Gap Inc.’s Strategic Audit and Management Report

Executive Summary

The Gap (Gap) is a well known name in the retailing world for clothing and related accessories for men, women and kids. Sold under the reputed brand names like Gap, banana republic, old navy and piperlime range of footwear. Primarily operating in North America, the company operates more than 3,100 stores worldwide, having stores in United States, Canada, the United Kingdom, France, Ireland and Japan¹.

Besides this, the company has an online presence as well, which makes it accessible to markets across the geographical boundaries. During the 53 weeks ended in February 2007, company recorded revenues worth $15,943 million, a decrease from the corresponding period in 2006². In fact the company saw similar downtrend in revenues during the FY ended January 2006, when the revenue figures came down by about 1.5% from the 2005 figures. The net profit figures also saw corresponding decline during this period. This is a testimony to the kind of competition the company has been facing during the last couple of years. This calls for some adjustments and reviews of the policies being adopted by the company.

Company’s Purpose and Values

Gap Inc. takes pride in calling itself a brand-builder and creating emotional connections with customers around the world through inspiring product design, unique store experiences and compelling marketing.

• Company’s purpose³ is, “To make it easy for you to express your personal style throughout your life”.
• Values guiding the company’s business operations are; integrity, respect, open-mindedness, quality and balance.

With this purpose and value configuration the company offers a wide variety of products like Apparel, Shoes, Accessories, Intimate apparel and Personal care products with the availability of brands like Gap, GapKids, babyGap, GapBody, Banana Republic, Old Navy and Forth &Towne

Stakeholders

For any organisation to work, a number of stakeholders have to pool their efforts. Terry & Franklin (1994) define management as ‘a distinct process consisting of activities of planning, organizing, actuating and controlling performed to determine and accomplish stated objectives with the use of human beings and other resources’. Management therefore involves a coordinated approach taking care of all the factors affecting the business operations. Functioning of an organisation is mainly affected by two types of factors;

• Internal: These are the factors like the strengths of the organisation, in terms of its finances, human resources, management, strategies etc. These factors can be controlled well by the organisation.
• External: These are the factors on which an organisation may not be able to exert much of its control. These include, the legal and political scene prevailing within the state/ country of its operations, number and types of competitors, suppliers in the market, terms and conditions from financial institutions, alternative products available in the market, newer technological innovations etc.

For Gap Inc. the key internal stakeholders are the more than 150,000 employees around the world and its shareholders with the task of management being performed by a dedicated lead by Glenn K. Murphy, the Chairman and Chief Executive Officer. The executive team includes;

• Jack Calhoun – President, Banana Republic.
• John Ermatinger – President, Japan.
• Marka Hansen – President, Gap.
• Toby Lenk – President, Gap Inc. Direct.
• Art Peck – EVP, Strategy & Operations.
• Stan Raggio – SVP, Gap International Sourcing.
• Dawn Robertson – President, Old Navy.
• Eva Sage-Gavin – EVP, Human Resources.
• Lauri M. Shanahan – Chief Legal & Administrative Officer.
• Sabrina Simmons – EVP and Acting Chief Financial Officer.
• Stephen Sunnucks – President, Europe.
• Michael B. Tasooji – EVP and Chief Information Officer.
• Tom Wyatt – President, Gap Inc. Outlet.

Gap-SWOT analysis

• Strengths: Strong brand identity; wide network of stores; more than 40 years of experience in the business.
• Weaknesses: Declining profits in the recent past; Concentration in North America
• Opportunities: Growth in online business; lucrative markets of India and China; Launch of newer brands in the recent past.
• Threats: Increasing competition; availability of a number of other brands; counterfeit products

Strategies for Future

In view of the above analysis, it is quite clear that Gap has the strength to become a leading brand in the market, but it needs to set its house in order, by setting priorities for the immediate as well as for the long term future. Huge market potential in the South Asian region in general and in India and China in particular needs to be tapped by adopting appropriate market penetration strategies.

References

Terry, George R and Franklin, Stephen G. (1994). Principles of Management. Richard D Irwin Inc. USA.

Gap Inc (2008). Web.

Datamonitor (2006). Gap Inc – Company Profile. Datamonitor Americas, NY.