Published by MBA Skool Team, Last Updated: October 12, 2019
PESTLE Analysis of Ralph Lauren analyses the brand on its business tactics. Ralph Lauren PESTLE Analysis examines the various external factors like political, economic, social, technological (PEST) which impacts its business along with legal & environmental factors. The PESTLE Analysis highlights the different extrinsic scenarios which impact the business of the brand.
PESTLE analysis is a framework which is imperative for companies such as Ralph Lauren, as it helps to understand market dynamics & improve its business continuously. PESTLE analysis is also referred to as PESTEL analysis.
The political factors in the Ralph Lauren PESTLE Analysis can be explained as follows:
Ralph Lauren gets to operate across various countries since a majority of the countries promote foreign investors in the clothing segment. Globalization of fashion has led to this opportunity for Ralph Lauren. The American company has been bidding on cheap labor and low political disturbance-based countries for setting up its production units. A majority of them are in Cambodia, Vietnam, China, Pakistan, and Srilanka. The changing tariff in the United States has hit the company hard. With imports still coming in from China and with increase tax rates, Ralph Lauren will have to shift its suppliers to other countries, or to work with the Chinese suppliers to further lower its cost, with also managing and maintaining the quality of the product, maintain its profits and market status while also maintaining its prices. This is an effect of the trade war between the United States and China. The reduced corporate tax in India will further attract companies like Ralph Lauren to expand their suppliers in these countries. Singapore also is a valuable asset for the garment industry. With a relatively stable government and policies, the country will further attract many companies like Ralph Lauren.
Below are the economic factors in the PESTLE Analysis of Ralph Lauren:
Various economic factors affect the Ralph Lauren company.
It is not just the taxes, duties, etc. that affect the business, but other factors that affect consumer spending and are beyond their control. The actual and perceived economic conditions may vary, thus causing a positive or a negative effect on its profitability. If the stock market fluctuates outside the safety lines, the economic conditions for the company may turn drastic. Inflation or recession in the market, lead to a lower sale of luxury products like these. Availability of product, changing consumer prices, change in fuel cost, weather conditions, etc. affect the sale of the product. In countries where the middle income has raised, the sale of a Ralph Lauren product may increase, but to do so the company must undertake extensive marketing to convert potential buyers into final customers. India and South Africa are examples of these growing economies. Unfavourable economic conditions may reduce consumers’ willingness and ability to travel to major cities for picnics and vacations in which Ralph Lauren stores are located. The willingness of a consumer to spend on events and experiences like movies and dinners may be higher, than the willingness to spend on luxury clothing.
Following are the social factors impacting Ralph Lauren PESTLE Analysis:
Ralph Lauren believes in integrating its customers, that form the society into its designing system. It believes in understanding the needs of the people and innovating products according to the changing trends, needs, and affordability of society. A majority of the population around the world are young adults, so the company should focus on making products that suit their taste and provide value to these people. Adapting to local customs and cultures is very important. To sell its product in a particular region Ralph Lauren should design the products according to the choice of people residing there. This gives the company yet another opportunity to work on innovative designs. The company works on a pink pony line. A majority percentage of sales is invested in projects involved in fighting Cancer across the world. This way the company satisfies the needs of the consumer by being socially responsible and active.
The technological factors in the PESTLE Analysis of Ralph Lauren are mentioned below:
The entire system works on MIS and cloud-based system and further investment in the digital ecosystem remains the brand's major target. Apart from direct selling stores, the brand has online stores for a majority of its products. These sites run across America and Europe. Ralph Lauren created a Holographic 4D fashion show, followed by using smart mirrors in their trial rooms and finally creating interactive shopping windows. The efficient use of technology is what Ralph Lauren has been undertaking for quite some time. Staying ahead of times using technology gives it a competitive edge over its competitors. The digital platform is not just restricted to the end consumers but also caters to the needs of various wholesalers. Besides this, the use of various digital and social media platforms, to gain popularity among customers is another way the brand is enhancing its presence through technology. With 'point of sale registers', Ralph Lauren stores can track any inventory throughout its supply chain in real-time. This allows for easy stock replenishment, effective planning, and real-time inventory calculation with stock accounting. A major risk associated with the technology is security breach.
This may cause serious reputation damage, with loss of faith in the brand.
Following are the legal factors in the Ralph Lauren PESTLE Analysis:
Many laws need to be followed and complied with by Ralph Lauren, in the United States, as well as the countries where the brand operates. These compliances are not limited to, trade, labor, and product safety trading restrictions, but also include Foreign Corrupt Practices Act, which prohibits and penalizes U.S. companies from making improper payments to foreign officials to obtain or retain business. Similar to this, many such acts prevent bribery, like the U.K. Bribery Act. Unexpected changes in laws, judicial processes, and regulatory requirements is a major danger that the company faces. If the company is not agile enough to adapt to these changes quickly, the loses it would make will be massive. Another segment of legality related to diplomatic relationships and trade relationships also has the potential to bring down any company. Like in trade war with China, a lot of companies have started shifting their sourcing back to Bangladesh. The low level of stringency when it comes to legal talks in Bangladesh is yet again a reason why companies prefer sourcing from it. With laws preventing unethical behaviour in its home country and need to behave unethically to maintain its competitiveness in a country like Bangladesh, put the brand in a fix. The Ralph Lauren company needs to decide on a certain code of conduct that may follow for the benefit of society as a whole.
In the Ralph Lauren PESTLE Analysis, the environmental elements affecting its business are as below:
Ralph Lauren believes in ‘reducing impact by design’. The company commits to designing more sustainable products and experiences through responsible sourcing, efficient manufacturing and investing in research and creating innovative products that will further the attached principles. It pledges to remove all the harmful chemicals from the system by 2025. To do so, it will monitor and reduce hazardous chemical use in its processes, evaluate the discharge and ultimately eliminate all hazardous chemicals from its production process. The company proposes to shift to completely sustainable cotton by 2025 and also boasts that the majority of the material used in its products is cotton. With changing policies for leather sourcing, the company has proposed to use completely traceable leather by 2025.
With a scarcity of water prevailing across various countries, Ralph Lauren has taken up this opportunity to save water by promising to reduce its water consumption by 20% across its supply chain by 2025. To tackle the waste management problem, the company has set the target of zero waste by 2023. Ans these simple ways Ralph Lauren wishes to make a difference in the society.
To conclude, the above Ralph Lauren PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.
This article has been researched & authored by the Content & Research Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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