Versace PESTLE Analysis

Published by MBA Skool Team, Last Updated: February 08, 2022

PESTLE Analysis of Versace analyses the brand on its business tactics. Versace 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 Versace, as it helps to understand market dynamics & improve its business continuously. PESTLE analysis is also referred to as PESTEL analysis.

Let us start the Versace PESTLE Analysis:

Political Factors:

The political factors in the Versace PESTLE Analysis can be explained as follows:

The majority of the countries where Versace has a presence look to be performing well from a political stability perspective. There are, however, certain exceptions. The United Kingdom's choice to exit the European Union has created a climate of uncertainty and political instability among the UK's countries, i.e. (England, Scotland, Wales, and North Ireland). Versace could face serious long-term ramifications as a result of this. Import tariffs on Versace's goods are also a factor to consider. China, for example, has high import duties, resulting in a significant price gap with other nations. Consumers will want to buy goods from other countries in order to benefit from lower prices. As a consequence, it is self-evident that Versace must be present in markets that attract more people in order to advance.


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Economic Factors:

Below are the economic factors in the PESTLE Analysis of Versace:

Versace is a global brand and has dependency on several economic factors.

There is a significant pricing discrepancy among markets, which might lead to insurmountable problems. The "Lipstick Effect," which states that during a recession, customers may prefer to buy less expensive luxury items, may emerge as a result of any economic slowdown. Nail polish sales are likely to soar, while sales of bulky fur coats are likely to plummet during any economic instability. The brand should invest in emerging countries across Asia & Africa since these countries can provide low-cost labor, allowing the brand to save costs. Furthermore, the economies of these countries are growing faster than the global economy. Hence, they have the potential to generate a lot of money.


Social Factors:

Following are the social factors impacting Versace PESTLE Analysis:

Versace has a significant advantage in terms of brand perceived value. Because the company has its roots in Europe, people value European luxury items more than luxury items created in Asian or South American countries. People are also more willing to try newer, more exclusive items. As a result, consumers are more likely to switch from well-known ordinary brands to exclusive brands in search of more unique brands. This gives all of the European Giants an advantage over their opponents. A proper market segmentation is also required; for example, a luxury brand such as Versace cannot sell its products in a nation where the majority of the population is from the lower middle class or destitute countries.


Technological Factors:

The technological factors in the PESTLE Analysis of Versace are mentioned below:

In addition to selling entirely through their own E-commerce portal or website, Versace should continue to have a significant presence on e-commerce sites like Amazon, Walmart, Flipkart, and others. They will be able to reach a larger audience which can help drive their business further. Furthermore, the average person now checks social media more than 6 times every day. Versace should use social media sites like Facebook, Instagram, YouTube, Pinterest, Twitter, and others to their greatest potential. To reach out to potential customers, it should implement sponsored advertising campaigns.

As a consequence, Versace will be able to maintain regular communication with their potential consumers.


Following are the legal factors in the Versace PESTLE Analysis:

While huge firms must follow a variety of legal restrictions while operating in different nations, the most important legal aspect for any luxury brand is "Counterfeiting." Versace is still dealing with counterfeiting difficulties all around the world. To remedy this problem, the "Anti-Counterfeiting Trade Agreement" was signed, however it has yet to be implemented. Furthermore, while deciding which country to invest in, intellectual property rights must be protected. Operating in countries with imitation product issues can be challenging for the company. Furthermore, the organization must do a comprehensive review of the country's Business and Employment regulations to see if they are consistent with its business strategy.


Environmental Factors:

In the Versace PESTLE Analysis, the environmental elements affecting its business are as below:

These are the most essential factors for Versace as more consumers become ecologically sensitive. Versace should implement processes that aid in the reduction of carbon emissions.

On its website, it also makes no mention of reducing textile waste or minimizing the release of hazardous chemicals into the environment. Furthermore, because it sells fur coats, leather wallets, and bags made from animal skin, the business receives critical feedback from animal protection institutions. As a result, the company should work hard to incorporate sustainable practices into its operations, as customers want to do business with organizations that are environmentally sensitive.

To conclude, the above Versace 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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