Gap Inc
Case 11 Teaching Note Gap Inc. in 2010: Is the Turnaround Strategy Working?
Teaching Outline and Analysis
1. What does a five-forces analysis reveal about the strength of competition in the U.S. family clothing stores industry?
In leading the class discussion of the five-forces analysis, we encourage you to direct the attention of students to Figures 3.3, 3.4, 3.5, 3.6, 3.7, and 3.8 in Chapter 3 to support their analysis.
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Case 11 Teaching Note Gap Inc. in 2010: Is the Turnaround Strategy Working?
Rivalry among Retailers—Very strong competitive force Competitive rivalry is the strongest of the five forces because of the following factors: • • Buyer demand was declining. Revenue for the U.S. family clothing store sector had decreased 3.2% in 2008 and 2.8% in 2009. Consumers had low switching costs among the clothing retailers. Consumers could purchase apparel not only from other family clothing stores but also from sellers in the department store industry, big-box store industry, men‘s clothing store industry, women‘s clothing store industry, and children‘s and infant‘s clothing store industry. The apparel offerings of family clothing store rivals are weakly differentiated. There are a large number of competitors. Although the four largest national chains accounted for about 39.4% of total market share in 2009, the industry was fragmented, consisting of thousands of small local or regional retailers that individually held very small market shares
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The primary weapons of competition are price, special sales promotions, extensive advertising, and convenient retail locations. Competitive Threat of New Entry— Weak to moderate competitive force While entry at the national level is not very strong, new entrants in local markets is very common. Entry barriers on a national scale include: stagnant industry sales, established competitors with well-known reputations, existing brand loyalty, and capital requirements necessary to establish a
Teaching Outline and Analysis
1. What does a five-forces analysis reveal about the strength of competition in the U.S. family clothing stores industry?
In leading the class discussion of the five-forces analysis, we encourage you to direct the attention of students to Figures 3.3, 3.4, 3.5, 3.6, 3.7, and 3.8 in Chapter 3 to support their analysis.
11-1
Case 11 Teaching Note Gap Inc. in 2010: Is the Turnaround Strategy Working?
Rivalry among Retailers—Very strong competitive force Competitive rivalry is the strongest of the five forces because of the following factors: • • Buyer demand was declining. Revenue for the U.S. family clothing store sector had decreased 3.2% in 2008 and 2.8% in 2009. Consumers had low switching costs among the clothing retailers. Consumers could purchase apparel not only from other family clothing stores but also from sellers in the department store industry, big-box store industry, men‘s clothing store industry, women‘s clothing store industry, and children‘s and infant‘s clothing store industry. The apparel offerings of family clothing store rivals are weakly differentiated. There are a large number of competitors. Although the four largest national chains accounted for about 39.4% of total market share in 2009, the industry was fragmented, consisting of thousands of small local or regional retailers that individually held very small market shares
• •
The primary weapons of competition are price, special sales promotions, extensive advertising, and convenient retail locations. Competitive Threat of New Entry— Weak to moderate competitive force While entry at the national level is not very strong, new entrants in local markets is very common. Entry barriers on a national scale include: stagnant industry sales, established competitors with well-known reputations, existing brand loyalty, and capital requirements necessary to establish a