Gap Inc. Case Study: Strategic Analysis and E-commerce Recommendations

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Written Case Report
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Introduction
One of the most renowned brands in the apparel industry, Gap Inc. is suffering from a few
external and internal issues. Those issues will be discussed in this report. A SWOT analysis
helps to understand the weakness, strength, opportunities and threats of this company. Few
recommendations which will be helpful to face those issues will be discussed in this report.
Investing more in E-Commerce could help the company to open new markets. It helps to
increase the growth rate.

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1. Identification of Business Model, Strategy and critical issues
Gap Inc. is one of the renowned brands of clothing all over the world. Gap has its business under
its six brands: Gap, Banana Republic, Intermix, Hill city, Athleta and Old Navy. It has over 2848
stores worldwide. Gap Inc. is a big business house and has many franchises stores. Customer
satisfaction is their prime focus. But a few years back, the company started facing different
issues which made a significant impact on its brand image and profitability (Gap Inc. 2019). The
primary key issues which the company is facing are the following:
 E-Commerce markets – Gap was started their business when it was no scope for e-
commerce markets but later things changed, and the situation became more difficult
when people feel more comfortable with shopping via online shopping.
 Competitors – Gap has few main competitors like Zara and others. They understood the
trend of online shopping much earlier than Gap.
 Infrastructure – Infrastructure of the company should an innovation makeover to attract
customers to come to retailers.
 Deals & discounts – Deals and discounts are essential for attracting more customers, but
if some company is offering deals and discounts on their fresh arrival, it creates no good
image of the brand.
 Repetitive stocks – Six major segments are working under the brand Gap, but still the
company is failed to provide customers with something new or trendy every time (Bain.
2016).

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The company is following a few different long terms and short term strategies for making
impactful decisions about their fall in their business from the last few years.
 Invest in online and digital mode – Company is planning to invest more in its online
and digital medium because since company adopts e-commerce modes, it became a little
help for the company.
 Productivity and scale – Company are planning to reinvest something into the
production units to make those units and its operations faster which are required to fulfil
customers need.
 Develop & growth of brands – 6 major brands are working under the company, but the
company is planning to expand Old Navy and Athleta for the next two years.
 Press and media – Company faced many downfalls in past years which was a hard phase
for the company. A company decides to release more positive and forward-looking
statements as to future planning for the company (Gap Inc. 2019).

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2. Analysis and evaluation of Opportunities and capabilities
External analysis
An external environment analysis for identification of opportunities and threats is given below -
External Factors
Opportunities Threats
 Few countries often welcome new
businesses.
 Starting a business in growing
countries would be helpful.
 Cheap and skilled labour can get from
different countries.
 In a time of, inflation of economies it
would be easier to work with different
countries.
 A cultural difference could be a big
issue for the company.
 Political instability makes the business
unstable.
 Creating demand in growing countries
for particular brands is not an easy
task because of their growing
economy.
 Terrorist attacks have become big
issues these days.
Competitive Industry Analysis
Porter’s five forces help to understand the competitive industry analysis of Gap Inc. The five
powers are the following:

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 Threats of new entrants – One of the most fundamental threats of new developing
competition which put pressure on the company to low its prices or low cost.
 Bargaining power of suppliers – Gap Inc. buys its raw material from many suppliers
worldwide that give them the power of bargaining. Suppliers can increase their prices,
which going to put pressure on the company.
 Bargaining power of buyers – Buyer is the king; it is the reality of today's competitive
world which makes them centralised with power. Buyers have many different options
nowadays.
 Threats from substitute products – Sometimes rivals can showcase the same products
which the company is working. It could be very problematic to the company.
 Rivalry among the existing players – in the apparel industry, competition is pretty
standard nowadays. Especially with real rivals competitors. It may lead to making a fall
down in prices sometimes (Fern fert university. 2019).
Internal Company Analysis
The company has been working in several countries and has its business in different countries.
The company has different internal working areas which made an impact on a company's growth.
Those are the following:
 Marketing – From the past few years, the company is facing a significant fall in its sales
and growth which indicates to its marketing team because marketing and sales are highly
relevant to each other.
 Production – Production departments are essential pillars of the manufacturing unit. The
gap doesn't manufacture its products, and a third party vendors are involved in it.

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 Technology – World is moving fast with technology. A company should try to use the
latest and advanced version of the technology to give its customers a unique experience.
Technology can make things faster and accurate.
 Legal factors – There are several laws for an employee working in the organisation such
as employee benefit and work laws etc.
 Human resources – Trained and skilled employees could be an asset to the organisation
but running a big business model with many franchises it is not an easy task to perform
(Gap Inc. 2019).
SWOT ANALYSIS
Strength Weakness
 A company is working accordingly
rules & regulations with an
understanding of cultural differences.
 Technology which company using is
latest among all its competitors.
 A company hires and trains their
employees according to its
requirements.
 New entrants could be the biggest
possible threats for the company.
 In this business model, power is in the
hands of buyers and suppliers which is
not ideal.
 A company is facing a struggle with
many of its rivals like Zara and H&M.
Opportunities Threats
 New developing countries could be
possibly new growth markets for the
 Terrorists' attacks are one of the most
significant issues for expanding

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company.
 Skilled and cheap labour could be
readily available.
businesses.
 Cultural difference and political
instability could increase the problems
(Bhasin. 2018).
After the detailed SWOT analysis, there are few things which require a lot of attention from
management. Those are the following:
 A company should try to shift power from the hands of suppliers because this isn't an
ideal situation. A company should either start to manufacture or bound suppliers with
some limitations.
 A company should start to invest in new growing economies; these could be very
beneficial for the company's growth.
 From its past experiences, the company's marketing team should focus on promotions on
a considerable level to attract more customers. The advertisement should be much
targeted to its audiences.

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3. Strategic Alternatives
Here are the set of alternatives for strategic action plans:
Action Plan
Strategies Advantages Disadvantages
Change stock every three
months.
 Customers will be
attracted.
 Customer satisfaction
could be possibly
earned.
 It will make products
costly.
 It will increase the
operational cost of
the company.
Provides selective deals &
discounts on occasion
 It will increase the
company's brand
image.
 It helps to take
advantage of the
occasion's targeted
customers.
 Some customers
might be lost.
 It could be a risky
decision, as it would
impact the company's
profitability.
Invest in E-Commerce markets  Customer reach will be
comfortable and
increased.
 Customers could
easily be distracted
with other available
options.

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 It helps to decrease
operational cost.
 Competition is fierce
at online modes.

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4. Recommendations
It is one of the major recommendations, management should prefer at first place:
 E-commerce markets have its benefit & failures but still, mostly are benefits which could
make a positive impact on the company's performance and growth in the long run. The e-
commerce market is the necessity of today's fast world. It has several advantages for the
company.
 It increases customer reach. With the help of online market, customers and the
company can easily interact with each other.
 It decreases the operational cost of the company.
 It reduces the cost of the promotional activities of the company.
 The company can organise contests, the quiz to targeted customers; it helps to
attract people more and more.
 It helps to find local, talented people to work with the company as freelancers.
Next steps and performance measurements
Steps for implementation of the recommendations
 Proper market research about target place – Company should first set the target and then
do the appropriate research about the situation to understand the possibilities of there.
 Hire tech savvy persons – Company should invest in some very high tech persons who
can handle bugs and issues and quickly fix them.
 Understand customer’s need– the company should properly research about customers
need.

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 Strategy team build up- Company should hire a group of well-experienced strategy maker
who can understand the issues and requirements and make strategies accordingly.
 Quick customer services – In online shopping, there is no interaction so customers
queries should be easily misguided. The company needs to prepare a process format for
customer services to them.
Steps for performance measurements
 The company should set some financial targets with a bound time limit for any particular
country or area.
 The company should be in contact with becoming with franchise holders to become more
engaged with their problems.
 Feedbacks from stores & regional managers could play an essential role in that.
Plan B (If applicable)
 The company should hire some local experienced person to do the research related to that
particular area. It will help them to understand the mistakes in the last plan and
improvements required in the programs.