BA534 Case Study: GAP Inc. - Strategic Analysis and Recommendations

This case study analyzes GAP Inc.'s business strategy, focusing on its mission to establish itself as a global brand and connect with customers. The analysis includes a SWOT and PEST analysis to assess the company's internal and external environment. The strengths identified include their franchise model and strong brand recognition, while weaknesses involve higher prices and limited diversification. Opportunities lie in global expansion and economies of scale, while threats include government regulations and competition. The study further examines key factors determining the company's success, such as market penetration, technology utilization, and competition. Recommendations are provided to improve competitiveness, including clear objectives, market segmentation, domestic market strengthening, and vertical integration to enhance brand image and manage international market threats. Financial ratios were also included to support an element of the case study.

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1CASE STUDY
GAP Company Strategy:
Having a corporate philosophy and specified codes of business ethics, the GAP company
has set their strategies in par with their mission of establishing themselves as a brand builder and
creating emotional connectedness with the customers around the world. In accomplishing this
mission, the company has decided to set a multichannel strategy. Apart from their online selling
in the bricks and Mortars, the companies have been tailoring the store for appealing to the
consumers by means of developing the multiple format and the designs. Since it has targeted a
broader demographic segment, the GAP store, instead of focusing primarily on the sophistication
and the luxury, the company is more inclined on giving the customers a total shopping
experience. Some of the strategies to give benefits to the customers are
1. the ability to return clothes in stores even if they are bought online.
2. free alterations.
3. customers have the freedom of doing web search for product information and then can buy it
on bricks and mortars.
Micro and macro environmental analysis:
1. SWOT analysis:
Strengths- the main strength of the company is their way of operating through franchise. It has
the franchise agreement with over 20 countries across the globe including Australia, Egypt,
Chile, Greece Russia, Ireland etc (Joslin, Lueck, Martino, Rhoads et al. 2010). This gives them
an opportunity of Global Operations and having a well built recognition.

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The brands that the company has within its portfolio are reputed and well established.
The company thus has a successful brand image in Canada, USA, UK, France, Germany and
Japan.
Being a company operating in the multinational level, GAP has a very strong
infrastructure. They have large number of stores all over the world that helps the company in
building a strong image in the industry (Barnes, Lea‐Greenwood, & Arrigo, 2013)..
Weakness- the prices of the products by the company are on a higher side in comparison with the
similar products available in the market.
The company has concentrated itself only in the garment industry, and provided no
diversification. Thus, any turmoil in the garment industry will affect their total business.
One of the major weaknesses of the company is their inexperience in the Asian Markets
thoroughly.
Opportunities- with their aim of expansion, the company have a opportunity of gaining
economics of scale which will further help them in incurring more profits.
The cost of transportations can be saved since they are operating from various regions
and need to transfer the products.
Threats- the government regulations can be a threat for the company since they may be facing
some rules and regulations that will be a loss for them (Wright, 2017).
The market of apparels and cloths are quite competitive. The threats of other companies
and the threats of substitutions are always there.

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Macro Environment Analysis:
PEST Analysis:
Political Effect- the political condition of the originating country of the Gap Inc. UK is
comparatively stable with respect to the government and its rule. The overall democratic set up
the country and the freedom of association as granted by the country is one of the great source of
advantage for the companies to thrive in. Moreover, the presence of the positive and convenient
trade laws in USA and the check upon the monopolistic market are also the added advantages.
Economic Factors- the economic factors affect GAP Inc to the large extents. Since they have
operations in various areas, the inflation rates, the economic turmoils of the respective counties
etc affect the revenues of the company.
Social Factor- the social factors that affect companies like GAP Inc are the changing trends
among the youth of the countries worldwide. The main target of the company is to capture the
young market and thus, the company are trying to catch the global trend among the generation z.
Technological Factors- the technological advancements have helped the company to a large
extent. By making use of the new technologies, the company have been focusing on the research
and development and using their knowledge in their latest creations.
External threats:
1. the rising of the cost of production.
2. the rising of substitutes and new entrants.
3. Currency changes between the countries.

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4. the search of the consumers for Lower Price.
Analysis of the SWOT Matrix:
From the analysis of the strengths and weaknesses of the company, it can be identified
that the main strength of their company is their brand name in the local market and the usage of
the technologies. Using this strength, the company can explore the opportunity of growing into a
global market.
Strength Opportunity strategy:
The company is a reputed one and has a strong brand name. In addition to this, the
company makes use of the technologies not only in the creation of the products but also in their
marketing strategy. They have a well placed online retailing strategy, these combined strength
can help the GAP Inc to reach in markets like Africa, Asia and Europe. This will help them in
growing their market. With their technology of online sale hey can also have the opportunity of
increasing their market share.
Strength Threat Matrix:
The GAP Inc can make use of their strong brand name and reputation in dealing with the threats
from the substitutes and the competitors like Fitch, TJX etc. The company can increase their
market share and thus have a competitive advantage than its rival brands. The company will also
have the ability to build a more loyal customer base than its competitors and thus overcome the
competitions in the market.
Weakness Opportunity Strategy:

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If the company is able to maintain the distinctive competence , they can take the advantages of
the market potentials. With the proper utilisation of the technological benefits, the company can
overcome the weakness of not being present in a large sector of the globe or their inability to
offer a comparatively lower price. Moreover, their opportunity of penetration can help in
overcoming the weakness of their concentration in the garment industry only. Their means of
penetration can as well include the process of diversification.
Weakness Threat Matrix:
Overcoming the means of the distinctive competence and the prices that they are offering,
the company can get rid of the threat of competition. They can also improve the sales position by
properly utilising their technologies.
Key factors determining the success of the company:
1. the proper penetration- it is essential for the company for increasing their strategy of market
penetration. With the threats of the competitions as well as their weakness of not being able to
capture a large mass on account of their inability to provide the products at a lower price, the
company needs to have a good brand image which will be possible to achieve only if they are
widely known and trusted. The company like L’Oreal is one of those reputed company which
does not provide a low cost, but because of their reputation and vast popularity, it is a high
selling brand even among the mass (Ansett, 2017).
2. The proper usage of Technologies- another major driving factor for the success of the
company is their effective use of the technologies. The usage of technologies in their marketing
strategy and building up a credible online retailing will help the company to extend their market

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in various areas. Moreover, the use of technologies in their production will help the company in
creating variety in collection as well as quality that will also give it a competitive advantage.
3. High competition- the high competition within the clothing industry is another key driving
factor for the changes within the company of GAP Inc.
Recommendation:
The Gap Company has no particular retained mission and vision. They are just keen on
finding the market trend, customer preference and market gap. Thus, it is very important
primarily for the company to clearly see through the objective and chalk out long term as well as
short term achievable objectives. Secondly, it is recommended that it is important for the
company to build up a clear and précis market segmentation. A fashion industry is an ever-
evolving one and thus, knowing the target market is particularly crucial. For example, the
demand of casual wears will be much more among the teenagers and more in the west that east.
It can also, focus on preparing something that can suite the older generations.
For maintaining the growth, the company should primarily focus on their penetrated
market in the domestic. Only after strengthening their control in the domestic market, they can
move towards the international market. The company must arrange a good strategy to a wider
range of customer in their all brand lines.
The company can further come out with vertical integration, which will in turn minimize
the outsourcing of manufacturing. By making their garments and apparels of their own, they can
generate a higher level of income. This will also be helpful in protecting their brand image.

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The company needs to avoid the threats associated in international market when they will
be continuously marketing their products to other countries.

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Reference List:
Ansett, S. (2017). Mind the gap: a journey to sustainable supply chains. Employee
Responsibilities and Rights Journal, 19(4), 295-303.
Barnes, L., Lea‐Greenwood, G., & Arrigo, E. (2013). Corporate responsibility management in
fast fashion companies: the Gap Inc. case. Journal of Fashion Marketing and Management: An
International Jour
Joslin, R., Lueck, P., Martino, C., Rhoads, M., Wachter, B., Chapman, R., & Christian, G.
(2010). Gap, Inc.: Has the Retailer Lost Its Style?. Understanding Business Strategy: Concepts
and Cases, 1-18.
Wright, P. M. (2017). Corporate social responsibility at gap: an interview with Eva Sage-Gavin.
People and Strategy, 30(1), 45.