gap presentation
TRANSCRIPT
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STRATEGIC MANAGEMENT CASE ANALYSIS
ON
GAP INC.
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GROUP MEMBERS:
•Wajiha Zafar•Sameen Siddiqui•Reeja Siddiqui•Khan Umer Bin Shahid•Zain Mehboob•Ehtesham Ali
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INTRODUCTION:•Gap inc is one of the famous fashion retailer chain
present globally and head quartered in USA San
Francisco.• They are selling wide variety of fashion products to
almost all demographic groups.
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Although Gap inc has a successful history of
business; but because of the dynamic market trends
in fashion industry, we recommend that Gap inc
must be able to adopt and implement some new
strategies to stay in the market as a profit earning
firm.
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The Gap inc operates through:
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Vision &
Mission Statement:
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•Gap Inc do not have any formal vision & mission
statements.
•But they have corporate philosophy & code of
business ethics.
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PROPOSED VISION FOR GAP INC:
Gap strives to be a leader in the fashion retailing
industry from casuals to formals covering baby
clothes needs to adults garment needs. With our
stores present globally; we are the leading family
fashion brand with affordable prices & great quality
standards operating business on fair and ethical
basis.
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PROPOSED MISSION STATEMENT FOR GAP
INC:
“ To continuously develop & offer quality
products at fair prices that meet the customer
& market demands, compatible with fashion
industry. To be a consumer oriented brand
with keen concern
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of garment products ensuring quality,
consistency, convenient availability & trendy
designs to operate with high standards of
technology to obtain a leadership position &
retain the position, motivation of human
resource and encourage them to participate in
company’s success by focus on their own
personal goals & achievements.”
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INTERNAL ASSESSMEN
T
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Internal Factor Evaluation Matrix (IFE)
Strengths Weight Rating Weighted Score1. Global brand recognition 0.1 3 0.32. Worldwide stores location 0.1 3 0.33. Offering products through multiple channels 0.05 4 0.24. Online stores presence 0.1 3 0.35. Attracting Elite class (Banana Republic) 0.025 2 0.056. Online available Wide ranges of Sizes 0.02 3 0.067. Maternity Lines Range 0.025 3 0.0758. Piperline-Online store offering multiple brands 0.005 3 0.0159. Atheleta Catering Females Sports need 0.025 2 0.0510.
Extensive Product Range 0.05 4 0.2
Weaknesses Weight Rating Weighted Score1. Extensive Size range is present only online 0.05 2 0.12. Piperline offering limited range of products 0.02 1 0.023. Banana republic catering only selected target market 0.02 1 0.024. Atheleta only offering females sports ware 0.05 3 0.155. Not offering brand range specifically for teenagers 0.05 4 0.26. They are outsourcing their Manufacturing 0.1 4 0.17. High cost because of delayed shipments 0.1 3 0.38. So many affiliated brands 0.02 3 0.069. Difficult to control quality standards throughout 0.05 2 0.110.
Dependent on third party 0.04 3 0.12
TOTALS 1 2.72
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EXTERNAL ASSESSMENT
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External Factor Evaluation Matrix (EFE)Opportunities Weight Rating Weighted Score
1. changing consumer's trend of purchasing 0.05 3 0.152. growing needs of teen age group 0.04 3 0.123. quick response time 0.09 4 0.364. improvemnet in customer products 0.07 2 0.145. internet based communication between supply chain of the company 0.04 2 0.086. cost efficiency through lean inventories 0.03 1 0.037. demand of sustainable products 0.03 3 0.098. product differentiation 0.07 2 0.149. interactive internet application for sales 0.04 2 0.0810. world wide growth through global branding 0.03 3 0.09
Threats Weight Rating Weighted Score1. U.S. is suffering from high enemployment rate of 9.7 in many 0.04 1 0.042. rising oil prices 0.05 1 0.053. increased natural gas prices 0.04 2 0.084. rising cost of cotton 0.07 1 0.075. restrictions to produce 95% of the product 'natural' and 'organic' 0.06 3 0.186. threat from international competitors 0.09 1 0.097. strong competition from rival companies 0.08 2 0.168. trade restictions 0.04 1 0.049. slow pace of economic recovery 0.02 2 0.0410. U.S. or foreign labor strikes 0.02 2 0.04
TOTALS 1.00 2.07
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SWOT Matrix
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123
123
123
123 Focus towards in house manufacturing to foster the pace of economic recovery (W6, T9)
focus towards improved customer products to over come limited range of products (W2, O4)delayed shipments can be overcome through effective intranet between the supplier, manufacturer and retailer (W7, O5) Introduce brand range for the growing needs of young adults (W5, O2)
WO Strategies
WT Strategiesblanket purchase from thrid party (supplier) to minimize the effect of risnig cost of raw material (cotton) (W10, T10) Product quality and standards can be maintained by focusing the restrictions of 'organic products' imposed by goveronment. (W9, T3)
SO Strategies
ST Strategies
Expension inAsian countries throuhg global brand recognition (S1, O10)extensive product line is valueable in covering the needs of changing demographics situation (S10, O1)quick response time by online store presence (S4, O3)
Offering products through multiple channels to reduce the effet of competetors (S3, T7)Offering elite class products in competiton with Nordstrom and American Eagle (S5, T4)
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Competitive profile matrix
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Weight Rating Score Rating Score Rating Score0.04 2 0.08 2 0.08 2 0.080.10 4 0.40 4 0.40 1 0.100.08 3 0.24 2 0.16 4 0.320.06 4 0.24 1 0.06 3 0.180.12 4 0.48 3 0.36 3 0.360.07 2 0.14 2 0.14 4 0.280.07 2 0.14 4 0.28 4 0.280.09 4 0.36 1 0.09 4 0.360.09 4 0.36 3 0.27 2 0.180.15 4 0.60 3 0.45 4 0.600.05 2 0.10 3 0.15 3 0.150.08 4 0.32 4 0.32 2 0.16
1.00 3.46 2.76 3.05
Online Sales Market ShareProduct QualityBrand Management
Critical Success Factors
Gap Inc.
Competitive Profile Matrix (CPM)
TJX CompaniesNordstrom Inc.
Response timeFinancial Profit
AdvertisingMarket PenetrationCustomer ServiceStore LocationsR&D
TotalsPrice Competitiveness
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BCG Matrix
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Stars Question mark
Cash cows Dogs
40%
Old Navy
Gap
39%
0.18Banana
3%OthersIndu
stry
Sal
es G
row
th R
ate
(%)
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Financial Ratios
• Current ratio = 1.87• Quick ratio = 1.1• Debt to total asset ratio = 42 %• Debt to equity ratio = 0.73• Long term debt to equity = 0.22• Inventory turnover =9.05 days• Fixed asset turnover =4.67 times• Total asset turnover = 2.07 times
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Continued ratios,• A/c rec turnover = 71.53 %• Avg. collection period = 4.97 days• Gross profit margin = 40 %• Operating profit margin = 13%• ROA = 17 % • ROE = 29 %
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RECOMENDATIONS
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•Total asset turnover ratio is 2.07 which means
asset are under utilization and firm is not
generating sufficient volume from its assets.•Gross profit margin of the company is 40%
which declares that COGS is 60%. Company
should focus on the ways to minimize its COGS.
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•Their inventory turnover is weak, it is about 9
days. Company needs to focus on lean
inventory.• They should be doing vertical integration by
minimizing the outsourcing of manufacturing
and start manufacturing their own garments
and apparels.
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•They should be offering sports garments and
accessories to children, teenagers and men
also.•Banana republic should be offering products
attracting all kinds of customers not just the
elite or high class. The prices of the products
should range from high to low and medium.
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•The extensive size range should be present
in stores also. Many of the buyers would not
prefer to use the online transactions.•They should be launching a separate brand
catering the needs and trends in teenagers.•Outsource non core activities of the stores
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•Opt to get more franchise and make their
products more available•Use aggressive marketing tactics by social
media and offering product promotions to
attract customers.
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•Should be using celebrities of TV, Film and
sports to endorse their products.•Can introduce the whole package of complete
attire. This can include tops, bottoms, shoes,
purses and accessories as whole package with
appropriate pricing.
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CONCLUSION
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Gap inc is facing loosing its market share
within the recent years. Although very
successful in the past; the firm needs to
change its major and minor strategies which
we have recommended to retain a good
market share.