PEST Analysis of Nike Term Paper Example | Topics and Well Written Essays - 1500 words

PEST Analysis of Nike - Term Paper Example Political Analysis The US government has sought to create economical policies that are essential to foster the growth and development of business that either are situated or have their headquarters in the United States. Nike is a major beneficiary of these policies that have been implemented by the US government. In order to support the Nike brand, the US government has established fundamental measures that include low interest rates, an international competitive aspect of the tax system, stable economic environment, and vital economical resources for the benefit of the company. This has demonstrated to be a factor in the development of Nike. 1(Thottam, "A New Push against Sweatshops") The nature of the political situation in various countries is a vital factor that has played a part in the growth of Nike into a multinational company. The organization has expanded to China, which boasts of a highly stable government and political environment. It has proven to be a vital factor that h as motivated the US Company to establish a plant in the country to reach a larger audience, especially in the eastern region of the world. Political stability in a country is critical in terms of establishing a solid platform for business growth in a region. A lack of political stability will generate uncertainty regarding a business’ future and hence a company will not seek to develop in a country posing political uncertainty. Economic Analysis The biggest problem that serves to affect the level of a company’s business is recession. When the latter occurred, Nike was adversely affected thus reducing its growth. With the US economy facing a down turn, it has resulted to reduction in consumer purchases. Consequently, this has affected the sales volume for the company. Nevertheless, Nike being a multinational company is able to rely on sales from other regions, particularly Africa, which was not as much affected by the recession 2(Stepp, "Nike is Right"). The main proble m with the case of the recession is that it affected other regions such as Asia and Europe. Nike has a high volume of sales in Asia and Europe, in comparison to Africa. The fact that Asia has a high population density and Europe has popular sports brands, the sales level was adversely affected. Nike was among the companies that suffered from this recession. The recession limited the growth of the company, and may have resulted in the company having to close a number of stores in various regions to avoid continuous loses. Aspects such as labor costs and materials for production were increasing, which meant that Nike was constantly in the red (recording losses). If the situation continues with the weakening of the Euro and the Asian currencies, Nike may be in a recession as well based on shrinking growth, and Africa may not be the ideal solution in maintaining company sales (until Africa is eventually affected by the Recession). Society Analysis The general trend in society is the con cern on health. The major stereotype in the United States is the fact that there are an increasing number of obese individuals. This has led to the increase in individuals joining fitness clubs. Nike can seek to capitalize on this factor by selling merchandise that is essential to those seeking to join fitness clubs. Shoes, overalls and accessories such as water bottles