PESTEL Analysis of Nordstrom
In the retail sector, Nordstrom is undoubtedly one of the biggest names. Their product portfolio, services, and offers are really strong. Nordstrom is the only fashion retailer that has been growing at a fast pace. Their unique services and strategies enable them to stay ahead of the competition. If you want to know the company’s competitive environment and its business performance at the macro level, you can go for PESTEL analysis. This tool will help to identify its political, economic, social, technological, environmental, and legal scenarios. Managers at Nordstrom can utilize these factors in order to make useful policies for the company. It is important for the long-term sustainability of the brand.
Political Factors:
International Treaties and Trade:
The track record of Nordstrom in following international treaties has been outstanding. Just because of following each country’s rules and government, the company is enjoying consistency in its business and international performance.
Civil Unrest within the Country:
The company doesn’t need to worry about political unrest within the country. They are risk-free in this scenario because they are in Canada and the US.
Regulatory Policies:
Nordstrom follows all the regulatory policies, whether local or international. So, they are doing their business with ease which is considered its biggest strength.
Portion of Government Budgets:
Both local and national governments are running a dearth budget. It is good for the company in the shorter term but can lead to an increase in inflation in the longer term.
Regulations and Deregulations from Government:
Under WTO norms, the country in which Nordstrom is operating completely follows government regulations. They implement those policies that the government designs for the betterment of the companies.
Relationship between Different Governments:
The relationships between governments are really strong in which the company operates. But, it leads to an increase in cost and time just because of getting clearances and certifications.
Role of Local Authority:
When it comes to policymaking, local authority plays a huge role. They are responsible for implementing laws and protecting various laws. So, the impact of local government is big on companies like Nordstrom.
Armed Conflicts:
Before venturing into any country, the company should analyze its political as well as armed relationships. It is necessary for protecting the business from any danger.
Economic Factors:
Savings Rates and Household Income:
The stationary household income has led to a change in customers’ consumption behavior. People now prefer to save money due to unpredictable economic conditions. It is crucial for Nordstrom to make policies according to understanding the behavior of the customer.
Increasing Prices of Raw Material:
The increasing cost of raw materials in different sectors such as agriculture, manufacturing, and goods has led to various problems for the company. It is hard to provide competitive products in the situation of increasing material costs.
Inequality Index:
The inequality between money and happiness is another biggest economic concern for international companies. If the society is rich, they can easily spend money on a lot of products. If there is an inequality in these factors, it will lead to suppression and uncertainty.
Inflation Rate:
The impact of inflation rate can create a huge impact on the demand for products. In case of a higher inflation rate, the company needs to increase its prices, leading to lower brand loyalty and sales. A cost-based pricing strategy could be fatal for the growth of the company.
Fluctuation of Prices in Markets:
There are so many retailers that offer almost the same products at different prices. This fluctuation indicates inequality and can distribute customers. It is really dangerous for the company, especially in emerging economies. Nordstrom should adjust its pricing policy by exploring the market condition.
Structure of Financial Market:
Before entering a new country or region, the company must understand its financial structure and market condition. IBy doing this, the company can reduce the risk of loss and can increase its market share.
Social Factors:
Savings Trend:
When it comes to saving patterns, different countries have different ways. For example, in US and China, people have other saving trends. People in the US spend more money as compared to China. This factor plays a big role in the policymaking of the company.
Demographic Behavior:
In order to predict the economic condition of a country, a company must see its demographic trend. The demand for old products is growing in the EU and the USA. There is a big portion of customers who still want less tech products. They love 90’s fashion more than anything. In this regard, the company should make policies accordingly.
Preference of Leisure:
By understanding the level of leisure, the company can easily evaluate various behaviors of customers. From young to kids and old, everyone wants those products that bring comfort and leisure in their life.
Power Structure:
It is essential for Nordstrom to evaluate the power structure of a country in which it is operating or wants to be. In the US, the older generation holds more power as compared to the younger generation. It is an important factor that creates a significant impact on the economy.
Role of Authority:
In different countries, people have different behavior toward local governments or authorities. Nordstrom carefully analyzes all the related factors in order to make the right decisions. It is different in Asia as compared to the US, Europe, or Africa. It depends on the prosperity of the economy. By evaluating these factors, Nordstrom can easily launch campaigns and new products accordingly.
Social Concerns:
It is imperative to know the social concerns of people by thoroughly analyzing the non-governmental organizations, pressure groups, and other related agencies.
Social Norms:
What type of social norms do people follow in a country? That is the question that you should answer if you are working globally. As a fashion retailer, it is necessary for the company to understand the country’s social norms.
Technological Factors:
Penetration of Internet and Mobile:
It is an era of the internet and smartphone. These things are necessary for ordering something online. Nordstrom must identify the penetration of these things in a country in order to make an effective business model based on realities and domestic needs.
Integration of Technology:
Societal values can create all the differences in the growth of a company. So, technological infrastructure is necessary for operating in any country. Uber failed in the Chinese region because they entered the country when there is no excess of smartphones.
5G Related Infrastructure:
The world is moving towards 5G. If a country is installing 5G infrastructure, then it can provide plenty of opportunities to the company. 5G connectivity is a must for such companies.
Licensing Issues:
The company should carefully analyze the licensing issues for obtaining technology as a global brand. It is crucial for avoiding the risk of IPR thefts and shakedowns.
Encouragement of Supply Chain Companions:
The success of any international company is based on the empowerment of supply chain companions. It helps to keep the supply chain more flexible and transparent.
Adoption of Technology in the Society:
If a country or society is tech-savvy, it is ideal for an innovative company to grow its business further. Entering into any country that doesn’t have proper tech infrastructure could be deadly for the company.
Intellectual Property Rights:
Before choosing any country for business, Nordstrom should pay attention to the laws for intellectual property rights.
Risk of Technology Disruption:
If any country or region is really technologically advanced, then Nordstrom should evaluate whether they can go with this technology or not; otherwise, it will bring disruption.
Environmental Factors:
People Concern about Environment:
These days, people are pretty much concerned about nature. Thus, Nordstrom must follow environmental laws and regulations.
They should keep consumer behavior regarding the environment in mind. They should make eco-friendly and sustainable products.
Recycling Policies:
Being a global brand, Nordstrom should follow all the recycling policies. They can make recycled products to attract eco-conscious users.
Influence of Eco-Friendly Agencies:
The eco-friendly agencies can play a major role in the implementation of environmental laws. Moreover, they have the power to safeguard ecological norms. These practices are necessary for the betterment of the world.
Carbon Emission Rate:
What is the carbon emission rate? It is a thing that every international organization must know. Nordstrom should reduce its carbon footprint in order to gain the attention of environmentalists and pressure groups.
Environmental Regulations and Standards:
The environmental policy could be different at the local and national levels. It can affect the decisions of Nordstrom towards the environment. It will also hurt the pricing strategy and product development.
Legal Factors:
Securities Law:
Before penetrating into any new country, it is the responsibility of the company to explore its securities law. Check the securities law both at the national and local levels.
Court Proceedings:
A country with a fair and independent judicial system is ideal for doing business. In case of any legality, you can get quick proceedings and justice. Thus, it is important for the company to thoroughly evaluate the country’s judicial system.
Health and Safety Laws:
These days, people are more aware of health and safety laws. A company like Nordstrom can make its business operation fuss-free by following health and safety laws.
Freedom of Judiciary:
A company can grow well in a strong judiciary system. It reflects the strength and credibility of the country.
Data Protection Laws:
Nordstrom should learn the data protection laws of a country before expanding its business in that region.
Transparency in Judicial System:
For fair trading, transparency is essential in the judicial system. Transparency is really crucial in this regard.
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