Introduction
Nike Inc encounters challenges from a myriad of natural and physical environmental factors, which affect its performance. They include climate change, pollution, and floods among others. According to Esteve-Turrillas and De la Guardia (2017), climate change impacts different facets of Nike’s operating model, including production and supply chain. This company relies on cotton for the manufacture of its apparels.
Therefore, shortage of these raw materials might have devastating impacts on the company. Drought in nations that grow cotton results in the prices of this essential commodity going up, thereby affecting textile companies’ profitability. Variations in weather changes have led to Nike looking for alternative ways of manufacturing its products. This company is now turning to using synthetic materials because they are not affected by climate change (Ali Mahdi, Abass, Mazar, & Shaju, 2015). Nike Inc is also renowned for sourcing organic cotton, which is grown via environmentally friendly methods.
Apart from climate change, floods contribute to Nike’s production levels dwindling. For instance, in 2013, the company was forced to momentarily close its Thailand plants due to floods (Esteve-Turrillas & De la Guardia, 2017). Today, the call for environmental conservation has resulted in Nike changing its operations. This company is investing in environmentally friendly sources of energy as a measure to curb greenhouse gas emission.
Moreover, it appreciates the significance of water conservation and is looking for ways to recycle wastewater. Nike has partnered with DyeCoo, a Dutch firm, to establish inventive production procedures that will minimize energy use (Hemphill & White, 2016). Additionally, this partnership will assist Nike to prepare its fabric (dyeing) without using water. The move will see the company save a lot of water since presently it needs between 100 and 150 liters per a kilogram of fabric (Jegatheesan et al., 2016). The company has initiated programs that advocate recycling of used shoes to reduce pollution.
PEST Analysis
Political, economic, social, and technological changes have significant impacts on the apparel industry. The political factors include terrorism and geopolitical stability, which cause ambiguity in the international economy. The present political changes in the United States and the United Kingdom have contributed to poor performance in the textile sector (Ali Mahdi et al., 2015). Moreover, environmental laws and the call for reduction of global warming have led to the apparel industry investing in green sources of energy. Economic volatility has a toll order on the apparel segment (Ali Mahdi et al., 2015).
For instance, slow growth in the Chinese economy has led to a decline in demand for textile products. As the number of globally employed people continues to rise, there are expectations that the demand for apparel will increase, facilitating growth of this industry.
Noteworthy social transformations have happened in the last decade, and have impacted the sales of merchandise. The number of employed millennials has increased tremendously, resulting in the apparel industry considering this generation as its main target. Hall, Towers, and Shaw (2017) allege that millennials are not only sensitive to the prices of merchandise but also quality. Therefore, apparel companies like Nike have embarked on manufacturing quality and inexpensive products.
Technology is a critical factor that has revolutionized the apparel industry. Information technology (IT), globalization, Internet, and increased use of smartphones have changed the way people do their shopping. In return, textile firms have been forced to invest in technology to enable them reach many clients. According to Hall et al. (2017), most millennials prefer online shopping and value tailor-made services. Consequently, apparel companies like Nike have online stores that enable them to target this clientele.
References
Ali Mahdi, H. A., Abass, M., Mazar, T. I., & Shaju, G. A. (2015). A comparative analysis of strategies and business models of Mike Inc. and Adidas Group with special reference to competitive advantage in the context of a dynamic and competitive environment. International Journal of Business Management and Economic Research, 6(3), 167-177.
Esteve-Turrillas, F. A., & De la Guardia, M. (2017). Environmental impact of recover cotton in textile industry. Resources, Conservation and Recycling, 116(1), 107-115.
Hall, A., Towers, N., & Shaw, D. R. (2017). Understanding how millennial shoppers decide what to buy: Digitally connected unseen journeys. International Journal of Retail & Distribution Management, 45(5), 498-517.
Hemphill, T. A., & White, G. O. (2016). The world economic forum and Nike: Emerging ‘shared responsibility’ and institutional control models for achieving socially responsible global supply chain? Business and Human Rights Journal, 1(2), 307-313.
Jegatheesan, V., Pramanik, B. K., Chen, J., Navaratna, D., Chang, C., & Shu, L. (2016). Treatment of textile wastewater with membrane bioreactor: A critical review. Bioresource Technology, 204(1), 202-212.