Analysis of the GAP Inc. Essay

Introduction

Company

Gap Inc. is a leading American specialty clothing retailer based in San Francisco in the state of California. It sells casual attires, accessories and other personal care products for both men and women and also children. Their products include T-shirts, khakis, denim, casual wear, boxers and others. “Its shares are traded in the New York Stock Exchange under the symbol GPS.”¹ Gap operates above 4,100 stores in the United States, the Canada, United Kingdom, France, Japan and Germany. It employs nearly 165,000 employees worldwide. Gap Inc. maintains a big number of brands, namely: Gap, Piperlime, Banana Republic, Forth & Towne, Old Navy and other minor ones.

These singular companies were bought by the parent company during different times. Gap Inc. started as a common jeans retailing store but in the present times has a market value of $13.32 billion. Throughout its yesteryears, Gap Inc. has steadily established itself as a leader in the industry.²

Gap’s corporate strategy has consisted of major global expansion by amplifying its retail space, increasing its portfolio and delving into diversified markets. Gap’s goal is essentially to become a “megabrand” like Coca-Cola or Adidas.³

Another strategy includes a formal environmental policy, which is focused on empowering employees to shape environmental policies, building better stores and offices and reduction of waste. In this paper, we aim to examine the effectiveness of Gap’s performance, more so socially, with an emphasis on its employees.

Social Responsibility

According to the company website, “At Gap Inc., social responsibility isn’t just a catchphrase or a feel-good initiative. It’s a reflection of who we are and how we operate as a company. To us, being socially responsible means striving to embed our values and ethics into everything we do–from how we run our business, to how we treat our employees, to how we impact the communities where we do business.”⁴

Corporate social responsibility is an ethical ideology that an organization has an obligation to act to benefit the society at large. This responsibility can be passive, by avoiding engagement in socially harmful acts, or active, by performing activities that directly advance social goals.

“CRS has a main aim which is to be accountable for the actions of an organization and give positive encouragement via its doings on consumers, employees, stakeholders, the environment and the public as a whole”. Social injustice and ecological harm have been majorly caused by highly viable and disjointed proprietorship prototypes of industrial units and farms.

Ineffective and deprived management practices by the government has led to occurrence of poor working conditions, the determent to pay legality fees, dissent of freedom of association or movement rights and child labor support. Gap Inc has ended up being an essential influence in the industry and the sustainability faction has sought to attend to these impacts.

In 2003 the GAP organization was a pioneer in realizing a CSR report that was very exhaustive in detail about GAP CSR especially how it approached the issue. The information was generally appreciated for its keenness in being transparent and candid about both the accomplishment and letdowns in this field.

The report Social Reporting Award was honored by the Business Ethics Magazine as ”unprecedented honesty in reporting on factory conditions”.⁵ And its follow up in 2004 further discussed and gave a provision for latest information on Gap Inc’s development, hardships and its most recent plans.⁶

While recently Gap has enjoyed positive press in terms of its social image, in the past Gap has been slammed in the media for its alleged use of sweatshop labor. Additionally, the idea of “sustainability” which is a catchphrase in industry as much as politics, tends to promote the idea that environmental, social and economic improvement are tied together and ought to be pursued equally.⁷

Stakeholders

As business organizations increasingly invest in corporate social responsibility, it becomes critical to accurately examine the effects of these endeavors. Generally business managers ought to put emphases on the reliability and accuracy of a given set of metrics to evaluate the objective of different interested parties – the crucial recipient of CSR initiatives – and to frequently appraise development made by the corporation in achieving those targets. The extent and necessity of the diverse challenges and issues facing the entire world call for a relationship between companies and its interested parties.

In order to be profitable and effective, the organization uses a wide range of methods to achieve this, such as, encouraging people to open up and bring forth their ideas. In addition, it also takes into account the opinions of governments, other businesses and non-governmental organizations thus ensuring that all their final decision has the outstanding benefits to all concerned parties.⁸

Stakeholders of any company play a vital role in its operations and relations with the outside society, thus the stakeholders of GAP also play a role in its CSR initiative. Whereby through their experience and workmanship they offer assistance and advice in area where GAP lacks the necessary expertise.

In addition they serve as monitors and supervisors to GAP and its programs ensuring they are run as the policy dictates in areas where the organizations lacks an efficient supervision system. Thus with time these relationship has resulted in Gaps’ success in the program as it can accurately attend to any social issue affecting any company.

Positive Examples

In any company, its success and profitability depends on its will in creating significance in its shareholders, nevertheless it’s the customers to the organization that determine its survival or not. Hence, it is vital that customers have a pleasant relationship with the company whereby they will keep on purchasing the company’s products for a very long time thus ensuring profitability.

As a result the company ought to ensure that it creates premium products that meet the expectations of the customers. In order to achieve this, the company ought to ensure that its employees are skilled, innovative and appreciate their work.⁹

“Gap has over the years strived hard to deliver a positive work environment; investing time, attention, and resources towards it with the ultimate goal being for employees to be treated fairly and with respect and integrity.” ¹⁰

Whenever new interns or staffs are added to the company, the management ensures that they are exposed to the values that the organization stands for thus ensuring that they get an overview of what is expected of them in the end and its importance, which is then left to the group leaders to ensure that they abide by these values.¹¹

In addition the Human resource department has appreciated this program by offering incentives and reward schemes to employees who meet and abide by the company goals for example offering wholesome health insurance schemes for employees working overtime, while offering a non comprehensive insurance scheme to those that don’t.

Gap also encourages an environment with open communication with workers, where the company conducts both formal and informal worker opinion polls, have open door avenues of communication, and have lines for code of business conduct.

In addition, Gap also offers tangible prizes to promote the morale of volunteerism and active encouragement. For instance, The Founders Award that is awarded annually to workers who offer their services to the service of the community and the winner gets paid-time leave to volunteer and an endowment to award the other community partners.¹²

All these initiatives show that Gap takes social performance seriously. The purpose is to show that Gap recognizes its employees for their commitment to finding innovative solutions to community and environmental problems. This also shows that Gap has a management that understands what is meant by living their principles as a way of corporate social responsibility, and as a firm with an apparent responsibility in building a positive workplace.¹³

Negative Examples

Even though Gap has demonstrated over the years that social investments and business investments are not mutually exclusive, the company draws persistent criticism over labor practices. In 2003, “Gap Inc. together with 21 other firms was involved in a class action court case filed by sweatshop employees in Saipan.

The allegations included “off the clock” hours, where employees were not remunerated for going overtime, risky workplace environment and obligatory abortion frameworks. A settlement of $20m was arrived at though Gap didn’t acknowledge liability”.¹⁴

In May 2006, it was found out that many workers of Western, a dealer in Jordan, had worked more than 110 hours/week and yet gone 6 months without remuneration and even some workers alleged that they had been sexually abused by their seniors. Majority of these claims were aimed at Walmart, though they disregarded the claims, while Gap urgently acted on the situation and looked for remedies.

On October 28, 2007, British Broadcasting Corporation reported cases of child labor in the Indian Gap plants, though it denied that it was conscious of such events and that was opposition of child labor and promised to probe into infringes in its ethical policies. The labor practices incidences above raise concerns on the capability of Gap as a company to uphold its social policies with focus on their employees particularly given the volatility of the economy.¹⁵

Conclusion

In as much as Gap Inc. is actively, and for the most part, successfully administering its social responsibility policies, it is not quite clear whether the company is effectively integrating its social strategies into its business strategy.

Gap has made considerable progress over the years, but there appears to be more of what can be done. Gap should raise the bar in its production operations overseas and as an alternative to implementing all of the “easy” aspects of its policy; Gap could raise the “socially responsible ante” by making more complex improvements, such as wage increases and better working conditions.

Gap should create its goodwill by dealing with some of the complex concerns that it’s still facing, for example job insecurity and poverty wages employees that have been caused by markets liberalization and the outgoing global financial gloom. Gap Inc. also needs to develop into being more transparent on the locations of its supplier factories and the strides it is taking to improve its purchasing practices and to make certain that its sourcing resolutions don’t victimize workers and good suppliers.

These unsure economic times, heightened by the pressing need to address the welfare of the workers necessitate a company to incorporate social risks and strategies into their business strategies. In addition to the company’s existing social sustainability commitments, Gap Inc needs to utilize the results from its social responsibility footprint assessment to put forward bold targets and long-term objectives for leading the sustainability agenda in the apparel industry.

Bibliography

Auerbach, Alan. “Fiscal policy in recession: US fiscal policy in Recession: what’s next?” CESifo Forum 2/2009. 2009.

Carsrud, Malin. Entrepreneurship, Illustrated edition. Melbourne: Greenwood Publishing Group, 2007.

Case, James. Competition: The Birth of a New Science. New York, NY: Farrar, Straus and Giroux, 2008.

Casson, Martin. The entrepreneur: an economic theory, (Illustrated edition), Manhattan: Rowman & Littlefield, 1982.

Clifford, Stephanie. “Gap Inc.” New York Times, 2008.

Colander, David. Macroeconomics, 8th Edition. New York: McGraw-Hill, 2009.

Gap Inc. “About Gap Inc..” Gap Inc. Web.

Gentleman, Amelia. “Gap Campaigns Against Child Labor.” New York Times. 2007. Web.

Hall. Koontz & Weihrich, Henry. Essence of Management International Perspective, New Delhi: Tata McGraw Hill, 2009.

Kotler, Philip. Marketing Insights from A to Z: 80 concepts every manager needs to know. New Jersey: John Wiley & Sons Inc, 2003.

Kotler, Philip. Principles of marketing, 2nd edn. New York: Prentice Hall, 1990.

Porter Michael. The Competitive advantage of nations, illustrated edn. Northampton, MA: Free Press, 1990.

Roberts, Michael. The Great Recession. New York: Lulu Enterprises Inc., 2009.

Weaver, Frederick. Economic literacy: basic economics with an attitude. Maryland: Rowman & Littlefield Publishers, 2007.

Wheelen, Thomas. & Hunger, David. Strategic management and business policy. New Jersey: Prentice Hall, 2002.

Wright, Patrick & Sage-Gavin. “Corporate Social Responsibility at Gap: An Interview with Eva Sage-Gavin.” DigitalCommons@ILR. 2006. Web.

Footnotes

1. Gap Inc. “About Gap Inc..”
2. Clifford, Stephanie. “Gap Inc.” New York Times, (New York, NY) 2008.
3. Gentleman, Amelia. “Gap Campaigns Against Child Labor.” New York Times, Web Site. 2007.
4. Gap Inc. “About Gap Inc..”
5. Carsrud Malin. Entrepreneurship, (Illustrated edition), Melbourne: Greenwood Publishing Group, 2007.
6. Weaver, Frederick. Economic literacy: basic economics with an attitude. Maryland: Rowman & Littlefield Publishers, 2007
7. Carsrud, Malin. Entrepreneurship, Illustrated edition. Melbourne: Greenwood Publishing Group, 2007.
8. Roberts, Michael. The Great Recession. New York: Lulu Enterprises Inc., 2009.
9. Colander, David. Macroeconomics, 8th Edition. New York: McGraw-Hill, 2009.
10. Weaver, Frederick. Economic literacy: basic economics with an attitude. Maryland: Rowman & Littlefield Publishers, 2007. Print.
11. Casson, Martin. The entrepreneur: an economic theory, (Illustrated edition), Manhattan: Rowman & Littlefield, 1982.
12. Auerbach, Alan. “Fiscal policy in recession: US fiscal policy in Recession: what’s next?” CESifo Forum , 2011.
13. Kotler, Philip. Marketing Insights from A to Z: 80 concepts every manager needs to know. New Jersey: John Wiley & Sons Inc, 2003.
14. Porter Michael. The Competitive advantage of nations, illustrated edn. Northampton, MA: Free Press, 1990.Print.
15. Wheelen, Thomas. & Hunger, David. Strategic management and business policy. New Jersey: Prentice Hall, 2002.