GAP Inc Case Study Strategic Management
Keywords: gap strategic administration, gap swot, gap pest
Strategic administration is a dynamic process of aligning strategies, functionality and business results; it really is all about persons, leadership, technology and operations. Effective blend of these elements will help with strategic direction and successful support delivery. This can be a continuous activity of setting and keeping the strategic way of the organisation and its own business, and producing decisions on a day-to-moment basis to deal with changing instances and the problems of the business environment.
An organisation should be able to respond effectively to issues – both problems and options – as they arise. For example, the citizen has increasing expectations of service expectations and availability. In response, organisations will work towards an outward-focused view of just how services should be provided – a simple shift from the original concentrate on internal concerns. At the same time, major opportunities for improvement may come up from developments such as new facts and communications systems, and the availability of additional financial resources including the Invest to save lots of Budget.
In many instances the response to the challenge or opportunity will:
- Require the continuous attention of senior management
- Affect most or each of the organisation
- Have permanent implications
- Require substantial resources
- Be interconnected with additional issues and developments.
- Factors determining effective strategic management
- A clear business technique and perspective for the future
- A strategic course endorsed by senior managers, taking account of partners and other stakeholders
- A system for accountability (to the citizen in achieving their expectations, aswell as to the centre in meeting insurance plan targets)
- The capability to exploit opportunities and respond to external change (turbulence) by taking ongoing strategic decisions
1. Terms Of Reference
This research statement examines GAP Inc, and its own strategic decision producing into organization areas.
2. Business Background
2.1. Founding: Gap Inc. was founded in 1969 by Donald and Doris Fisher in San Francisco, California.
2.2 The Company: Gap Inc. is a leading international apparel retailer offering clothing, equipment and personal maintenance systems for men, women, children and babies beneath the Gap, Banana Republic and Classic Navy brands. Gap brand includes Gap, GapKids, babyGap, GapBody and Gap Outlet.
2.4 Going International: Gap is becoming among the world’s most recognized brands, with retailers in the U.S., Canada, the United Kingdom, Japan, France and Germany.
Who is involved in strategic management?
Key roles include:
Senior executives and organization managers in public areas sector organisations; they need to look for opportunities for new means of working that will help the organisation to realise the agenda for switch in the general public sector; they also should be aware of the implications of realignment if the strategic path is changed
Staff in charge of developing and reviewing the business strategy in their organisations; they need to appreciate the wider organization context partners and additional stakeholders afflicted by the strategy.
The strategic issues facing the organisation and its own response to them will call on the organisation’s expertise in strategic operations – its ability to recognise and deal effectively with strategic problems. In the public sector, these includes:
- addressing the requirements of the citizen, certainly not the capability of the organisation
- greater efficiency and value for money
- improved and innovative service delivery to the public
3. Going International : Before going into a international market a business should think about its internal and exterior environment. It should as well carry out SWOT and PEST examination.
SWOT Research of GAP Inc.
A SWOT Research is a structured method of evaluating the strategic placement of a organization by determining its strengths, weaknesses, possibilities and threats (Appendix 1). It offers a simple method of synthesizing the benefits of the advertising audit by summarizing the company’s strengths and weaknesses as they relate to external chances and threats. Strengths and weaknesses will derive from the internal marketing audit analysis. Possibilities and threats will are based on the external marketing audit analysis.
Global Functions: Gap has got operations throughout the world. Thus, it has a well developed reputation.
Brand Name: Gap Inc. brands; Gap, Old Navy and Banana Republic, are well established and well known. It’s been very successful in establishing its company image in U.S.A, Canada, United Kingdom, France, Japan and Germany.
Infrastructure: Gap Inc., to be a multinational company, includes a very strong infrastructure. They presently contain 4261 stores in 7 countries. Having large numbers of stores in a wide spread area, contributes to their strong graphic in the apparel sector. Hence, they have the ability of experimenting further foreign expansion.
Experience: Gap Inc. has a good experience in venturing into the international markets. Its experience could be a support to its establishment in India. Gap Inc. is doing organization since 1969 when its first retail store was opened in San Francisco. They went overseas in 1987. Its encounter proves itself regarding the level it has reached today.
High Price: The prices of Gap items are greater than general prices of identical products on the market. India includes a low level of income as compared with different countries where Gap Inc. has successfully ventured. The persons might not be able to afford such high prices.
Non diversification: Gap Inc. is targeted just in the garment industry and all the business originates from garments. That is their weakness, as any problem faced by the garment sector, will automatically affect the business directly.
No Experience in the Asian Marketplace: Gap Inc. has the disadvantage of failing to have operated within an Asian market before. Consequently, anticipating the near future trends in such market segments will be difficult for the business.
Economies of scale: Because of expansion, the company would be able to gain economies of scale. This would make it gain more profit and keep their rates competitive.
Transportation Expense: As Gap Inc. already does a part of its development in India, selling the merchandise there will save the business when it comes to the transportation cost.
Low Labour expense: The price of the skilled labour in India, being low, would allow Gap Inc. to save lots of costs.
Better Earnings: As the cost will reduce as a result of previous advantages, there will be higher scope to improve the profits.
India being a developing country: India as a growing country, offers a better opportunity to conduct business there. As the country is developing so is the market.
Legal Distinctions: As the country is developing, you will see less legal obligations. This may be very advantageous for the firms from the established countries. Medical and safety regulation is also very liberal and also be a benefit for them.
Government Regulations: Federal government regulations is definitely an opportunity and also a threat as well. Sometimes the government regulations and types of procedures are unpredictable and frustrating; this may be a threat for the company.
Competitive market: India is an extremely large exporter of garments and also possesses a big garment industry, which occupies a considerable part of the national income.
Economic Condition: As a result of recession in the Indian economy, the garment industry has been negatively affected.
Taste and Choices: The style and choices of the Indian populace is very not the same as what Gap Inc. presents. Gap Inc. has a product range that predominantly includes plain and sober outfits, whereas the neighborhood market has a pattern of wearing colourful clothes.
Pest Analysis of India – GAP Inc
Country’s Political Instability: The country has a political instability due to the communal riots and disputes with the neighbouring countries. This may cause a problem in the sense that the business might be confronted with short supply anytime, if such scenario repeats.
International Law: In 1991 the federal government of India released the globalisation of the Indian economy. Since that time, many multinational companies have entered Indian industry to exploit the inexpensive skilled labour and explore the very potential Indian market to sell their products. Gap Inc., has a good opportunity to indicate its space in the growing Indian market.
Currency: Indian currency, Rupee, is very unstable and its own exchange rate is quite weak in comparison to US Dollar and THE UK Pound.
Per Capita Profits: Indian population is quite large but its per capita cash flow is very lower in comparison with other formulated countries. This could be a negative factor for the business as most of the population might not be in a position to afford its highly price tag products.
Infrastructure: The infrastructure of the united states, like transportation and interaction is not as effective as in developed country, but nonetheless it should not hamper the functioning of Gap Inc. in the united states.
Terms of repayment: The terms of payment in India because of their customers and suppliers varies with the term of payment of USA or UK.
Culture: The tastes and preferences of the population is driven from traditions. But the effect of modernisation and western customs has altered the choices of the population. Thus, it creates it beneficial for Gap Inc. as their products will be of the same kind.
Education: The training system in the united states is rolling out since independence. Presently, India has a sizable number educated and experienced labour who can provide at a cheaper price tag.
Brand Awareness: Because of improvement in technology, in interaction and media, people have become more aware of brands. Hence, the value of using branded products has increased significantly. As Gap Inc. currently includes a renowned brand name, it will be easier for them to create themselves in the minds of the changing populace.
Religion: India has a huge number of diversified religions. This might be a difficulty for Gap Inc., as different religion might have different choices in the clothing style. For example some religions in India usually do not prefer women of all ages to wear the sort of dresses that Gap Inc would make, like deep-neck blouses
and short skirts.
Work and Leisure: The style of clothes worn in India for both do the job and leisure is pretty similar. Persons wear semi-formals or semi-casuals. Gap Inc. has a positive advantage in this case, as they have mastery in this kind of clothing.
Travel and Distribution Infrastructure: The travel around and distribution infrastructure in the country is merely up to international benchmarks in metropolitan places and economically designed areas; but isn’t good enough in most places article critique apa. Gap Inc. won’t be much afflicted by this drawback as its major aim for customers lies in the metropolitans.
Communications Infrastructure: India offers an advanced communication systems. India is becoming among the major Information Technology giants. Ironically people are still not really used to e-commerce features like on-line shopping. It has not been successful as people concern with getting cheated. Gap Inc. won’t really have an excellent business in online looking as they have in developed countries
Manufacturing Base and Ability: India offers an excellent base for developing garments of good quality standards. It’s got the capability of coordinating Gap Inc. requirements. This is obvious as Gap Inc. products are already being created in India. The majority of the Gap Inc.’s linen centered products are getting sourced from India.
As due to the advertising audit and SWOT evaluation, relevant objectives will be established. Two types of objectives have to be deemed: strategic thrust and strategic goals.
Key factors for technique development
Strategic thrust defines which goods to market in which markets. There could be four options as follows
Market penetration or growth (existing items in existing marketplaces): This strategy aims at penetrating deeper into the market. It tries to make the existing customer brand devoted and also attract new customer to buy their brand. The techniques found in this is to help make the customer use the brand more regularly and in greater amounts.
Product development (brand-new/related products for existing marketplaces): This strategy involves increasing sales by improving present products and innovating new products for the existing market. This is often achieved by bettering style, performance and comfort and ease of the product. Gap Inc. would need to design new products suited to prospective customer.
Market development (existing items in new/related markets): This plan is used to sell the current products in new markets. This may involve moving into brand-new geographical areas or brand-new market segments. To find yourself in the Indian marketplace Gap Inc. won’t have to develop the whole products, but, instead may bring in the previously existing successful goods to the marketplace.
Entry into new market segments (new/related goods for new/related marketplaces): This is the most risk bearing approach as both, the merchandise and the marketplace is new to the companies and the client. But this strategy is necessary if the company is showing discouraging signals of future development or if the business is looking for expansion taking into consideration the introduction of services related to the new market. Gap Inc. can use their ground breaking experience for developing innovative set of products remember the Indian market segments.
Strategic objectives for items ought to be set. The goals are to build product sales and market talk about, hold, harvest (improve profit margins) and divest (drop or sell product). The strategic objective is to decide based on the company’s situation which is determined by SWOT analysis, mark and audit the evaluation of strategic options. In the case Gap Inc., they are planning to enter the Indian market. Their strategic objective subsequently, is always to builtd sales.
- Core Strategy
Core online marketing strategy involves the accomplishment of marketing targets through the perseverance of target marketplaces, the setting up of competitor targets and the creation of a competitive gain.
- Target Markets
The target market is the place where in fact the company is planning to sell its items. In this specific case the target market for Gap Inc. can be India. Considering industry segmentation it would further more be segmented by years and gender.
- Competitor Targets
Besides targeting consumers/companies, the company will choose competitor targets. Weak opponents may be viewed as easy prey and assets channelled to attack them. The decision of target market may determine competitor targets and become influenced by them: market segments with weak competition may be attractive targets.
- Competitor Advantage
A competitive advantage is a clear efficiency differential over opponents on factors that are essential to target consumers/institutions. This provides the foundation of how Gap Inc. competes. Major success experienced by Gap in various other overseas market segments, has contributed to make a competitive advantage when you are better at anticipating or giving an answer to customer needs than competitors, or being closer by establishing close long-term relationships with buyers.
- Implementation and control
Implementation and control of the strategic strategies the company has made is made by a set of decision making these are known as
Marketing Mix Decisions
By defining a target market and understanding the demands of their consumers/businesses, a marketing mix could be created to meet those needs better than your competition. The four crucial decisions areas to be considered while making a marketing mix decision are item, promotion rhetorical essay topics, value and place.
Product: Product decision involves locating the requirement of the prospective customer segment. The opportunity of the merchandise failing after having carried out a market research is minimized. Company decisions like brand, packaging, guarantees and services for the product line, should be predicated on the targeted consumer segment. Because of everyday adjustments in technology and style of the client, the brand ought to be innovative and creative to maintain its customer’s brand loyalty.
Firstly, Gap Inc. should carry out a market research to discover base for the mark customer segment for each and every of its manufacturer in the Indian marketplace. This would help Gap Inc. figure out its customer foundation better and lessen their likelihood of failure. The business products should be progressive to meet the dynamic dependence on their related customer base. This would provide them with regular and repeated buyers and would attract new customers.
Promotional mix combines advertising, public relation, sales promotion personal selling, direct marketing, internet and online advertising. This makes the mark audience aware about the existence of something or services and the benefits involved with it. Promotion focuses on the distinctive top features of a product. Thus, the essential aim of the advertising is to communicate details to targeted customers and potential users about the merchandise and persuade them to buy.
Promotion bridges the informational gap between your brand and its targeted clients. Gap Inc. should use promotional tactics which would reach directly to its market. Gap Inc. being truly a garment related company should work with a promotional measure like revenue advertising, T.V., newspaper, journal advertising and stage and fashion shows to reach their diversified customer range and make their occurrence sensed in the Indian market.
Price is a key component of marketing mix, as it is the only element that represents the financial inflow for the merchandise and services becoming marketed. The Ps in the marketing combine represent monetary outflow for instance, expenditure on product style (product), advertising (promotion), transportation (place). The company should be careful and considerate while prices their products, as they should consider all of the factors that influence their value setting. They should retain some margin for future years special discounts and allowances that they could have to provide to the clients in case of the increase in the competition on the market.
There certainly are a number of pricing plans which Gap Inc. may adopt to attain its pricing objectives. Included in these are: skim, penetration, mixed, differential. Gap can use a penetration pricing to boost the market share.
Place aspect of the marketing blend concentrates mainly on the distribution channels to be utilized and their management, the positioning of outlets, ways of transportation and inventory levels to be held. Its purpose is to ensure the availability of the required products at the mandatory time and place. Place where the firm should market their items should be chosen very carefully , to be sure that it is readily in contact with its target customer base to help increase the sales and therefore the profit involved.
Gap Inc. should supply and market their goods, where they have the mandatory demand for them. They should set up their foundation in the market segments where there’s a demand for the high quality goods, and really should also retain in consideration the fact that these markets should be where in fact the supply of raw materials for their product is simpler. Hence, Gap Inc. can set up their item range in big locations in India with very good distribution systems. Easy and quick access to the market would also help in cost-cuttings.
Market segmentation identifies the organisations or individuals having similar characteristics which have significant implications for the dedication of online marketing strategy. Market segmentation forms the foundation for the identification of the mark industry. A segment that the business decides to try is its marketplace. As a result of similarities in the features of the customers, only one marketing strategy is necessary. If the segmentation is done in a creative manner, then this could help the companies to recognize new segments that have not yet been served by any others.
We as the Marketing managers, do not recommend Gap Inc. to grow their organization in the Indian market. This is obvious after having evaluated the negative factors that can have an effect on Gap Inc. in expanding in India and the ones factors that can be beneficial if Gap Inc. carries out the expansion.
- High competition
- Cultural differences
- Lack of knowledge in Asian markets
- High priced product range
- Difference in style of clothing