Li Ning

EXTERNAL ENVIRONMENT

PESTLE

Political –

Economic

o global industry rapidly growing and highly potential market with dramatic growth in the past decade.

o industry growth rate slowed down 2007-08

o global financial crisis – revenue from international markets decreased by 5.1%

o industry is very vulnerable to the direct impact from the economic crisis and therefore a higher market saturation in that area

o 2009 store sales growth declined but still remains strong due to the spike in growth because of the Bejiing Olympics

o strategy focuses on second and third tier cities which have a low income level but highest growth potential

Social

o China has become the subject of major sportswear brands’ attentions due to the Bejiing Olympics

o more young Chinese consumers who are interested in sports apparel

o Western and Chinese business practices gap – difference in culture

o Western and Chinese size difference

o Fast moving consumer goods sector – frequent changes in consumer taste habits with design and fashion

o increase in sponsorship in China

Technological

o improvements in product design

o retail experience improvements by Adidas (sports performance and style all under one roof)

o growth of research and development centres

Legal

o in 2004 Li Ning went public on the Hong Kong Stock exchange establishing itself as an international brand

o partnership with French sports apparel brand AIGLE and Italian brand Lotto

Environmental

PORTER’S FIVE FORCES

Threat of entry

o Low barriers to entry

- many global brands have also entered sports apparel market in China

- Chinese market represents a large proportion of global industry which is rapidly growing.

- low differentiation amongst international competitors through high quality products

o high barriers to entry

- large product base from competitors making it very expensive for new entrants to match

- high differentiation amongst home competitors through high...