MGMT 497 – Case Studies EXAM
1. What are the key elements of the company’s strategy? Is it working? a. Redesigned websites and established online presence for all Gap Brands (Gap, Old Navy, BannaRep, piperlime, Atheleta) to allow customers to shop for all brands in one cart for greater functionality and more convenient shopping experience. This e-commerce platform utilized service innovation as its key strategy. Became known as one of the best e-commerce sites in retail (pg. 164) b. Expand to new markets internationally in Asia, the middle east, and Europe (Saudi Arabia, Indonesia, South Korea, Greece, Russia...) (pg. 166) c. Reduce outstanding debt and consistently increase dividend payments to shareholders for financial wellness d. Improving Gap’s quality, styling, and overall image by brining back Patrick Robinsons as Gaps’s design chief who strayed them away from the “trend treadmill” and back to the classic of quality and style. (pg. 167) e. Analyst saw to company’s improved merchandise, clearer focus on the 25-35 age demographic, strong leadership team, and additional cost cutting strategy as the strengths of Gaps turnaround strategy. Still yet to determine if slight increase in sales is an in fact a effective turnaround strategy f. Gap utilized turnaround strategies. Gap experienced two turn around strategies periods: 2002 and 2007. g. 2002: elements of focus on eliminating long term debt, becoming more consumer accessible- online shopping i. Pros: reduction of debt from $2.9 billion to zero in 5 years (2007), increase dividends to shareholders $0.09 to $0.32, reduced outstanding stock shares 877 million in 2002 to 794 million in 2007.(C-165) ii. More accessibility to consumers via internet reconfiguring the company website-establishing a more user friendly site for all five brands. (C-164) h. 2007: elements of focus were on expansion (including international expansion) & quality, styling overall company image. i. Pros: Profitability had improved new focus on image and quality, expansion broadened market into Asia and the Middle East, began franchising. New management (company president), new ideas for demographic appeal (age 25-35). (C-166, 167) 2. What strategic issues and problems does the company need to address? a. Accumulation of longer term debt which reached 2.9 billion (pg. 165) b. Decisions to cut costs in the supply chain led to slowed product-to-market cycle times, making them less able to respond to fashion changes and less interesting new lines and products (pg. 166) c. Falling into the “trend treadmill” and competing with the wrong companies such as H&M, Zara, Uniqlo) d. Dealing with a lingering 2.9 billion long term debt amount, outstanding shareholders amount of 877 million. (C-165) e. Excessive cuts in expenditures of design, development and marketing. Slow in product-to-market cycle times (harder to keep up with fashion changes), personnel not in unison and began disagreements causing delayed decision making, lack of interesting lines, revenues and earnings decline. (C-166) f. Dealing with recession and struggling economy. Annual revenues continued to decline including rapid comparable store sales, Transition periods for new growth and implementations 3. What recommendations (in terms of possible actions and strategic changes) would you make to help the company improve its profitability and strengthen its competitive position? a. Establish customer value creation though improved financial standing with share holders b. Employ operations innovation for better and more advanced production capability c. Enhance service innovation by continued web presence and improvement of e commerce d. Focus on broad differentiation strategy through establishing customer loyalty by differentiating products from market with its classic look. e. Continue to promote and advertise...
Please join StudyMode to read the full document