo.com/question/index?qid=20081029123101AANIA01
5
https://www.Nike.com/us/en_us/c/cities/chicago/services
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Nike uses materials such as cotton, rubber, polyester, Eva form and leather to
making clothing, shoes and equipment. The man made items used for production
are fabric, sewing machines, and computers.
Nike has had success as a result of collaborating with
other companies within the sports and fitness
industry. Nike has collaborations with Jordan’s, Supreme, Jun Takahashi &
Undercover, Errolson Hugh & Acronym, Kanye West, Off-White, Drake and Apple.
PESTEL
PESTEL factors is an acronym that stands for Political, Economic, Social,
Technological, Environmental and Legal factors.
Political factors determine the extent to which government and government
policy may impact an organization or a specific industry. This would include
political policy and stability as well as trade, fiscal and taxation policies.
Economic factors impact on the economy and its performance, which in turn
directly impacts on the organization and its profitability. Factors include interest
rates, employment or unemployment rates, raw material costs and foreign
exchange rates.
Social factors focus on the social environment and identify emerging trends. This
helps a marketer to further understand their customers’ needs and wants. Factors
include changing family demographics, education levels, cultural trends, attitude
changes and changes in lifestyles.
Technological factors consider the rate of technological innovation and
development that could affect a market or industry. Factors could include
changes in digital or mobile technology, automation, research and development.
There is often a tendency to focus on developments only in digital technology,
but consideration must also be given to new methods of distribution,
manufacturing and also logistics.
Environmental factors relate to the influence of the surrounding environment
and the impact of ecological aspects. With the rise in importance of CSR
(Corporate Sustainability Responsibility), this element is becoming more
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important. Factors include climate, recycling procedures, carbon footprint, waste
disposal and sustainability
Legal factors are external factors which refer to how the law affects the way
businesses operate and
customers behave. Product transportation, profit margins, and viability of certain
markets are all
examples of things which may be influenced by legal factors.
C1 Nike External Environment
The government of any country must enforce economic policies that will benefit
the growth of industries and businesses in that particular country. The US policies
have enabled Nike to grow and market its products. The support accorded to Nike
by the US government, particularly in the general macroeconomic stability, low-
interest rates, stable currency conditions and the international competitiveness of
the tax system, form the foundation critical to Nike’s growth. Nike’s main
production facilities lie in the Asian countries where political unrest prevails. The
rise and fall of governments’ results in change in policies relating to tariffs on
import and export, foreign direct investment, etc. This political unrest in the
production countries may affect Nike. There is also the case of employing under
aged workforce in the factories located in the Asian countries.6
One political factor affecting Nike is Tax policy. Tax policy is the choice by a
government as to what taxes to levy, in what amounts, and on whom is to be
paid. The stability of a political system can affect the appeal of a particular local
market. Nike pay corporation tax to the government in order to run the business.
Due to this Nike have been able to manufacture and sell their goods. The £3.35
billion company Nike would owe on its £9.96 billion in offshore profits translates
to a U.S. tax rate of 33.6% meaning it has only paid foreign taxes on these profits
at a rate of 1.4%7. Nike benefits with tax policy as paying tax would allow them to
expand free trade policies and also receive government support leading the
business to reach all over the globe and to be well-known, creating more
awareness which would benefit Nike business as this would make them receive
more customers. As Nike has to pay less tax this will lead to less outflows and
more money maintained within the business. Therefore, Nike will have more
money to finance their business and improve the clothing, shoes, and equipment
quality which would satisfy customer’s needs.
6
https://www.ukessays.com/essays/marketing/analysing-the-market-environment-for-Nike-marketing-essay.php
7
https://itep.org/fact-sheet-Nike-and-tax-avoidance/
