Executive summary
Gap Inc is one of the best-known brands in the world. The company gives very much important for delivering better shopping experience for the customers. “At Gap Inc., we never stop moving. It takes thousands of passionate, dedicated, and talented employees around the world to deliver the merchandise and shopping experience our customers expect and deserve.” (Man on a mission, 2005).
The company has very good strategies that have helped them to achieve their mission and are helping them to achieve it. The company gives very much importance to the appearance of its outlet designs. It creates its durable products through the tie-up with the best factories all over the world.
Introduction
Gap Inc has given due importance to all its activities in order to enhance the market share. Building a very good brand image was one of the strategies of Gap Inc., the company, in order to build a better brand image, enhanced its all activities. The company gave due importance to the appearance of its retail outlet. For this, they designed the outlets in the most modern way so that the appearance remains in the minds of the people who shop in their outlet.
Literature review
In this, the various strategies that are formed by former CEO Paul Pressler are being discussed. Paul Pressler formulated many strategies for Gap Inc, but he was not successful in bringing the expected results from those strategies.
Strategic choices Gap Inc. made during CEO Pressler’s tenure
Mr. Pressler was the chairman of Disney before he joined Gap Inc. one of his strategies in Gap Inc was to go for a vast expansion plan. He hired many of his former colleagues in Disney for building his team in Gap Inc. By hiring specialists from Disney, Pressler was able to make a better balance sheet position for Gap Inc. “Under his leadership, the company has meaningfully improved its operations, strengthened its balance sheet, greatly enhanced its online presence across the brand portfolio, and improved its standing as a global corporate citizen.” (Gap Inc, 2008).
Pressler also hired HR specialists from Disney for Gap. He also brought new strategies in marketing. The punch line of the brand was “Own it, do it, get it done.” In the process of making changes in the strategies, he transformed the punch line into “Purpose, values, and behaviors.” For making developments in the organizational culture and performance, he conducted continuous meetings, role-playing and other management activities.
Another strategy adopted by Pressler was to combine the supplier chain of all the three brands of Gap Inc. “Gap Inc. owned The Gap, Banana Republic, and Old Navy chains.” (Pressler, 2007). Before the three brands, Gap had three suppliers. Before the prototypes of the garments were made in the Manhattan district. But Pressler decided to stop this and get it done from Asia. This was a cost-cutting decision made by Pressler. He also made his own suggestions for the display of the apparel in the showroom apart from the idea of the store designer’s.
Effectiveness of his strategic choices
The strategic choices made by Pressler in Gap failed to bring proper results. His effort to make a transformation process was accepted widely by everyone. But the transformation process seemed to take more time. This reduced the productivity of Gap during those periods. The interactive activities introduced by him wasted a lot of time, contributing nothing towards the effectiveness of Gap. The vast expansion program introduced by him was ineffective. Before going forward with the expansion program, he should have tried to capture a better market in the US itself. His suggestions for improvement in the store design ended up with no results.
Analysis of his cost-cutting strategy
He adopted two main cost-cutting strategies in Gap. One is to combine the supplier chain of the three brands, and another is to shift the prototype making to Asia from Manhattan. In the first case, he was effective in cutting the cost by purchasing the required materials from the same supplier. But the end result was not effective. The materials, especially jeans that were brought for the three brands, did not differentiate in nature.
This made all the three brands almost similar in nature. The designers felt very little flexibility in the materials. The second cost-cutting method also felt difficult. His attempt was to cut the cost of production by producing samples from Asia. So in this effort, the designers first make a prototype and leave it to Asia for making the sample. After producing the samples, it comes back to the designers who make further changes in it and again ships it to Asia for production. The end result was more consumption of valuable time.
Accomplishments and failures of Gap Inc
Gap Inc improved its Balance sheet position during the tenure of Pressler. The company operations have undergone many improvements under his guidance. Gap Inc was also able to make a better presence in the online market under the tenure of Pressler. Similarly, Gap Inc faced many failures during the period. The failure of Gap Inc began from a fall in the market share. The clothes that were first designed under his tenure made their debut in the market in the spring of 2005. “But even supported by an advertising blitz fronted by actress Sarah Jessica Parker, the brand’s sales fell 4% that spring and summer.” (Business Week, 2007).
Better advertising was involved for marketing it. But Gap faced a 4% decrease in sales in that season.
Conclusion
Gap Inc has a good strategy on brand image building. But unfortunately the strategic choices used under CEO Pressler tenure was not at all effective in cost cutting and was also a time consuming process and this marked a decline in profit and market. Further his guidelines improved the brand positioning through online marketing and this resulted in better financial condition.
Reference
Business Week. (2007). Paul Pressler’s fall from the Gap, off the market research. Web.
Gap Inc. (2007). Gap Inc announces Paul Pressler to step down as Chief Executive Officer. Web.
Man on a mission. (2005). Gap’s mission statement. Web.
Pressler, Paul S. (2007). A fashion sense. Web.