Strategic Management Report: Analyzing Gap Inc.'s Business Strategies

This report provides a comprehensive strategic analysis of Gap Inc., a major player in the global retail industry. It begins with an introduction to the company and its operations, followed by an examination of the external environment using tools like PESTLE analysis and Porter's Five Forces to identify opportunities and challenges. The report then delves into Gap Inc.'s mission and vision, aligning them with market demands, and explores the company's strategies, competencies, and capabilities through SWOT analysis. It further examines how Gap Inc. creates, delivers, and captures value for its customers. The report concludes by discussing strategies the company can use to defend its core business and maintain a competitive edge in the apparel market.

Strategic Management

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Analysis of external environment by using various models and concepts..................................1
Various opportunities and challenges in existing market............................................................3
TASK2.............................................................................................................................................4
Vision and mission aligned to demand of marketplace...............................................................4
Company strategies competencies and capabilities.....................................................................4
The way company creates, delivers and capture value to its customers......................................8
TASK 3............................................................................................................................................8
Strategies that company can use to defend its core business.......................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Strategies management refers to various plans and strategies that company formulate in
order to take competitive advantages need to be managed effectively for achievement of
organisational goals. There are various external factors that impact on functioning and
performances of firm so they need to be considered for effective and smooth operation of
business. This report is about Gap Inc that was founded in 1969 that is largest specialist
retailers in United States having 135,000 employees and 3727 stores operating worldwide to
provide qualitative product to customers. The report discuss about various external factors
that affects operation of firm and strategies so that it can gain competitive advantages. It also
explains about strategic competencies and capabilities and the way firm create value within
market. At last it explains about possible strategies that firm uses to increases its profit
margin and sales volume in order to differentiate itself from other competitors.
TASK 1
Analysis of external environment by using various models and concepts
External factors refers to various all such factors that are outside control of firm but
directly impact on its functioning such as policies of government, economic condition of
country, social preferences and trends of people living in the society (Castañer and Ketokivi,
2018). Environment, technology and legal factors also impacts on smooth operation of company
so firm by considering such factors is able to protect itself from various threats and can
competitive advantages in the industry. Various model and theories like Pestle Analysis and
Porter five forces are used to illustrate that various external factors impact on Gap operation such
as:
Pestle Analysis:
It is most important tool that is used by most of the firm to analysis and evaluates various
external factors that impact or influence functioning. Therefore Gap Inc by using Pestle analysis
is able to formulate strategies that helps firm in gaining competitive advantages and increase its
market share.
Political Factors: It included policies and procedure of governments such as U.S. presidents has
imposed that American firm has to manufacture products in America only. That means instead of
importing from less develop countries it have to produce products within country so Gap has to
changes its strategies to manufacture products in U.S as most production of firm takes place in
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South-East Asia (Steinbach and et.al., 2017). As company operates globally so it has to follow
various policies and procedure of other countries such high taxes to be paid or some countries
resist to new companies to come and operates in country. Therefore all such policies of
government impact on performance and strategies of firm to enhance its market share.
Economical Factors: Such factors also impact on strategies of firm as it included disposable
income of people, interest rate and education level of people living in the society. Retail industry
is facing tepid especially in apparel sector thus Gap sales volume and profitability has declined.
Thus it can be explained that economic factor impact on sales and market share of company but
it by decreasing cost of products is able to attract large number of customers.
Social Factors: As preferences and taste of people changes continuously so firm in order to
achieve its goal has to identify needs of customers and think ways to satisfy them in most
effective manner. As Gap deals in clothing and fashion it by considered present trends and
demand of people related to design helps firm in gaining opportunity to meet needs of customers
and increase its profit margin (Augier and Teece, 2018). Therefore it also impact on strategies of
firm as it by changing strategies is able to motivate and influence people to work effectively.
Technological Factors: Due to digitalisation and continuous innovation Gap is forced to use
innovative techniques in production and delivery of products to satisfy needs of customers. Gap
has provided mobile checkout store facilities to customers as well as purchasing product through
online website of firm. Thus Gap by changing its strategies to delivery products to customers
through innovative techniques is able to enhance its market share.
Environmental Factors: As gap operates its business across various nation and the customers
and government are getting aware about impacts of environment on health and safety of people.
Thus, it forces Gap to take step for conservation of resources of environment by effectively
utilising available resources thus reducing wastage and cost of production.
Legal Factors: Various legal laws and rules need to be followed by firm for smooth operation
and survival of it in the industry. Gap Inc pay equal compensation to both men and women, it
also follow international standard, legal laws and ethics while formulating strategies thus able to
gain competitive positioning and enhances its brand image.
Porter Five Forces:
It is another tool that analysis level of competition in the retail industry that impact
growth and success of Gap Inc. Various factors such as power of customers, supplier, entry of
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new competitors and existing competition are considered to analysis and evaluate level of
competition (Witcher, 2019). Therefore porter five forces of Gap Inc is as followed:
Threats of new Entrance: New companies can easily enter into the industry by bringing new
innovation and ideas thus forcing Gap Inc to manufacture products at reasonable cost. As threat
of new entrances is high in retail industry thus Gap has formulated strategies to manufacture
innovative and standardise products at reasonable rates. Thus, it helps firm in gaining
competitive advantages and increasing profit margin.
Bargaining power of suppliers: There are large numbers of supplier in retail industry so firm
has more power to purchase inputs at lower costs. Therefore Gap can easily purchase input at
reasonable prices because of low power of supplier and strong brand image of company. Gap has
build effective supply chain so that they it can easily deliver products and services to large
customers within limited time and cost.
Bargaining power of customers: It also impacts on firms as customers preferences and trends
changes continuously and they switch from one brand to another for getting best products at
reasonable rates. Bargaining power of customers in retail industry is high but Gap is able to gain
competitive advantages by building strong relationship with customers (Li and et.al., 2019). It
also continuous innovate products so that it can charge competitive pricing from customers and
decrease power of people.
Threats of substitute products: Substitute products available in the industry also help in
analysing level of competition in the industry. Products that have similar value are high in retail
industry as clothing and shoes can be easily copied by others. But Gap Inc by manufacturing
qualitative, innovative design and standard clothing is able to motivate customers to purchase
products and services of firm.
Rivalry among existing customers: Gap Inc is operating its function in competitive apparel
stores industry so firm by manufacturing differentiate products is able to enhances its market
share and sales volume (Nerur, Rasheed and Pandey, 2016). Therefore company by maintaining
its quality of products and services is able to reduce competition among industry.
Various opportunities and challenges in existing market
There are various opportunities and challenge in the industry that firm by analysing and
evaluating is able to protect itself from threat and able to make effective utilisation of available
opportunities. Such as Gap Inc. has an opportunity to expand its business across worldwide by
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using innovative technologies to satisfy needs of customers. Gap Inc by manufacturing
innovative and creative design clothing is able to attract large number of customers (Weiss,
2017). Innovative technologies helps in brining economic of scale and reducing cost of
production thus Gap can manufacture products at reasonable rates and meet demand of
customers. Gap has uses social media to market its products and services so that it can attract
large number of customers to buy products of company. It has helps in increasing sales and
profitability as customers feel ease and comfort when products are delivered at their door steps.
Therefore company by offering products through social sites can satisfy needs of customers in an
effective manner. But despite of so many opportunities in the industry firm faces lot of
challenges such as increase in competition, substitute products. Therefore, Gap Inc by
manufacturing qualitative products at reasonable rates is able to gain competitive advantages and
reduces threats of increase competition and substitute products.
TASK2
Vision and mission aligned to demand of marketplace
Gap mission is to democratize fashion and make shopping fun again and to introduce
incredible styles and qualities so that customers needs are satisfied and give them memorable
experience. Company mission is to improve living of people and manufactured products that are
highly distinguished and qualitative to meet customers’ needs and preferences. Gap mission
statement is aligned with market place as it able to improve living standard of people and fulfil
their requirement of qualitative clothing. It provides wide varieties of products for men, women
and kids thus able to fulfil needs of large customers (Martinsons, Davison and Huang, 2017).
Gap vision is to create opportunities for people and communities to improve their living standard
by touch and feel of business. Thus, company vision is not only to design innovative clothes but
also to serves large number of people by maintaining quality of products. Therefore it creates
opportunities for large number of people to improve their living standard by offering product
across global market.
Company strategies competencies and capabilities
Company formulate various strategies in order to enhance its market share and
profitability for achievement of organisational goals (Heath, 2018). Through two models
such as SWOT Analysis and VRIO frameworks strategies competencies and capabilities of
Gap Inc can be explained:
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SWOT Analysis: It is an analytical tool that evaluates internal strength and weakness of
firm that helps company in facing threats and making effective utilisation of opportunities.
Therefore, SWOT Analysis to know about strategies competencies and capabilities of Gap
Inc are as follows:
Strength: It refers to internal strength of firm that helps it in expanding its market share
and sales volume and to take competitive positioning. Gap Inc strength lies in its global
brand recognition to manufacture qualitative products such as clothing and shoes.
Therefore company formulate strategies to increases its sales volume by using strong brand
image to influences and motivate existing as well as new customers to purchase products
of Gap Inc (McMillan and Overall, 2016). Another advantage is Multi brand portfolio firm
by assigning different brand names for different products range is able to provide easy to
customers to recognise products and services that effectively satisfy their needs and
demands. Firm by using competitive strategies is able to expand its sales volume and
market share.
Weakness: It includes area in which firm lacks so such point need to be improved t for
survival and expansion of business across nation. Varieties of product and services is less
as customer when enter into Gap stores they find a wall of V-neck tees, array of jeans and
sweaters. Gap offer simple and essential products but now customers have become more
demanding so firm has to continuous innovate its products and services to meet changing
demand and needs of customers. Therefore, company has formulate strategies such as
innovate and creative design to remove its weakness and to grow and survive in the
industry. It has also wide its product range to meet demands an requirements of each and
every customers in the society.
Opportunities: Gap has opportunity to expand its market in Asian market as Philippines
is best suitable for old Navy products as they have more affinity towards American
products and services (Köseoglu and et.al., 2019). Japanese buyers also liked to buy
product and services that have high values so Gap Inc has opportunities to expand business
across Asia. Another strategies that firm has used to improve its positioning in online
market is by increasing its presences in social sites and own websites. It has found strong
growth in sales through online presences as large numbers of customers are able to know
about products and services offered by firm. Therefore all such competitive strategies
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increase its market expansion and online presence has promoted growth and success of
business across worldwide. Gap cash is program that is introduced by firm so that
customers can get more savings and offerings. Online delivery of products and hold them
for 7 days is also another strategies that attract new as well as existing customer to make
purchase of Gap products. Thus, such strategies helps in maintaining and retaining
customers loyalty and satisfaction and at same time promoting its long term growth.
Threats: Increasing competition and decreasing sales of Gap Inc is increasing threat for
company as it mostly relied upon Old Navy and Athleta brand. Most of the physical stores
are operating at losses due to decreases in sales of products and services. Thus, firm has
reviewed its brand in order to satisfied needs of customers beyond their expectancy and
enhanced its profit margin. Increasing competition such as Zara, H&M and Foreever21 are
continuously innovating its products and services so that it can meet needs and
requirements of people (Grant and Baden-Fuller, 2018). Due to high competition within
industry firm is forced to manufacture qualitative products at reasonable rates so that more
and more customers are ready to buy products of Gap Inc. Therefore company has
formulated strategies to invest more in research and development in order to manufacture
innovative and creative and unique design so that it can differentiate itself from other
competitors.
VRIO framework:
It is strategic tool that is used to analysis resources and capabilities of firm that
helps it expansion and growth of business. Therefore, by using VRIO framework Gap
strategies competencies and capabilities can be analysis and evaluated for smooth
operation of business.
BASIS Value Rare Imitable Organised
Employees Yes Yes No Yes
Management Yes No No Yes
Organisational
Structure
Yes No No Yes
Technologies Yes Yes Yes Yes
Employees: Gap has highly skilled, knowledgeable and experienced employees that work
effectively for achievement of organisational goals. Gap Inc manager has formulated
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various strategies to motivate and influences employees to enhance their performance so
that firm can achieve its objectives. Attractive compensation and various incentives are
some of the benefit that are provided by company to motivate employees to work hard for
success and growth of firm. Such competitive and capabilities strategies of Gap Inc help in
increasing its sales volume and profit margin. Employees helps in adding values of
products as they helps in providing better quality products and services so they are
valuable, organised and rare but imitable by other companies.
Organisational structure: Gap has definite organisational structure and roles and
responsibilities of each employee are clearly defined thus reducing conflict and confusion
among individuals. Employees of firm are highly motivated to work as team towards
achievement of specific task and avoid conflict for smooth operation of business
(Koseoglu, 2016). Company strategy is to provide good working environment and build
strong relationship among employees so that they can work together towards common
goals. Organisational structure is also valuable and organised not rare and can be imitated
so company has to prepare strategies so that no one can imitate organisational structure.
Management: Gap competitive and capabilities strength also lies in effective
management of people and resources of company. Manager and leader continuous uses
innovative techniques to motivate employees to work hard so that firm can improves its
profitability. Manager formulates strategies to reward and recognised efforts of individual
that have make extra effort to face challenges and effective utilisation of opportunities
through social media. Management of company is organised, valued but can be imitated so
its is not rare so firm has formulated strategies to develop effective management of various
stores across nation.
Technologies: Innovative technologies and new ideas and innovation are another strong
strategies competitive and capabilities of firm. Gap has planned to use innovative and
updating technologies to manufacture and deliver products at reasonable time and cost in
order to satisfy needs of customers. Mobile app and innovative design are some of the
strategies that help company in gaining competitive advantages. Thus, technologies are
valuable, organised, rare and cannot be imitated by other competitors so such strategy of
firm helps in competitive positioning.
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Therefore various strategies competitive and capabilities planned by company
helps it in improving its market positioning and profit margin.
The way company creates, delivers and capture value to its customers
Gap Inc is able to create values for its customers by delivering qualitative products and
services to large number of customers. Employees of firm are highly motivated and influenced to
provide better services to customers so that goals of firm are achieved in an effective manner.
Gap Inc definite organisational structure and proper management also helps in reducing conflict
and confusion among employees regarding roles and responsibilities to be performed by each
individual thus able to provide services and products within limited time and cost (Lange and
Bundy, 2018). Innovative technologies and creative product manufactured by individual helps in
providing valuable and qualitative products at reasonable rates to people. Gap by offering
product through its own websites is able to offers products at door steps of customers thus
providing them lot of comfort and ease while shopping. Therefore it can be stated that various
strategies helps firm in proving valuable products to large number of people in the society.
TASK 3
Strategies that company can use to defend its core business
Company formulates various strategies in order to influence customer to purchase products
of firm so that it can gain competitive advantages, increase its market share and profitability.
Different strategies that can be formulated by Gap Inc. are such as identifying product segments,
adjusting pricing and merging with other business so that both business by sharing each other
resources and capabilities can achieve goals and objectives of firm (Weiss, 2017). Therefore
various strategies that can be used by firm to improve its performance and productivity are as
follows:
Growth strategy for new products: Gap Inc. can plan for introduce new and innovative
products that have creative design such as large size clothing so able to attract existing as well
new customers to make purchase of Gap products. Introduction of new product or some more
additional helps in meeting unsatisfied needs of customers thus enhancing company profit
margin and sales volume.
Finding new market for product: Another method that can be used by Gap Inc. is identifying
new market segment for existing products and services of company. Company by selecting
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appropriate and new market share is able to bring new customers and influences existing
customers to enhance their sales. Entering into Asian Market is an big opportunities and strategy
that can helps company in gaining competitive advantages as most of people in Asia Value
products and services.
Price- skimming strategy: Firm can also differentiate itself from other competitors in the
market by reducing its cost of production and offering qualitative product at reasonable rates.
Gap by using innovate technologies and choosing appropriate supplier that provide input
material at lower cost and by motivating its employees to work hard and effectively can reduces
wastage of products and cost of production. All such strategies helps in decreasing price of
products and services and helps in meeting needs and demand of customers beyond their
expectancy. It is one of best technique that helps in attracting large number of customers as most
of people desired to have product at reasonable price. It can be stated that it is also good strategy
to attract number of customer to prefer product f Gap Inc. over other competitors products.
Acquisition strategy: It is another strategy which helps in growth and expansion of business and
sales and market share of Gap Inc by margining with another company that enough funds and
resources. By using such strategies Gap can easily enter into new market segment as it have large
amount or resources and strong brand image influence people to purchase products of Gap Inc.
Gap by merging with other company able to increase its resources and capabilities and target
customers, productivity, performance and profitability as both company works together for
common objectives (Steinbach and et.al., 2017). Therefore, merging with another company is
one of the best options as both companies can easily expand and grow its market share by using
each other brand image and capabilities in which they excel. It also helps in removing each other
weakness thus protect company from various threats at the same time helps in effective
utilisation of available opportunities as they have highly skilled and knowledge employees.
Differentiate strategy: Firm also can uses differentiate strategy in order to gain competitive
positioning and increases it market share. Gap Inc by manufacturing qualitative and differentiate
products and services is able to attract customers. Company has to plans for strategies that can
bring innovation, new ideas and creative way to delivery products and services. Unique clothing
and shoes helps firm in charging high and differentiate price from large number of customers as
no other substitute is available for launched products. For this Gap Inc. plans to target high class
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people or people that mostly believed in quality not in price of products that means quality of
product is more important to them rather than price (Ferreira, Mueller and Papa, 2018).
Company also have to trained and educate its employees so that they can easily manufacture
product that meet needs of unsatisfied customers. It has to invest more in research and
development departments so that it can bring continuous innovation and creative design to
satisfy needs of large customers.
Competitive Strategy: Competitive strategy is also plays great role in the company for
protecting its core businesses. Top-level management of company is completely understanding
the actual value of this strategy. This is strategy is basically helps company for analysing existing
competitive environment of market. Competitive strategy support company in gaining huge
competitive advantages in market as well. Currently Gap Inc. is leading company in Malta
because of this strategy. Many times the management of company take various steps towards
improving this strategy, because improvement is too necessary in this strategy to gain effective
return in respective market. The company is able to identify all business activities of their
competitors through this strategy. When a business has whole knowledge of their competitor’s
business, then it will capable to gain huge profit in market. That’s why this strategy is to
productive in gaining very high competitive advantage in retail industry. Currently competition
in this industry is increasing day by day, so this competitive strategy is enough to company for
defending its core businesses.
Focus Strategy: Focus strategy is another major strategy which helps to company for protecting
or defencing its core businesses. The management of company enables to focus on different
areas which can provide huge profit to company (Rugman and Verbeke, 2017). Focus is
generally a task to each organisation for analysing exiting market conditions. This strategy is
contributing in company’s market research functions as well. There are these different market
conditions can impact company in both term positively and negatively, so focus strategy helps to
company for systematically dealing with these market conditions. The company should focus on
each movement of reatil sector to achieve its decided goals in decided time period.
CONCLUSION
It can be concluded that there are various innovative and modern business strategies are
giving great contribution in all over growth of the Gap Inc. Top-level level management of
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