Business Strategy of Gap Inc.

Gap Inc. is a popular retailer that provides clothing accessories and personal care products for babies, children, women and men. The company has a total of more than 3000 stores across various countries of the globe and employee more than 1,50,000 people in the stores as their employees. Read about the business strategy, key issues, and solutions to overcome the challenges. Also, find out the applicable theories and frameworks.

Running head: BUSINESS STRATEGY
Business strategy of Gap Inc.
Name of the student
Name of the university
Author Note:

2
BUSINESS STRATEGY
Table of Contents
Introduction......................................................................................................................................3
Business Strategy of the Company..................................................................................................4
Original Vision and Mission of the company..............................................................................4
Corporate philosophy...................................................................................................................4
Code of Business Ethics..............................................................................................................4
Objectives of gap.........................................................................................................................5
Business Model of the Company.....................................................................................................5
Key Issues of the Company.............................................................................................................6
Strategic Solutions to the Issues..................................................................................................7
Theories and Frameworks that are applicable in the Company.......................................................8
BCG Matrix.................................................................................................................................8
Porter’s Five Forces Analysis......................................................................................................8
Recommendation with Justification................................................................................................8
References......................................................................................................................................10

3
BUSINESS STRATEGY
Introduction
Gap Inc. is a popular retailer that provides clothing accessories and personal care
products for babies, children, women and men. The company provides the products under a
variety of brand names like Gap, Old Navy, banana republic, Piperlime and Athleta brands. The
stores of the company are generally located in the USA, Canada, Japan, Ireland, France and
many more such countries. The company has a total of more than 3000 stores across various
countries of the globe and employee more than 1,50,000 people in the stores as their employees.
Apart from this business, the company has also other subsidiaries like Gap Kids, Baby Gap and
Gap body. The organization has also maintained its presence in the online world with the help of
gap.com, oldnavy.com, type online.com and many more similar websites to cater to the needs of
online customers. All of the clothing products produced by the company are private label
Merchandise that is made specifically for the organization. The management of the company
designs each and every aspect of the business which starts from store displays and other controls.
The company experienced a major growth from the year 1980. The time between the
years 1990 to 1999 was the progressive expansion efforts of the company. In the year 1993 the
organization became the second largest fashion styling apparel brand in the globe. The company
is slowly expanded itself globally as they entered into the French Marketplace which is
considered as the birthplace of fashion. In the year 2005 the management of the company
revamped its online stores and offered much more convenience and interactive shopping
(gapinc.com, 2018). The same here also so get to introduce Forth &Towne in the city of Chicago
and New York. The store caters mainly to pregnant women that offer stylish, age appropriate
clothing especially designed to appeal to their feminist characteristics and individuality. In the
year 2007 Glen Murphy became the CEO of the organization and within a few months of
appointment as the CEO he closed all the 19 Forth & Towne stores across Chicago and New
York. On the other hand in the next year the management under the leadership of Glen acquired
all the capital stock of Athleta Inc. the women’s sports and active apparel company present in
California for $148 million. Another important factor that is added to the success of the company
has been the continuity of the company to add stores annually in different countries of the globe.

4
BUSINESS STRATEGY
Though all of the above stated strategies of the company seems quite encouraging the
annual revenue of the company dropped by 5% in the year 2011. The following drop affected the
total revenue for the month that fell to $ 949 million which was just a small increase from the
earlier $948 million (gapinc.com, 2018). Gap also includes the banana republic and Old Navy
change outlets and other small written concerns and is also one of the biggest clothing sellers of
USA. However the annual revenue at these different stores drop by 10% while the revenue
growth fail by 6% for the different stores of gap. Another upsetting figure was the fall of 4% at
banana republic and 3% at Old Navy in the same year (gapinc.com, 2018).
This direct fall in the sales and the revenue is a challenge to the management of the
company and thus the company needs a clear strategic plan to overcome the crisis in the future.
Business Strategy of the Company
Original Vision and Mission of the company
The company in original does not have any proper mission and vision statement. The
company generally claims itself to be a brand builder and also claims to create emotional
connection with the customers around the globe through providing proper product design unique
store experiences and a great marketing experience (gapinc.com, 2018).
Corporate philosophy
The management of the company find it hard to claim a leader in the clothing industry.
The statement of corporate philosophy of the company States that the company wants to make a
lasting and positive impression on the people and the communities with whom they do business.
This is because the company believes that it is right to do the things that are good for the
business. The following means to deliver value to the shareholders while walking to listen the
impact of the planets and make the government workers a part of the company and its culture.
Code of Business Ethics
The management of the organization has formulated when established code of ethics and
has translated it into a large number of different languages that helps to address the different
aspects and guidelines about the purpose responsibilities lodge violations retaliation policy

5
BUSINESS STRATEGY
charges benefits and other waivers of the company (gapinc.com, 2018). The following code also
establishes a responsible and ethical work environment for all the employees and supervisors. It
also provides a common platform for the employees two voice their concerns against conflict of
interest discrimination or violence in the workplace. It is also mentioned that taking bribes not
following international trade regulations and carrying on other illegal activities within the
workplace is directly against the code of ethics and also the management of the company. The
company will employ a zero tolerance policy if any employees are found to violent the code of
ethics.
Objectives of gap
The current objectives of the company are as follows,
1. Targeting life skill casual clothing consumer family
2. Targeting the secondary consumers who seeks sports clothing
The first objective of the company is met by operating different retail outlets for the teenagers
and adults while the second objective is met by operating different sports outlets where sports
clothing of different ranges are available.
Business Model of the Company
The business model of the company is the plan of the organization to generate revenue
and make a profit. It discusses on what kind of products and services, the management of Gap
Inc plans to manufacture and what kind of the expenses that the organization will incur to ensure
the profit of the organization. The management of Gap Inc. has proposed a five year goal to
implement the plans of the organization. It aims to attain the tag of being the frontrunner
company for the production of different types of green products with an innovative and effective
supply chain (gapinc.com, 2018). The company will adapt its strategies in line with the new
survey results where it is seen that almost75% of the consumers in the modern market will be
more likely to buy a product or service from any organization if it aims to become sustainable in
nature. Other initiatives that will be taken up by the management of the clothing company will
involve the investment in human resource capital, partnerships with other large as well as small
organizations and also acquiring organizations to continue the growth of the business. Apart

6
BUSINESS STRATEGY
from this the company intends to maintain long term strategic partnerships with the suppliers of
the business and use recycled materials for producing clothes (gapinc.com, 2018). Lastly the
company intends to follow Smart shipping programs and reduce the emission of gas to make
itself a green organization (gapinc.com, 2018).
Key Issues of the Company
The presence of a large number of social media channels, online retail stores, online
websites of shopping has change the way the modern consumers does shopping. The availability
of less time and the increase in different types of shopping options for the consumers have thus
changed the trends of shopping. A shopper nowadays prefers an online shopping site more than
that of a store in large shopping mall. The absence of an advanced and technologically superior
shopping site has worked negatively for Gap Inc. The early disbelief of the management on
online shopping sites led the company to focus and invest more on physical stores which is
slowly becoming out of date and obsolete in the modern days.
Another issue which the company faces is from the designing of the cloth items by the
organization. The clothing manufactured by the organization is generally designed, manufactured
and then packed for shipping to the retailer. All of the following process totally involved a total
traditional set up and the total process of producing and then actually transferring the same to the
end consumers usually took a long time and was very much costly.
As said earlier, Gap Inc has most of its stores located in large malls to attract most of the
visitors. However, by the passage of time the importance of mall has reached a new low as
people prefers mall as just a place to hangout rather than to shop. According to, McCormick et
al. (2014) the increase in the number of online shopping websites has been the main reason for
the great decline in the interest of people over malls.
Lastly the presence of strong competitors in the market is one of the key issues of the
decline of the company in the global market. The presence of large scale competitors in the
business like Inditex Group, famous for the brand Zara Stores and other famous retail brands is
one of the major threats to the growth of the organization in the market. Inditex group has a well
designed and technologically advanced logistics network with a presence in 88 different

7
BUSINESS STRATEGY
countries and under 29 different online brands. The company distributes Zara brand in China
through the largest online Chinese sales platform, tmail.com.
Apart from this there are also other major problems in the organization which involves
the failure to understand the latest trends in the shopping market. The management of the
company totally fails to understand the market and thus fails to address the demands and exact
needs of the consumers. Different surveys on consumers using clothing of Gap for a few years
now have revealed that the company takes least care about the demands of the consumers. The
absence of the market study makes them dull on the needs of the customers and the trends that
have been in the fashion market (Chakraborty, Lee, Bagchi-Sen, Upadhyaya & Rao, 2016).
Therefore the consumers have the feeling that the organization is engaged in production of the
same brands and the same quality and style each and every year. The consumers also complain
about the marketing and promotional ideas that are implemented by the organization as they find
it to be very boring and usual and with least or no such variation in the quality of such strategies.
The study of (Christopher, 2016) has found out that most of the consumers find it
unattractive as because the organization has been unable to have a strong online presence and
still relies on old and outdated online techniques that are time consuming. This has led to a
decline of the sales and has been a key issue in the organization. The presence of other online
shopping option in the likes of Zara.com has processed the shift of the consumers from Gap to
its rivals in the clothing market.
Strategic Solutions to the Issues
The emergence of fast fashion has outdated the traditional process and thus the
management of the company needs to immediately implement the following process to ensure
the chances of profitability. It is important for the company to discard old practices and
implement modern and technologically advanced practices to ensure success for the
organization. The organization needs to develop a technically superior and user friendly online
shopping app for the consumers to follow the new trends of online marketing. The marketing
department of the organization must conduct market surveys along with competitor analysis to
get a clear vision of the wants and needs of the customers. The better, the organization will have

8
BUSINESS STRATEGY
a clear view of the needs and demands, the easier it will be for them to produce the exact quality
of clothing as demanded by the customers.
Theories and Frameworks that are applicable in the Company
BCG Matrix
The following matrix clearly portrays and graphically represents the divisions in terms of
the relative share position of the market and the growth rate of the industry in which the
company operates (Elliott, Rosenbaum-Elliott, Percy & Pervan, 2015). The BCG Matrix’s
product portfolio matrix is designed in such a manner that it helps with a much long term
planning which helps the business to consider different kinds of growth opportunities by the
review of the different kinds of the products and their portfolio. The selection of the portfolio of
the products helps the organization to decide on whether to invest or to discontinue the
production of different kind of products. The BCG Matrix is generally used because it draws
attention to the cash flow, investment characteristics and other kind of needs of the organization.
The analysis provided in the following report have shown that the organization is always
in search for the total profit and generate the cash flow and manage it accordingly.
Porter’s Five Forces Analysis
The Porter’s Five Forces generally deals with five different elements namely threat of
substitutes, entry of new forces, power of supplier, power of buyers and rivalry among the
competitors. According to the following case study the main force that will bother the following
organization is the rivalry that exists among the competitors of the company. Abercombie
&Fitch, American Eagle Outfitters, Inditex group, Zara and many more other similar clothing
brands act as a threat for the company. The rise in the number of clothing brands in the last 10
years along with the development of the online fashion stores have enhanced the growth of the
organizations and led to a decrease in the market share of the company (Henninger, Alevizou &
Oates, 2016). However the brands are similar in one way as they prove to cater to the household
casual wear brands.

9
BUSINESS STRATEGY
Recommendation with Justification
As mentioned earlier the reports published in the different annual articles on the company
between the year 2015 and 2016 has shown a decline of sales by 3%. The Banana Republic
which experienced 7% and 10% declines respectively in the year 2015 and 2016. The same
happen for other gap stores and there was a little increase by just one percent in the old Navy
store between the year 2015 and 2016. The sales decline at the company is a serious concern for
the organization as each and every brand of the company has shown or negative growth. The
negative growth is surely to hamper the spread of the Company across the globe.
In the modern competitive market it is important to adapt to different marketing
techniques to ensure smooth business. A retailer who sells through both physical stores and
online marketplaces by the use of social media and email for communicating with the consumers
is preferred more than a retailer who prefers to sell his products through only a single channel.
The combination of the omnipresence of the retailers along different channels and creating a
number of distribution channels he is one of the modern practices of marketing.
The company failed to came out with specific vision and mission statement. This is
because most of the persons will be ignoring and also assuming that the vision along with
mission is not an important part of the organization. Most of them just get the marketing trends
and preferences. The organization must concentrate on nothing less than to satisfy the fashion
designers of the consumers by ensuring quality but yet affordable clothing through the different
clothing brands of the company. Secondly it is necessary for the organization to organize a clear
and precise segmentation of the market in which it operates. The fashion trends are always
changing therefore the company must identify its niche market. The focus group of the enterprise
must be aware of all the different products of the company. This is because the more there when
the more is will be the passion to buy quality products from the business enterprise.
It is also recommended for the organization to close the stores which generally runs on a
loss. It is prudent to not operate such stores that generally provide loss. It will be a wise idea for
the organization to focus on the branch which gives profit to them rather than engaging in loss
making branches.

10
BUSINESS STRATEGY

11
BUSINESS STRATEGY
References
Chakraborty, R., Lee, J., Bagchi-Sen, S., Upadhyaya, S., & Rao, H. R. (2016). Online shopping
intention in the context of data breach in online retail stores: An examination of older and
younger adults. Decision Support Systems, 83, 47-56.
Christopher, M. (2016). Logistics & supply chain management. Pearson UK.
Elliott, R. H., Rosenbaum-Elliott, R., Percy, L., & Pervan, S. (2015). Strategic brand
management. Oxford University Press, USA.
Gapinc.com. (2018). Home. [online] Available at: http://www.gapinc.com/ [Accessed 4 Dec.
2018].
Hasan, B. (2016). Perceived irritation in online shopping: The impact of website design
characteristics. Computers in Human Behavior, 54, 224-230.
Henninger, C. E., Alevizou, P. J., & Oates, C. J. (2016). What is sustainable fashion?. Journal of
Fashion Marketing and Management: An International Journal, 20(4), 400-416.
Huq, F. A., Chowdhury, I. N., & Klassen, R. D. (2016). Social management capabilities of
multinational buying firms and their emerging market suppliers: An exploratory study of
the clothing industry. Journal of Operations Management, 46, 19-37.
Jary, M., & Wileman, A. (2016). Retail power plays: From trading to brand leadership.
Springer.
Kopnina, H., & Blewitt, J. (2018). Sustainable business: Key issues. Routledge.
Kozlowski, A., Searcy, C., & Bardecki, M. (2015). Corporate sustainability reporting in the
apparel industry: An analysis of indicators disclosed. International Journal of
Productivity and Performance Management, 64(3), 377-397.
McCormick, H., Cartwright, J., Perry, P., Barnes, L., Lynch, S., & Ball, G. (2014). Fashion
retailing–past, present and future. Textile Progress, 46(3), 227-321.

12
BUSINESS STRATEGY
Perry, P., Fernie, J., & Woods, S. (2018). The international fashion supply chain and corporate
social responsibility.
Radaelli, G., Guerci, M., Cirella, S., & Shani, A. B. (2014). Intervention research as management
research in practice: learning from a case in the fashion design industry. British Journal
of Management, 25(2), 335-351.
Robinson, P. K., & Hsieh, L. (2016). Reshoring: a strategic renewal of luxury clothing supply
chains. Operations Management Research, 9(3-4), 89-101.
Shankar, V., Kleijnen, M., Ramanathan, S., Rizley, R., Holland, S., & Morrissey, S. (2016).
Mobile shopper marketing: Key issues, current insights, and future research
avenues. Journal of Interactive Marketing, 34, 37-48.