GAP INC.

2011 CASE STUDY

INTRODUCTION
Gap was founded in 1969 by Donald Fisher and Doris F. Fisher and is headquartered in San
Francisco, California. The company operates six primary divisions: Gap (the namesake
banner), Banana Republic, Old Navy, Intermix, Hill City, and Athleta. Gap Inc. is the largest
specialty retailer in the United States, and is 3rd in total international locations,
behind Inditex Group and H&M. As of September 2008, the company has approximately
135,000 employees and operates 3,727 stores worldwide, of which 2,406 are located in the U.S.

SWOT ANALYSIS

STRENGTHS
1. Has stores in 29 countries in Asia Europe, Latin America Middle East Australia and the
US.
2. Has 180 franchises, stores and plans to increase that to 400 by 2015.
3. employees 134,000 people with 3.321 stores worldwide divers brands including Gap,
Banana Republic, Old navy, Piper lime and Athleta.
4. Is working with visa to deliver real time discount via Sms text messages.
5. Excellent liquidity ratios.
6. Is the largest US clothing seller.
7. It has been a multinational company has a very strong infrastructure. They presently have
4,261 stores in 7 countries they have the ability of experimenting further international
expansion.
8. Only 1.5% of Gap total assets come from goodwill.

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WEAKNESSES
1. GAP has no formal vision or mission statement.
2. Offshore production doesn’t not allow Gap to adjust quickly changing customer
preferences .
3. Paid $99 million over book value for Athleta.
4. Focuses only in the casual clothing market for customers under 34 years old.
5. GAP operates from a hybrid divisional structure by geographic region and by product.
6. The process of gap products are higher than general prices of similar products .
7. GAP is concentrated only in the garment industry.
8. GAP has the disadvantage of not having operated in an Asia market before. Therefore,
anticipating the future trends in such markets would be difficult for the company.

OPPORTUNITIES
1. Baby boomers are the largest per capita consumer of apparel.
2. 71 million teens in the us are maturing in young adults.
3. Consumers age 20-34 years account for 24%of the apparel spending of the US.
4. Internet based communication between supply chain of the company.
5. Worldwide growth through global branding.
6. Market size for women apparel .

THREATS
1. Rising of cost of production.
2. Unemployment rate is causing consumers to spend less.
3. Currency changed between countries.
4. Increase in the market for counter feed goods.
5. Cotton prices are up over 100% from 2009.
6. Threat from international competitors .

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RECOMMENDATIONS
1. Gap should create a global structure by market development strategy to drive the
company’s long term growth and brand management system.
2. GAP should develop a formal vision and mission statement.
3. GAP should use an SBU structure by region.
4. Should use forward integration and control their distributors.
5. Gap should diversify its business into different industries.
6. Should use the strategy of product development and focus on clothing for all age groups.
7. They should be doing vertical integration by minimizing the outsourcing of
manufacturing and start manufacturing their own garments and apparels .
8. The extensive size range should be present in stores also. Many of the buyers would not
prefer to use the online transaction.
9. Outsource non core activities of the stores
10. Use aggressive marketing tactics by social media and offering product promotions to
attract customers.