GAP Inc has been a member in the family-clothing-store industry for 43 years. They are one of the top four companies with a 16.3% market share as of 2010 (Van Beeck, 2010). They have a chain of stores that include GAP Inc, Old Navy, Banana Republic, Piperlime and Athleta. Between 2002 and 2010 GAP has implemented multiple strategies to accommodate changes in technology and the economy that have driven the strategies of all of the major competitors in the family-clothing-store industry. This presentation will analyse the three key turn around strategies implemented. These include reaching economies of scale through acquiring and broadening their portfolio of product lines and expanding globally, technological advancements in online sales avenues and gaining a competitive advantage over rivals through broad differentiation. The impact this has had on the company will be analysed drawing on strategic analysis of porter’s five-forces, assessing the representative weighted competitive strength assessment, as well as the weaknesses, opportunities and threats present to the company and industry at large. The three key strategic issues and problems targeted by Gap inc. consist of… * Technological Advancements,
* Reaching Economies of scale &
* Gaining a competitive advantage
Firstly powerful efforts to combat technological issues were faced by Paul Pressler. The e-commerce platform once used by Gap and its connected brands did not effectively address its target audience nor address the desired needs and wants of its buyers (Thompson et al, 2010). Pressler recognised this, his turnaround strategy then aimed its focus on the adoption and facilitation of a completely rejuvenated e-commerce platform (Thompson et al, 2010). Gap.com, Bananarepublic.com and Oldnavy.com were redesigned into one website for maximum convenience and functionality (Thompson et al, 2010). New York Times reported that GAP had one of “the best e-commerce websites in retail”. This statement reflects the impact of the online redesigns on its audience and buyers alike, exemplifying a successful change operation. In addition to the redesign of existing websites, in 2006 a new website known as Piperlime.com was launched (Thompson et al, 2010). This website acted as an online clothing store facilitating its own as well as third-party brands in a variety of men, women and children shoes. The website now offers all of the Gap Inc chains, that is, GAP, Banana Republic, Old Navy, Piperlime and Athleta ranges under the one roof, allowing you to search and purchase products from all of the chains on one website (Thompson et al, 2010). Technological adjustments within the company are another strategic manoeuvre made by the company. The adjustments include the outsourcing of its IT infrastructure to IBM (Armonk, 2006). Gap required an innovative leap to manage its internal technological operations. Their capabilities as a company were not being fully utilised as the most productive technological resources were not being accessed or implemented to their full potential. Establishing a contract with IBM enabled a fast responsiveness to trend changes and the ability to process orders faster and with greater accuracy (Armonk, 2006). From this, Gap enhanced its capacity to perform its technological operations with greater proficiency then its rivals, therefore gained superior competitive advantage. Reaching Economies of Scale
In order to reach economies of scale a predominant concentration was placed upon the prospect of greater International expansion (Thompson et al, 2010). In order to increase production and decrease the cost-price per unit, capital resources were utilised in a far more productive way and resources abroad became a key component to reaching economies of scale; therefore the strategy employed by Gap in this situation is ‘Resource Based’ (Thompson et al, 2010). The ending of the MFA (Multi-Fiber...
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