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PESTEL Analysis of Nike | PESTEL Analysis | PESTEL Analysis Example | Digital Transformation

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let's take a look at the PESTEL analysis of Nike

Political : Nike has a strong dependance about the chinese regulation. Nike has a lot of factories in Asia so they need to be sure they have some good relationship with countries over there. Nike also need to adapt to the tax and regulations because taxes can ruin an entire business.

Economical : Because Nike is selling some product all around the world, they need to check currencies from dollar to different currencies. In time of economic crisis the purchasing power of consumer is reduce a lot. Nike is also dependent about some raw material like cotton.

Social: Customer priority change a lot across the world. They need to adapt quickly to new trends to be sure to be on the right track. People are more and concern about the brand image.

Technological: Nike invest a lot in R&D to be at the cutting edge of the technology. Nike also launched a new app to sell online product and it help them a lot to increase there sell around the world. With the arrival of AI, Nike also invest a lot in artificial intelligence to develop some new product and be more productive.

Environmental: Nowadays, the environmental factor are more and more taking into account. The environmental image of Nike need to be as much environmental friendly as possible. Nike is using biological product and recycle almost all of there trash.

Legal: Nike is working on a lot of different countries and cities, so they need to respect a lot of different local rules. They also need to respond to quality and security factors.

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If we look at Porter's 5 forces now

Competitive rivalty: There are some strong concurrence in the market. For example adidas, under armour are considered as direct competitors. Some new brands are also coming such as Gymshark. The fast fashion also need to be taken into account.

Bargaining power of suppliers: Nike is outsourcing a lot of there factories in Asia. Nike dispose of a strong negociation force around the world.

bargaining power of customers: Nike has different type of customer. The first target is the individual consumer. They have a strong brand loyalty. They are also selling to retailers and distributors such as foot locker.

Threat of new entrance: Nike has a very strong position inside of the market. They are the leader. To enter and concurrence them, it will be very difficult and will cost a lot due to different factors. R&D and distribution for example.

Threat of substitutes: A lot of alternatives can be choose instead of Nike such as Adidas, Puma that are sports brand. But also some second hand market that are re selling some Nike product.

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Non.School Accelerated Learning 4 Life Age 1-100

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Porter's 5 Forces for Competition Analysis in Sporting Shoes Industry: Nike, Adidas, UArmour... V1.0

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One of the first impact is the change of the CEO. The new CEO John Donahoe has made some bad choices for the company. The fact that he manage to succeed with big tech companies such as e-bay didn't mean that he was able to lead Nike to the best way possible. His direct consumer acceleration strategy was a disaster and it is one of the reason of challenges. At first it was a very good idea because of the covid 19, the direct t consumer was the perfect solution. But they missunderstood the after pandemic.

Nike also cut down some relationship with suppliers. They thought it wouldn't affect them but they were wrong. They didn't reach the objectives of 50% digital sales. After the pandemic, people start coming back to stores to buy product and that is when it started to colaps for Nike. During covid they had to face some supplier problems because a lot of there usine are located in Asia. After that they had a huge stock of product due to the sales that were not as high as expected.

After that, Nike tried to make a come back to their suppliers that they left because they wanted to sell all their stock.

Nike product are also not that much attractive to consumer. Retailer are putting some big discount on Nike product to sell them. Even their most known product are not that much sale. Nike also wanted to bring their product to everybody. The released time is over. The example of some released for new Nike product with a queue in front of a store is not anymore what the company want. But here also they were wrong. making every Nike product more available was not the good idea, people are not hype anymore about new released.

Another part where Nike was wrong was on the running side. They have abandoned their running community by reducing the technology that they put on their new product. So people went to other company with unique techy design.

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Why Nike is Facing Its Worst Performance in Years

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For the internal factors, Nike really need to reduce his Asian dependance. They can relocated some factories in the USA and the American continent. It will help them in case of problem and also make them a green image in the society. Because of the use of raw material, Nike need to make some strong partnership with suppliers especially in case of inflation like right now. It will assure them some protection. They also need to develop themselves with AI, it will help them to gain time. The last part that can become crucial for Nike is the environmental part. They need to improve their sustainability.

For the external factors now, Nike need to come back at what is working. A strong image with important sports personality. They also need to make sure his community is in good health like the running club or something like that because these people are the heart of the company.