Audit of Nike's Strategies

PEST Analysis of Nike

Feb 12, 2009 Gwendolyn Cuizon

Nike is the leading footwear company in the world. PEST Analysis sums up how the
company's business strategies fare in the macro environmental level.

Nike, Inc. is an incorporated company that designs, develops and markets worldwide
athletic footwear, apparel, equipment and accessories. Nike employs both traditional and
non-traditional distribution channels in almost 200 countries with primary market regions
in the United States, Europe, Asia Pacific, and the Americas.

Nike has some 20,000 retailers worldwide including Nike factory stores, Nike stores,
NikeTowns, Cole Haan stores, and Web sites which sell Nike's sports and leisure
products. Nike accounts for 33% of the global market share in the athletic footwear
industry.

PEST Analysis of Nike

Nike, being an international organization, needs to focus on macro environmental factors.

Macro environmental factors comprise Political, Economics, Society, and Technology

Political Analysis

The government must create economic policies that will foster the growth of businesses.
Nike, fortunately, has been helped by the US policies which enable it to advance 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.

Economic Analysis

In economy, the biggest threat for Nike would be economic recession. During recession,
Nike’s growth will be adversely affected. The US economy is experiencing a downturn
right now. Consumer purchases are slowing down. Currently, Nike's feeling the pinch of
the economic recession. The Asian economic crisis also affects Nike since its goods are
manufactured in Asia. The labor costs and material prices are going up.
Nike's growth is not just affected by the local economy but also in the international
economy. A weak Euro and an Asian recession could mean weak sales for Nike. The
overall results in the sales generated by Nike in athletic footwear, however, remained
stable. The global market makes up for the variances in sales particularly between peak
and lean seasons.

Society Analysis

People are more health conscious nowadays. Diet and health are getting more
prominence. Consequently, more and more people are joining fitness clubs. There is an
accompanying demand for fitness products particularly exercise apparel, shoes and
equipment. Nike is at the forefront of this surge in demand as people are looking for
sports shoes, apparel and equipment.

Nike, however, failed to foresee problems brought about by a sweatshop expose

pertaining to labor and factory conditions at production locations in Asia. This caused
bad publicity and declining sales as society and consumers demand more socially
responsible companies.

Technology Analysis

Nike uses IT in its marketing information systems very effectively. Nike applies
marketing information systems to the economics of innovation, segmentation and
differentiation for most of its businesses. Nike’s leadership status owes in large part to
the use of extremely valuable Information Technology, and applying it to every aspect of
the product from development to distribution.

Nike, being the world leader in the athletic footwear industry, is able to effectively
harness its environment to boost its marketing efforts. This strategy has translated into
robust sales of Nike's products.