Analysis of the general

environment of GUCCI

ES-SLAILI HAJAR
20179827
 SUMMARY
INTRODUCTION 
POLITICAL FACTORS:
• Asian markets like China & India
• Government Regulations 
• Import & Export 
ECONOMICAL FACTORS:
• Price Skimming
• Exchange Rate
• Less Buying Power due to Pandemic
• Growth in Development Economies
SOCIAL FACTORS:
• Demand Product
• Criticism by Social Activist
• Rise of Middle/Lower Class
• Endorsing Social Reforms
TECHNOLOGICAL FACTORS:
• Using Technology to Reduce Cost
• Online Store
• New Methods
LEGAL FACTORS:
• Obeying the Laws
• The lawsuit against Forever 21
• Litigation against GUESS
ENVIRONMENTAL ISSUES AFFECTING GUCCI:
• Realization towards Eco-Friendly Material
CONCLUSION 
 INTRODUCTION

Being in a luxury goods industry, Gucci is involved in outsourcing and volume

manufacturing of components such as: fragrance and cosmetics, leather
goods (shoes, clothes, caps, belts and women’s wear among others) fashion
and ready-to-wear products, watches and jewellery (Erhuvwu)
The company’s products are mainly assembled through activities such as
quality control, material procurement and distribution. Today, GUCCI products
are being created by a group of craftsmen who controls and enforce durability
of its luxury goods by pursuing best quality and purest raw materials. The raw
materials used for production have qualified for high quality standards that
meet various design specifications. Some of these high quality raw materials
used up and incorporated by the Gucci Company include but are not limited
to; reptile skins, soft nappe, French calf, nubuck and full aniline (APLF). Worth
noting, is the fact that the aforementioned materials are often used up in the
making on leather oriented Gucci products, as well as high end footwear,
which end up costing a fortune due to the prices of these raw materials and
also as a supplement for the Gucci name and brand (APLF).
PESTLE Analysis of Gucci analyses the brand on its business tactics. Gucci PESTLE Analysis examines the
various external factors like political, economic, social, technological (PEST) which impacts its business
along with legal & environmental factors. The PESTLE Analysis highlights the different extrinsic scenarios
which impact the business of the brand.
PESTLE analysis is a framework which is imperative for companies such as Gucci, as it helps to understand
market dynamics & improve its business continuously. PESTLE analysis is also referred to as PESTEL
analysis.
Let us start the Gucci PESTLE Analysis:
 POLITICAL FACTORS IMPACTING GUCCI 

ASIAN MARKETS LIKE CHINA & INDIA

Although China and India are one of the top economies in Asia; but both of these countries have no clearly defined
intellectual property laws. Gucci, on the other hand, spends millions of dollars on the training and development of its
artists and creative team.
When a brand like Gucci enters into such a market without having any protection, piracy would jeopardize the
functionality of the company. The investors of Gucci aren’t willing to take such risk of entering into such markets where
their investment isn’t safe.
GOVERNMENT REGULATIONS
As we know that Gucci is a multinational luxury fashion brand and the company is operating its business worldwide.
Then political influence like regime change and the political movement towards implementation of certain laws could
have a very bad impact. Therefore, the brand has to keep an eye on the political environment of the country.
IMPORT & EXPORTS
Whenever a new government introduces new tax reforms, it ultimately impacts the consumer prices of the product.
When the company increases the prices, the demand for the product increases or decreases depends on the economic
circumstances. Gucci has had a very bad experience with import/export taxation, and it negatively impacted the growth
of the company. If the brand can find cheap labour, then it would positively change the profitability of the company.
 ECONOMICAL FACTORS AFFECTING GUCCI

PRICE SKIMMING
Economic circumstances like the living standards of the people and the purchasing power of the people play a very
important role. For instance, Gucci has the reputation of following the price skimming strategy and buying high insurance.
Resultantly, the GDP, living standards of the people, and buying power of the customers have improved because of the
company’s efforts.
EXCHANGE RATE
As a multinational brand, Gucci has to make many international deals with different countries and regions across the world.
Speaking of international trade, the exchange rate of the country matters a lot. The stability of the currency is also very
important. If the currency is weak, it would be difficult for you to convince the investors because it makes them suspicious
and untrustworthy.
LESS BUYING POWER DUE TO PANDEMIC
The pandemic of covid-19 has locked people to their houses and shut down businesses. Many people lost their jobs and
received minimum salaries during the lockdown. As a result, the buying power of the people reduced to a great extent.
That’s the net income and profitability of Gucci has decreased by approximately 30% in 2020 compared to the last year.
GROWTH IN DEVELOPING ECONOMIES
The economic circumstances are visible to everyone. If we compare the growth rate and profitability of the luxury fashion
industry with other businesses, it’s much better. The growth rate of Gucci is comparatively very good if you keep in mind the
pandemic and lockdown situation. The fashion industry of the Asian market has had great growth in recent years.
 SOCIAL FACTORS IMPACTING GUCCI 

DEMANDED PRODUCT
Gucci has the status of being a luxurious brand and the company offers its products only to the elite class mostly. The
brand has always delivered the best quality products like fur coats, leather bags, and other items to its customers. As a
result, the company has created a strong database of loyal customers over the years.
CRITICISM BY SOCIAL ACTIVIST
Many environmentalists and social activists have severely criticized Gucci for using animal fur and skin for coats and
handbags. Some environmentalists have even claimed that the fashion industry is wasting scarce natural resources.
The young customer market is getting very cautious about environmental issues. If such claims and criticism keep on
increasing, then it would be very difficult for the brand to attract new customers.
RISE OF MIDDLE/LOWER CLASS
The economic circumstances are making it difficult for people to make both ends meet. The worldwide population
comprises of middle and lower classes of people. Therefore, Gucci has to change its marketing strategy and start focusing
on the middle/lower class people.
ENDORSING SOCIAL REFORMS
One of the most admiring and appreciating characteristics of Gucci is that the company is fair to its employees. The brand
has proved its commitment to improving the lives of people across the world. Gucci has also raised its voice supporting
gender equality, the emancipation of women, the health and wellbeing of children, and the protection of art.
 TECHNOLOGICAL FACTORS IMPACTING GUCCI 

USING TECHNOLOGY TO REDUCE COST

Technology has improved a lot of processes like designing, production, distribution, and many other operations. If Gucci
uses any of those advanced technological tools at its production facilities, then the company would be able to reduce
various costs. Hence there’ll be more profitable for the company. Gucci has also recently opened up a call centre in
Florence to provide a more personalized experience to the customers.
ONLINE STORE
The good thing about Gucci is that the brand is already active on different social media platforms and the brand has got
millions of followers. The company should improve its online store like Amazon and Alibaba to increase the conversion
rate.
NEW METHODS
Gucci is already working on various latest technologies to increase the efficiency of its logistics, production, and
distribution systems of the company. For instance, the company has launch start-up incubators to foster the culture of
innovation and technology at the workplace.
 LEGAL FACTORS IMPACTING GUCCI 

OBEYING THE LAWS

Gucci has a history of following the laws of different countries and delivering quality products across the world. The
company also treats its employees fairly by providing them high salaries and annual tours.
THE LAWSUIT AGAINST FOREVER 21
Gucci filed a lawsuit against Forever 21 and the Italian brand claimed that Forever 21 has stolen the green-red-green and
blue-red-blue trademark strips of the company. On the other hand, Forever 21 said in its defence that the company uses
different designs, ornaments, aesthetics, and decorative. It had nothing to do with the trademark of Gucci.  
LITIGATION AGAINST GUESS
Gucci also had a brutal litigation experience against Guess. It lasted roundabout for more than 10 years. It ended in the
form of settlement between both brands.
 ENVIRONMENTAL ISSUES AFFECTING GUCCI 

REALIZATION TOWARDS ECO-FRIENDLY MATERIAL

Gucci has realized the importance of an eco-friendly environment. Now the company is fully committed to take all the
necessary steps toward the protection of the environment and nature. The main and top objective of the brand is to find the
environmental-friendly raw material.
This is the only way for Gucci to survive in an environmentally cautious market. According to the fashion and leather industry
kills approximately 75 billion animals every year for various reasons. The brand has realized the concept of animal cruelty
and it would take responsible steps to become a role model for other organizations.
 CONCLUSION

After a careful study of the pestle analysis of Gucci, we have realized that the company has a strong market position even
during the pandemic. The brand is also obeying the laws and regulations of different. I think that’s why the company has
survived different periods in history.
THANK YOU