Marketing major students in college are often asked to conduct marketing analysis so that they can study the current state or dynamics of the market or a certain industry. One of the most common analysis tools that is being utilized by marketing majors and those who needs to make an important decision is the SWOT analysis. Another tool that is being used is the PESTLE analysis. A PESTLE analysis is conducted in order for brands and companies to gain an understanding of the market before producing or launching a product. This article will present a sample of what a PESTLE analysis looks like by using the luxury fashion brand Dior as the study.
Popularly known as Dior, Christian Dior SE is a France-based company founded in 1961 and currently distributes products through over 400 subsidiaries across the globe. Christian Dior SE is engaged in different product lines like fashion, wines and spirits, leather goods, fragrances, cosmetics, accessories, and retailing. However, This PESTLE analysis will only focus on Christian Dior Couture, Dior’s group that is focused on designing, manufacturing, and selling luxury fashion articles.
Christian Dior Couture produces haute couture, ready-to-wear clothing, watches, leather goods, jewelry, makeup, and perfume for both men and women. It is currently the world’s third largest fashion group making a revenue of more than $55 billion as reported in the year 2020.
Here are some of the political factors that affects Christian Dior as observed in this PESTLE analysis:
Although operating worldwide, Christian Dior is primarily based in France. Because of this situation, Dior has to be familiar with and manage the political scenarios in every country it operates in. For instance, Dior operates in Italy and the country has faced an extreme lockdown due to the pandemic in the past year. Dior’s operations in that country may have come to a halt in order to comply with the enforced lockdown.
However, since Christian Dior Couture’s parent nation or is based in France, the company has to consider and keep a close eye on the political situation in France. The manufacturing of their haute couture and jewelry products adheres to the legislation that is set in France so as to avoid conflict. Their other products, such as leather goods, sunglasses, and jeans are manufactured in other countries such as Italy and Japan.
Overall, the legal department of Christian Dior mainly keeps track of the political climate in France is it is its parent nation and new policies or changes may affect their operations. They make sure that they not only comply with France’s laws, but also that there is political stability in the country to ensure that their operations flow smoothly, that there are reasonable labor laws imposed, and that there is protection for exporting and importing materials and products.
Here are some of the economic factors that affects Christian Dior as observed in this PESTLE analysis:
Checking the economic factors that may affect the operations of Dior is of critical importance because this may determine the business’ success in a particular country. The fact that it is the third largest fashion group in the world would not matter as a severely negative political climate may affect their standing. This can be evidenced by how they went from being the top largest fashion group to being the third in just three years.
First off, the unemployment rate in a country they are manufacturing and selling in plays a crucial role in determining Christian Dior’s success in that particular country. This is because if a country has a high employment rate, this would translate to saving Dior from a much higher payroll expenses while selling Christian Dior products in an economically unstable country would not do well for business because Christian Dior Couture is a luxury fashion brand and most people would not be able to afford it.
The second thing Dior has to check in terms of a country’s economy is the rates of loaning. Higher interest rates mean that Dior will have trouble taking out a loan because it will affect the company’s financials. A big high fashion company like Dior needs to take out loans in order to cover the costs of procuring raw materials, labor, and setting up a manufacturing plant or workshop.
Finally, since Christian Dior Couture operates in different countries across the globe, the countries it operates in should have a healthy currency exchange rate against the US dollar or the euro.
Here are some of the social factors that affects Christian Dior as observed in this PESTLE analysis:
These days, younger people are interested in fashion and are inclined on following high fashion brands like Christian Dior. Many young people are also being encouraged to be up-to-date on the brand’s activities such as collection launches and fashion shows. Aside from that, many young people have the money that they need to purchase luxury articles.
Although, there are still some older people that are purchasing luxury products for their collection. Some people think of Christian Dior products as a status symbol and use it to project their identity and financial capabilities. Because money is an issue when it comes to luxury brands like Dior, they make sure to focus their marketing strategies on those who are actually capable of purchasing a product to avoid incurring a loss on their part.
Here are some of the technological factors that affects Christian Dior as observed in this PESTLE analysis:
Over the years, the world has witnessed a lot of technological revolutions. The fashion industry is not exempt from this as even they utilize advanced technology such as RFID for their business operations right from procuring raw materials to selling their products. Christian Dior uses RFID to track their materials and manufacturing process as well as in their stores where there is an interactive augmented reality and virtual reality that can be experienced in their dressing rooms.
Aside from RFID, another technological advancement of Dior is the way they set up a very pleasing website where people can read about the company’s history, know where to locate a store, buy products online, and find out where they take a Christian Dior product for repair. Dior even has social media accounts where a social media manager is tasked to produce content and interact with their followers and answer queries.
Here are some of the legal factors that affects Christian Dior as observed in this PESTLE analysis:
Christian Dior does not only focus on the political climate of the country but also the legal implications that may affect the fashion industry and thus their business operations. One of the main things they look into is the labor laws of the country as they have to strictly comply with the minimum wage, the number of working hours, safe working conditions, and other benefits that a worker should be offered.
The second thing they look into is the taxation laws of the country as this may heavily affect their financials. Hand in hand with that is the import and export laws as this will affect their manufacturing process and operations. These laws vary from country to country and their plan for each country is modified to comply to the laws of the country they are operating in to avoid legal implications.
The third thing they are looking into is connected to the last thing that is going to be discussed in this PESTLE analysis which is the country’s laws regarding waste disposal. If not properly studied and complied, this may become an issue especially in countries with very strict environmental laws.
Here are some of the environmental factors that affects Christian Dior as observed in this PESTLE analysis:
To continue with what was previously discussed, Christian Dior, being an environmentally conscious company, is dedicated to making sure that their manufacturing process is environmentally-friendly. The company helps save the environment by avoiding waste disposal in bodies of water and controlling the carbon emission produced by their manufacturing plants. Furthermore, they have taken steps to minimize their energy and water usage so they could prevent harming the environment.
The PESTLE analysis for Christian Dior Couture as seen above accentuates the factors that affects the company, its operations, and its overall performance. This PESTLE analysis can help evaluate and understand the climate and issues the brand needs to address so as to sustain its operations and improve where needed.
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Reuters Editorial. (n.d.). DIOR.PA - Christian Dior SE Profile | Reuters. Reuters. https://www.reuters.com/companies/DIOR.PA