In this Sample Essay on PESTEL analysis of Old Navy, we focus on Political, Environmental, socioeconomic, Technological and Economic factors in Old Navy
The Old Navy’s parent company is GAP Inc. It runs retail and outlet stores across the globe. It mainly specializes in apparels, accessories and care products for men and women. While there are signs that Old Navy’s market share has dropped, it remains a major player in the international clothing market. In 2009, Old Navy was the leading family apparel outlet in the United States. This PESTEL analysis of Old Navy will discuss how political, economical, social, technological, environmental and legal factors affect the company’s performance.
Globalization is a major factor that has transformed the business world, including the fashion industry. Companies must adhere to international regulations and policies in order to thrive on a global scale. For Old Navy, it is subject to domestic and international conditions, which affect its operations. For example, the company pursues large tax implementation and avoids countries that impose huge taxes on foreign investors.
Changes in overtime policies and the share of retail stores in the health care bill further affect the operations of Old Navy. If these changes go beyond existing limits, this will affect the chain negatively. On the other hand, the health care bill will affect Old Navy positively since it will regulate the price of medicines, which will help consumers and the company at large.
This PESTEL analysis of Old Navy reveals that economic conditions have affected the performance of the company in various ways. For example, between the year 2004 and 2006, consumers had a shift in their preference of apparels. With existing Unbranded apparels, Old Navy experienced a drop in sales, even in Asian markets.
In addition, the US slow economic growth will affect Old Navy negatively or positively. It’s the economy grows faster, consumers will have a stronger purchasing power. This would result in higher product sales. On the other hand, consumers would have low purchasing power if the economic growth is slow, resulting in low sales and a change of attitude towards purchasing products.
Because of globalization, there is a higher concern for the environment and employee benefits. Today, every company is investing in corporate social responsibility as a way of strengthening their brand in a competitive business environment. This includes protection of human rights, addressing consumer health and safety, and adding value to the surrounding community in order to improve living standards.
A PESTEL analysis of Old Navy also shows that the company faces shortage of employees because of a high rate of retirement. This means that as more retirees leave the organization, their slots remain unoccupied. This may affect the overall performance of the company.
The Old Navy employs technology in its business strategy to meet the comfort and aesthetic needs of its customers. This approach is also important in adjusting to modern market trends like online buying and mobile technology. Today, Old Navy uses software technology in its production and marketing, a move that has increased efficacy among its staff.
While Old Navy is embracing technology in an information age, it also understands that the rural market still lags behind in embracing modern trends. Thus, the chain focuses on fusing tech-approaches to address the needs of its customers at a personal level.
Fashion and climate relate closely. For instance, weather conditions largely determine what customers are purchasing. Thus, it is necessary for Old Navy to understand types of clothing on demand in different regions, depending on weather patterns. For instance, it would be hard to sell heavy clothing in the tropical region, where the weather is at boiling point.
A PESTEL analysis of Old Navy further shows that the company is also in the race by going green and saving the environment from pollution. It embraces products that promote energy conservation and address climate change, through proper waste management practices.
Legal factors – Old Navy works towards complying with domestic, regional and international regulations, which govern the business world. Common laws include occupation law, discrimination law, health and safety law, and antitrust law. These laws affect the company’s performance, either directly or indirectly.