Internal Analysis of GAP Inc.

This report discusses the internal analysis of GAP Inc. by focusing on their resources, capabilities, and core competencies.

Strategic Management
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STRATEGIC MANAGEMENT

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Contents
Introduction...........................................................................................................................................2
Internal Analysis....................................................................................................................................2
Conclusion.............................................................................................................................................5
References.............................................................................................................................................6
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Introduction
GAP is a global clothing retailer that originated in US in year 1969 and is headquartered in
San Francisco, California. It has six core segment that are currently functional i.e. GAP,
Banana Republic, Old Navy, Intermix, Athleta and Hill City. GAP is biggest specialty retail
business in America and is third largest across the world, after Inditex and H&M. In this
report internal analysis has been discussed for GAP Inc. by focusing on their resources,
capabilities and core competencies.
Internal Analysis
Resources
The major resources of GAP Inc. includes their operations where their OLD Navy brand
which is a budget category portfolio is biggest resource for their earnings and consist of 45%
of overall sales. Another resource is their brand name and identity where The GAP brand
itself leverages for more than 1/3rd of their sales. Other resource of GAP brand is their
upmarket portfolio named Banana Republic which contributes to 15% of total sales followed
by Athleta which is an activewear brand and Intermix which is a designer wear brand. GAP
owns and operates majority of their stores and franchises around 10% of store locations.
Another resource for GAP Inc. is their geographical reach where GAP secures more than
85% of their overall sales from North America. Also Asia, Japan and China accounts for
GAP Inc. second largest market that contributes to over 10% of total sales followed by
Europe ( the United Kingdom, Ireland, France, Italy) which accounts for 5% of sales
(GlobalData plc 2016). GAP Inc. has over 430 franchise outlets throughout Asia, Europe,
Latin America, Middle East and Africa. The other resources of GAP Inc. such as distribution
and warehouse facilities are located throughout USA including Arizona, California,
Kentucky, New Mexico, New York, Ohio and Tennessee along with facilities located across
Canada (Ontario), China (Hong Kong), Japan and the United Kingdom.
The other resource of GAP Inc. is their sales and marketing as it helps them to interact and
connect with their customers through various platforms like television, print media or social
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media as GAP Inc. have extended their resources to digital system and now the company
provides a range of omni-channel services. Other resource of GAP Inc. is strong free cash
flow that enables them to offer resources to extend into new markets, R&D activities and
product development. During 2017, GAP Inc. spent around 673 mn dollars on advertising in
contrast to 601mn dollars in 2016 and 578 mn dollars in 2015 which reflects their strong
financial resources and investments (GAP 2017)
Capabilities
The key capabilities of The GAP Inc. is their strong brand portfolio that has been established
over their years of investment for developing a strong brand image and reputation. Their
strong brand identity is extremely capable which helps them to expand into new markets and
product categories. Other key capability of GAP is their successful track record of
collaborating with complimentary enterprises through mergers and acquisition and GAP Inc
has successfully integrated with various technology firms in past decade which has helped
them to build capable operations, streamlined process and valuable supply chain (Radojevich-
Kelley & Hoffman 2012). Also automation of different operations at GAP has facilitated
consistency of quality in their product and operations which in turn has enhanced their
economies of scale and have facilitated them to scale up and/or down their inventory based
on demand situation in the markets. This has enabled GAP to become largely successful in
Go-To market approach for their products. Moreover, one of their capabilities also includes
strong performance in new markets where the company has pioneered the expertise of
entering into new markets and making them successful. These extensions into new markets
and locations has enabled GAP Inc to create more revenue streams as well as diversify the
economic cycle risk into different markets where they operate, thus enabling them to
maintain consistent profitability and growth (Arrigo 2013). Another capability of GAP Inc.
is their strong supplier network where the company has successfully developed a culture
among their vendors and dealers where they not only facilitate the company’s products but
also invest in training of sales personnel where they interact with customers and raise
awareness about the ways that can be used to get maximum benefit from products. Another
remarkable capability of GAP Inc. is their strong returns on capital expenditures where the
company is substantially successful in implementing new projects and generating strong
returns over capital expenditures through development of new revenue streams for growth
and high returns.
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Other capability of GAP Inc. is their omni channel which has bridged digital space and
physical outlets thus enabling state of art shopping experience irrespective of customers
location i.e. online or in-store. The comprehensive omni-channel capabilities has been driven
by few elements as follows:
Ship from store: this element was introduced in 2011 and facilitates inventory throughout
GAP, Banana Republic, Old Navy and Athleta thus enabling them to connect supplies with
customer demand. The Ship from store has driven supply and inventory capabilities of GAP.
Find in store: the customers who shop online and on mobile systems can utilise Find in Store
feature of GAP that was introduced to help customers easily locate their goods in stores.
Knowing that several customers pre-shop online this feature has added extra capability to
improve online service of GAP while driving customers to in-stores.
Reserve in store: another element that has facilitated online shopping capability of GAP is
Reserve in store feature that allows customers to conveniently place their merchandise on
hold in a store.
Order in store: this feature is a new approach to enhance online shopping and omni-channel
capability at GAP which will make shopping easier and personalised. With this feature if a
customer is not able to find exact size, colour or style then they are assisted by GAP
personnel’s to order -in store and then desired item is delivered to customer doorstep.
Core competencies
The core competencies of GAP Inc. includes:
Sustainability: as reputed clothing brand GAP has made significant efforts to add
opportunities to resolve systemic social and environment concerns and have committed to
add business value to ensure safe, fair working conditions for their employees, reduce
environment impact and work with industry to attain global sustainability goals. GAP has
aligned with sustainability approaches of UN Global Sustainable development and
framework for UN Guiding principles on Business and Human Rights and Paris Agreement
on climate to develop competencies and skill development to address sustainability issues and
reduce impact across value chain, business and society.
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Stakeholder engagement: GAP Inc. other core competence is their ability to engage with
stakeholders on different concerns to ensure collaboration and joint developed solutions.
GAP engages stakeholders to form alliances which helps them to get clear interpretation of
issues and local situations where business is done and this engagement helps them to
improvise solutions, restructure approaches and scale solutions. The extensive stakeholder
engagement and collaboration helps GAP to effectively find out new strategies, competencies
to develop collective solutions to different needs or concerns.
Talent management: GAP’s dedicated focus on empowering a culture that attracts and
involves talented workforce helps them to tap opportunities to attain organisational goals by
ensuring to offer work-life balance for employees. Employees are offered programs and
personalised experiences that helps them to develop their skills and utilise full potential thus
giving talented resources scope for new challenges, roles and responsibilities. This talent
management approach has ensured greater satisfaction and career development scope for
employees which helps to retain workforce (Cohen 2017).
Supplier Sustainability: GAP has partnership with all their suppliers and stakeholders which
helps them to offer safe, fair and healthy environment. Through holistic approach GAP
executes different programs for supplier sustainability that promotes collaboration and
improves working conditions and competencies (GAP 2017). Through different programs
capability of suppliers are developed so that management relations, innovation in employees
as well as access to improved resources, working conditions can be facilitated to ensure better
supplier engagement through responding to different needs.
Product sustainability: GAP has sharp focus to develop great product which are sustainable
and hence their competency involves empowering collaboration across business to ensure
approaches that promotes sustainability performance in brands and products. This outlook
helps GAP to deliver competence to produce products responsibly.
Conclusion
Thus it can be concluded that GAP has successfully leveraged on their different resources to
capitalize their operations, revenue generation, market reach and promotions which has
helped them to maintain extraordinary brand awareness and popularity among customers in
different markets. Also they have explored their different capabilities such as strong brand
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name, financial capability, automated operation, supplier collaboration and strong omni-
channel approaches to build their strengths and growth opportunities. Further, competencies
like focus on sustainability, supplier engagement, product sustainability and talent
management has ensured facilitation of strong practices and good working conditions to
attain desired goals and outcomes along with gaining of support from different stakeholders
involved in business which has ensured their overall market gain and extensive reach.
References
Arrigo, E. (2013). Corporate responsibility management in fast fashion companies: the Gap
Inc. case. Journal of Fashion Marketing and Management: An International
Journal, 17(2), 175-189. https://doi.org/10.1108/JFMM-10-2011-0074
Cohen, E. (2017). Employee training and development. CSR for HR (pp. 153-162).
Routledge.
GAP (2017) Global sustainability report. GAP Inc. Retrieved from
https://www.gapincsustainability.com/sites/default/files/Gap%20Inc.%202017%20Report.p
df
GlobalData plc. (2016). Retailing - company profile, SWOT & financial analysis.
GlobalData plc: Basingstoke. Retrieved from
https://search.proquest.com/docview/1829948247?accountid=30552
Radojevich-Kelley, N., & Hoffman, D. L. (2012). Analysis of accelerator companies: An
exploratory case study of their programs, processes, and early results. Small Business
Institute Journal, 8(2), 54-70. https://www.sbij.org/index.php/SBIJ/article/view/136
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