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, Forth & Towne etc.. Primarily operating in North America, the company operates more than 3,000 stores worldwide, having stores in United States, Canada, the United Kingdom, France, Ireland and Japan.
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Key resources for Gap include the human resource headed by the competent strategists in the form of its top management and a renowned brand identity. While the strategists provide plans and policies the motivated work force seems to ensure proper implementation of these plans.
Services of people like Karyn Hillman, and Liz Claiborne too proved crucial in implementing the plans set up by Pressler. Brand equity on the other hand is an important intangible asset for the company. It not only creates a product identity, but it also helps in establishing lasting relationship with customers. The brand identity adds significant value to the range of products offered by the company.
A company will not be in a position to take advantage of its resources, if there is no matching determination and capability to implement the plans. Gap has the capability to take on its competitors head-on by unleashing a range of competitive measures like penetrative pricing, entering into strategic tie-ups with the likes of designer Roland Mouret in order to offset the losses.
Thanks to such strategies, the company was able to sustain the losses during periods of sagging sales, while the crack was duly filled up in due course. Gap also has the ability to invite the attention of its customer, even when the company goes for an overhaul of its strategies and positioning of its products in the market. In 2003 the business of Gap Inc bounced back when the management decided to reposition the three main brands. The sales saw an upswing after 29 months of straight decline.
Gap’s understanding of the changing fashion ideas is one of the key core competencies of the company. The brand ‘Old Navy’ was an instant hit amongst the younger crowed, when the company shifted its focus to teenagers in the year 2000. The expertise in fashion wear and the company’s ability to translate this expertise into developing and manufacturing trendy cloths is another core competency for Gap.
Three findings of the case include; Gap’s majority hold on the North American market, Gap’s dwindling sales figures in recent years, Overdependence on the North American Market.
It is worthwhile here to mention that while on the one hand the overwhelming presence of Gap in the North American market is a strong point for the company, the overdependence on this market becomes a weaker link for Gap. If for some reason, another competitor emerges in the North American market, the company would find it difficult to leverage its potential.
The news of tapering sales graph in recent years is certainly not a healthy sign for the company. What is particularly worrying is the fact that many of the key executives have also started deserting the company in search for better opportunities. Increasing competition, availability of a number of other brands, and counterfeit products are also going to give tough times to Gap in times to come.
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.
- Wheelen, Thomas L and J. David Hunger (2010). ‘Strategic Management and Business Policy: Achieving Sustainability’, Twelfth Edition. Prentice Hall, New Jersey.