Introduction
Gap Inc., also known as Gap, is an American corporation that deals with the manufacture and production of clothing and accessories while also acting as a retailer. Gaps’ main focus is on the production of men’s, women and children’s clothing using sustainable methods. The life cycle of a product at Gap goes through seven stages that include: product design and development, materials and processing, textile manufacturing, creation and finishing, logistics and distribution, retail stores, and consumer and circularity. Gap, as a company, focuses on sustainability, diversity, respect for all, and preservation of culture. Gap integrates technology in its operations to ensure faster production and continuous communication with its customers.
The differing business systems and processes applied at Gap
Gap has often aimed at offering its customers the opportunity to feel stylish, comfortable, and updated fashion-wise at very affordable prices. To achieve this, Gap has undergone a digital transformation in its supply chain to reduce product development and distribution lead times and thus increase customer response speed. This digital transformation is closely connected to information sharing (Preindl, 2020). Additionally, Gap also outsources technical labor from several developing nations and hence reducing costs and increasing the profit margin. Leadership at Gap has assisted in developing an in-house program titled GapTech Rotational Program (GRP), which trains innovative software engineers on how to code and develop great retail technology for its brands, employees, and customers worldwide. Having in-house developers and coders greatly increases productivity as being in-house makes it easier for them to comprehend what is required and how to develop it.
Gap differs from other cloth-manufacturing companies in many ways, especially at the manufacturing stage. To this end, Gap has resorted to the outsourcing of several services, thus encouraging economic interdependence and helping globalization. Outsourcing has helped many companies cut the costs of producing products. The outsourced services are usually nonessential functions that are not required in company headquarters or within its proximity. Gap experiences a low turnover rate of new products because its manufacturing centers are located far from its headquarters. When products are manufactured close to the company headquarters, it becomes much simpler to manage and control the production. Gap outsources labor and other manufacturing products from developing countries, thus reducing its turnover rate. Gap, therefore barely meets its customer demands which reduce its profitability.
Unsatisfied customers can easily lead to the failure of a business. Customer loyalty and satisfaction are key ingredients in the success of a business, and this is usually lost when the clients are not satisfied. Ensuring the satisfaction of customers is almost a guarantee of customer loyalty, thus increasing profitability. To refer others to products they have bought and are satisfied with, most customers will promote brands and companies through word of mouth. When the delivery of services or products is poor, the reviews about a company also portray the company in a negative light. Therefore, ensuring customer satisfaction should be a top priority rather than profitability. Customer satisfaction will automatically result in profitability because a satisfied customer is more likely to return an
The best practices and insights implemented at Gap Inc.
Gap has implemented several strategies, policies, and procedures to help manage its employees, customers, supply chain partners, and the whole business. Some of the responsible business practices put in place are; risk management, engagement of stakeholders, code of vendor conduct, code of business conduct, anti-corruption and anti-bribery, and data privacy. Gap has set up a risk assessment committee at the enterprise level that prioritizes risks based on their likelihood and the severity of the impact. At the physical asset level, the company has a business continuity planning team that analyzes, prioritizes, and helps mitigate risks related to extreme weather and natural hazards.
Gap aims to engage its stakeholders in each manufacturing step to achieve optimal production. Stakeholders such as local and international NGOs deal with labor affairs. Gap has a code of vendor conduct (COVC) that outlines its basic expectations for environmental standards to all vendors and suppliers with whom it conducts business with. The COVC is among the policies developed by Gap to deal with ethical supply chain issues (Futterman, 2022). The COVC also outlines that Gap expects all facilities to comply with environmental laws and regulations and to manage their energy user and water impacts. Gap ensures it protects its customers’ and employees’ data to build trust between them and the company.
The challenges faced by Gap Inc. and how to solve them
One of the main challenges facing Gap as a company is the lack of a substantive CEO. The previous CEO, Sonia Syngal, stepped down, and the company is yet to name a permanent replacement. The presence of top leadership is an integral part of having a successful business. The CEO is responsible for spearheading strategic management by guiding organizational principles, articulating strategic areas of focus, and creating long-term goals that guide the organization (Yaakob, 2019). The major decisions that can lead to the growth or failure of a company are usually made at the C-suite level. The absence of a CEO at the helm makes it difficult for the company to focus on achieving the long-term goals set out due to a lack of clarity. Therefore, the lack of a CEO is a step in the wrong direction for Gap as a company and a worldwide brand able to compete with its peers.
A company that has no sense of direction is more likely to fail than to succeed. A precise target market makes it easier to advertise and gather sales, and it also makes it easier to devise strategies to use against your competitors. A particular target market increases precision in production, making it easier to produce on time and satisfy customers. Having a specific target market also allows a company to focus on customer needs, satisfying customers fully by meeting their demands.
Another major challenge facing Gap Inc. is the decline in growth accelerated by the covid 19 pandemic. Gap’s ‘Old Navy business’ was affected by the pandemic, with led to a massive loss of sales. Old Navy was known for its budget-friendly clothing for adults and kids. Old Navy’s operations were affected by delays in outgoing inventories and a lack of product market for the target market. Gap had a move to acknowledge the push to sell plus-size items at Old Navy. This move led to having too many plus-size clothes compared to its core sizes. This lack of direction in production at Old Navy led to a decline in sales, which reduced the company’s financial growth.
Some mistakes can be avoided by ensuring that proper market research is carried out. Additionally, Gap should use online platforms to interact with existing and potential customers. This move will help the company market its manufactured clothing and be able to reach the right target market. Gap can also benchmark its competitors, such as Zara, and develop strategies that uplift its competitive position in the clothing industry.
Ethical decision-making by leaders at Gap
Gap is a company that deals with a wide variety of customers and has to be diverse in its manufacturing strategies. A diverse leadership strategy will ensure success in harvesting the potential value of diversity (Homan, 2020). Leaders in Gasp should bring diversity experts to help transition the organization into accepting different people and cultures. Leaders should also guide their employees in shifting the company culture while still ensuring that they hire people from different racial backgrounds and cultures. Leaders at Gap should also provide resources that support the act of embracing diversity and promoting global interactions.
Conclusion
Business decisions should ensure the pivotal growth of company leadership, employees, customers, and other stakeholders. A solid stakeholder relationship can increase employee motivation, create a powerful and recognizable brand, enhance customer perception, and increase profitability. Positive business ethics should be integrated into the company’s operations to ensure respect and responsibility. All participants in a business should experience fairness, trustworthiness, and good citizenship. All these factors lead to loyalty and goodwill in customers. They also lead to good supplier relationships, which boost business growth. Gap has sectors in which it should improve to improve its manufacturing business and avoid failure that might lead to its closure in the future.
References
Futterman, A. (2022). How Supply Chain Stumble Changes a Company’s Policies and Progress 20 Years Later. A Case Study of Gap Inc.
Homan, A. C., Gundermir, S., Buengeler, C., & VAN Kleef, G. a. (2020). Leading diversity: Towards a theory of functional leadership in diverse teams. Journal of Applied Psychology, 105(10), 1101.
Prindle, R., Nikolopoulos, K., & Liu, K. (2020; January). Transformation strategies for the supply chain. The impact of industry 4.0 and digital transformation. In Supply Chain Forum: An International Journal (Vol. 21. No. 1. PP. 26–34). Taylor & Francis.
Yaakob, M. F. M., Musa, M. R., Habibi, A., & Othman, R. (2019). Strategic management and Strategic Planning in school: Is it worth it for teachers? Academy of Strategic Management Journal, 18(3), 1-6.