P6M3 How does political, legal and social factors impact business activities of selected organisations and their stakeholders
Nike
Political factors: Politics can Nike.in both negatively and positively through changes made to tax, labor and national security laws. For example, politicians can raise taxes directly on businesses or on individuals, which ends up costing the company in the long run as people spend less money on goods and services. Alternatively, Nike profit when citizens receive tax incentives.
Nike would respond accordingly to the games of politics. From increasing interest rates to adjusting their demographic models.
Legal Factors: Businesses can be affected by many aspects of government policy. In particular, all
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Social: Population growth rate and age profile is data the NHS will have to update constantly. Social impacts relate to change is society and social structures. Changes in the structure of the population, and in consumer lifestyles and behaviour affect buying, treating and disease patterns, something the NHS will have to continuously adapt to. M3 contrasting businesses
There are many legal, government and social factors that affect both NHS and Nike.inc, analyzing them is also important.
One of the factors that affects business, and even charities and public services like NHS is simply GDP. As we know, analysts use GDP to measure whether or not a country is submerging below negative, which means a recession. It is an accurate indication of a countries output, while GDP per capita has a close correlation with the trend in living standards over time.
Another factor is taxation. Corporate tax is currently around 21%. Tax is a sum of cash that businesses have to give to the government annually, monthly or maybe every 6 months. The sum is calculated by the businesses overall income by the end of the set tax day, then takes the set % from that sum.
Legal: Minimum wage actdirectly affects every single organisation. The minimum wage act means that all workers receive, at the least, the minimum wage. Currently it is around £6.31 an hour. If businesses fail to provide this, employees can take legal
Political: this inturns the legislation and government rules of the country that may influence and pose as a threat to the business,
(3) Political and legal environment, factors related to policy and law that influence company’s operation.
The minimum wage is intended to protect workers and fight poverty. In the United States, the federal government sets the minimum wage at $7.25 per hour although many states set higher minimums. There is currently a movement to raise the federal minimum wage to $15 per hour. This movement is called the “Living Wage Movement” (Living Wage Resource Center, 2016) or the “Fight for $15” (Fortunato, 2016) and purports to address the problem of poverty in America.
In the last couple of years Nike’s sales have decreased which were targeted at 15-19 year olds. This problem has caused Nike to lose customers which means a loss in sales/ profits. Over the past few months competitors have been raising their strategies to bring in customers in which increases their profits. This is having a negative effect on Nike, if Nike carry on the way
Population demographics - Changes in the population has many consequences for the business operation. As the total of the population changes the demand for products and services also changes for example the increase in the UK population has contributed to the demand of the NHS services and has put a strain on
The table below shows the current rate at which the National Minimum Wage stands as of October 2015. This table is updated every October. Under 18's are entitled to receive £3.87 per hour, 18 to 20 year olds are entitled to receiving £5.30 an hour, 21 and over are entitled to receive £6.70 an
The purpose and intent of this paper is to describe the legal, cultural, and ethical challenges that face the Nike Corporation in their global business ventures. This paper will also touch on the roles of the host government and countries where Nike manufactures their products and the author will summarize the strategic and operational challenges that Nike managers face in globalization of the Nike product.
Nike has caused places such as Vietnam’s wages to go up, as well as their standard of living. An increase in their economy can be seen, and this is due to competition.
Nike‘s vertical structure includes CEO Mark Parker and a board of directors chaired by co-founder Phil Knight. Although Nike has functional divisions and divisions based on specific products it is not a matrix organization. In a matrix organization, employees report to a functional and divisional manage. At Nike, employees report to the divisional manager and the president of each division reports directly to the CEO. Nike’s continued product innovation and successful marketing are due to the combination of functional and divisional organization using an operations department to insure communication between divisions. There is division of labor but it is not clearly identified. With a more pronounced division of labor and levels of direct supervision Nike can improve its
Enderle, K., Hirsch, D., Micka, L., Saving, B., Shah, S., Szerwinski, T. (2000, March 14). Strategic Analysis of Nike, Inc. Retrieved on December 14, 2005, from
In order to properly discuss Nike’s issues, it is important to first look at the apparel industry and the economy as a whole to determine how Nike compares to it. The apparel industry, more specifically the athletic apparel market, is a very dynamic industry to be in. Because of
During the late 80s and early 90s Nike was faced with a series of labor strike back at home due to unethical labor practices by its independent countries in third world countries. It is well known for Nike to outsource almost all its production from third world countries at cheap prices and sell them in U.S. market at an abnormal profit. The company began outsourcing its products from Japan where labor was competent and wages were very low. The living standards were raised which prompted Nike to outsource its products from Thailand, Pakistan and Indonesia since wages in these countries were extremely low and labor for these products were competent due to rapid development of the Japanese economy. The outsourcing of footwear products from Asian countries enables Nike to earn high profits and enjoy a competitive advantage over its rivals in the footwear industry. The company invests the high profits realized in marketing its products through celebrities. For instance, Michael Jordan was used to advertise the positive image of Nike Company (Lipschutz and James, pp. 87-96).
Legal: In the united kingdom , there are lots of rule and regulation about in business policy and strong taxation policy. Taxation policy also affected the Nike business in the United Kingdom. Besides, they have to maintain proper employment law, age law, environmental law etc.
Nike’s CEO’s and management made a decision to begin using sweatshop labor in order to save money and begin aggressive marketing. They used this aggressive marketing to have a one up on their competitors, in fact, Nike spent 280 million dollars alone on advertising in 1994 (Schwartz, 2000). Nike would give great athletes million dollar contracts to endorse and wear their clothing. For an example, Andre Agassi received 70 million dollars to endorse Nike's tennis clothing line. The choice to start aggressive marketing is the reason why Nike entered into this crisis and started making unethical decisions. Once the top management of Nike realized the profitability and popularity of hiring professional athletes to wear and endorse their clothes, regular advertising would not suffice. The company became greedy and were willing to use cheap abusive labor so that they could pay professional athletes millions of dollars (Schwartz, 2000).
Nike’s management understands how important a relevant strategy is in the global environment, as Don Blair, Nike’s CFO, stated “...we are refocusing our efforts, increasing our investments in innovation, using our voice for stronger advocacy and looking at how we incubate new, scalable business models that enable us to thrive in a sustainable economy.”