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Use Swot and Pestle Analysis on Nike

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“Nike, Inc.” commonly known as Nike was founded in 1964 by Bill Bowerman and Phil Knight and has become the largest seller of athletic footwear and apparel in the world (Wikipedia, 2017). These two men one a former professional coach and the other an athlete had the vision of producing and retailing the best sports products to help enhance athlete’s performance. Nike is a US based trans-national corporation, which has developed into the largest corporation in the sportswear industry. The marketing strategy has concentrated on keeping the product image both distinct and easily recognisable. The Nike ‘swoosh’ is a unique and iconic logo, which along with their motto ‘Just Do It’, has been at the heart of their marketing success (Wikipedia, 2017). The endorsement of professional athletes has been a crucial part of their strategy with many world-class and recognisable names now holding marketing contracts as well as appearing in T.V commercials.

The external environment surrounding big corporations can have a large impact on the success and development of the company. These external factors can be broken down by PESTLE: the political, economical, social, technological, legal and environmental forces.

The main political decisions affecting Nike are international tax agreements, America’s foreign policy and the government’s decision on interest rates. Nike have benefited from a prolonged period of low interest rates in America due to the 2008 recession with the rate of 0.25% put in place in December 2008 remaining at this level for 7 years before rising recently to 1% (Trading Economics, 2008). This benefited Nike, as people tend to spend due to the poor return they receive from saving. America has managed to negotiate favourable international tax agreements meaning that Nike is not heavily taxed exporting and importing their products to the 180 countries they sell in. However, the arrival of President Trump has created a significant threat to Nike for two reasons. Firstly Trump’s opposition to the Trans-Pacific Trade Partnership which would have almost eliminated tariffs for shoes imported from many of the countries in which Nike have factories, most notably Vietnam where 40% of their sneakers are alleged to be made (Green, 2017). Secondly Trump’s proposed ‘border tax’ which will tax goods that are produced outside the USA.

Nike can be affected by the state of the economy in those countries producing goods for them and this may lead to them transferring their production from one country to another. An example would be transferring their production from China to Vietnam. Nike can be negatively affected if countries in which their production is sourced see a strong increase in economic performance as this leads to higher minimum wage rates and thus higher production costs. The economies of the main countries they sell to can also have a direct impact as during a recession people will look for cheaper alternatives to Nike which may be seen as a luxury good they cannot afford.

As mentioned earlier Nike have been highly successful in establishing a strong and positive brand image. However with the increasing development of information technology it is now easy to trace how global companies such as Nike source their products and people have learnt about Nike’s sweatshops based mainly in Southeast Asia. This could have a negative impact on Nike as in the world today there is a shift in attitude amongst developed countries who are stressing the importance of other people’s welfare particularly in less developed countries. Now that people are more aware of some of Nike’s production sources they may be less willing to buy from them as they may regard as being a ‘non fair-trade’ company (Wikipedia, 2017). Together with the shift in attitude of people trying to get rid of unfair labour there is also a growing trend of people wishing to lead healthier lives eating a more balanced diet and taking more exercise. This social change benefits Nike, as with more people taking up sport products sales will continue to grow.

Nike has not been greatly damaged by technological changes in the retail market and has benefitted in certain ways with online shopping for example making it easier to sell their products. Legal external pressures have however caused difficulties. Nike received a lawsuit having been caught falsifying advertising promotions where supposedly discounted products were actually selling at the RRP (Weisberg, 2017). This hasn’t been their only legal issue as along with other companies they have been caught avoiding large sums of tax by the US government (Schroeder, 2015). Although neither of these has cost the company much money it has tarnished their brand image.

The last element of PESTLE to be considered is the environmental aspect. With increased interest world wide in global warming

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