Introduction
In this assignment I will explore,assessing and evaluating the effects of the changes in the
external,internal and competitive environments of nike.
The effect of the environment on a business
Background
Nike was found by University of Oregon track athlete Phil Knight and his coach, Bill
Bowerman in january 25 in 1964.The size of Nike is large due to In 2019, Nike operates at a
total of 1.152 thousand retail stores throughout the entire world as Nike distributes its
products to more than 160 countries and has employed 76.7 thousand Nike employees
worldwide.According to 2018 annual report, Nike generated about $36.4 billion in revenues
last year, and under $16 billion in gross profit which company increased revenue by 6% from
2017 and As of 2018, Nike was the most valuable global apparel brand with a brand value of
28 billion U.S. dollars. Nike also held the largest with a market share of 2.8 percent in 2017
Nike designs, develops, markets, and sells athletic footwear, apparel, equipment, and
accessories worldwide. The company offers Nike brand products in six categories including
running, NIKE basketball, the Jordan brand, football, training, and sportswear which Nike is
most known for and also is one of the biggest influencers in the clothing and footwear
industry as the company is worth approximately 32.4 billion U.S. dollars alone as nike also
owns big companies such as jordans which is also part of the same industry as nike but is
mostly promoted towards basketball as nike is more to football side and being active in
general.
The external environment
PESTLE analysis describes the factors that can or are affecting management and the
business which are separated into 6 categories which are
politics,economics,social,technology,legal and environmental and these factors affect a
company in future or present.
Politics would affect nike in many situations for example Most of today’s political changes
only affect how a company can produce their goods or how much profit they make for
example this may seem insignificant but Political factors decide the survivability of an
organisation which for Nike are policies of a company which The United States is Nike’s
home country which has fantastic policies for growth which are especially valuable to this
corporation. These include low-interest rates and well arranged international tax agreements
which means if the government decides to change the policies or not be in an arranged
, international tax agreement the cost o the product would be much higher due to them paying
more tax and nike wants to make profit not loss as their only solution would be to sell their
products at a much higher cost.
Moreover politics has influence on nikes imports and exports as if the country gets into
political conflict it would mean that nike cant export or import into the country which means if
nike has a lot of stores in for example uk nike would lose a lot of money due to not keeping
up with stocks in their stores because they can't import anything to help with anything due to
conflict of politics.
Finally another political factor is trade restrictions where if nike trades non licensed
merchandise it would restrict what they can sell and cant and if they do trade anyways they
would have to pay a big fine as i found that The European Commission has fined Nike €12.5
million for banning traders from selling licensed merchandise to other countries within the
EEA. This restriction concerned merchandising products of some of Europe's best known
football clubs and federations, for which Nike held the licence.
Economics factors affect nike also because nike sells a well-respected different range
product so they are less vulnerable to economic factors because whatever nike releases it is
praised and huge amount of people will buy it even if it doesn't look nice in general people
will say it is style which will give even more reasons to buy it and nike is massive company
that's why they don't have to worry about most economic factors because they have a lot of
money
However nike still has factors that could affect in bad ways for example if A market collapse
which mean bad news for Nike along with many other big brands such as jordans which nike
owns as Consumers may choose to switch to lower-end, cheaper products if this were to
occur because nike is pricey as if market collapses people will buy cheaper shoes than nike
because they in general cheaper than nike
Moreover Nike’s revenues are to some extent dependent on the low cost of labour in
Eastern countries such as india which This is changing though which might mean higher
Nike prices across the globe come with the development in Less Economically Developed
Countries With its massive finances Nike has the resources to chase after small emerging
markets in which they could sell products to and make even more money
finally there are negative social factors that can affect nike such as exchange rates because
nike sells their goods all over the world which means some of the currency is weak which
they are losing profit moreover the exchange rates could go down such as a pound could
now be less than a US dollar which shows how it could affect nike.
Social factors can affect nike because Public Relations has never been more relevant than
today because of social media as everyone is giving always their opinion on several good
and bad decisions on the buissnes for example on topic of sweatshops as nike uses alot and
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