GAP Inc.

CAN IT DEVELOP A STRATEGY TO CONNECT

WITH CUSTOMERS IN 2016

Strategic Management in Business

 5
MEET OUR TEAM
COMPUTRANTO TRI HANDONO – 2301984106 YOSEPH MARIO – 2301984131
FERRY NOVRIANTO SUTHIONO – 2301984112 LUCIA SUHARDI TAMIN – 2301984163
FRANSISCA KUSUMA NINGRUM – 2301984125 MARTINUS PRANANTA - 2301986313
TABLE OF
CONTENT
COMPANY BACKGROUND PORTER’S FORCES

MAIN ISSUE SWOT ANALYSIS

COMPETITIVE ADVANTAGE PESTLE ANALYSIS

COMPETING IN INTERNATIONAL MARKETS

About
GAP Inc.
The Gap Inc (Gap) is an Omni-channel retailer. The company merchandises apparel,
accessories and personal care products for men, women and children through its
retail stores, franchised stores, and e- commerce portals.Its products are marketed
under:
- Gap
- Old Navy
- Banana Republic
- GapFit
- GapBody
- GapKids
- babyGapy
- Athleta brand names.
Gap also offers various Omni-channel services such as curbside pick-up, buy online
pick-up in store, order-in-store, find-in-store, and ship-from- store. It also provides
license to various third parties to sell and market these products.
The company has business operations across the US, Asia, the Middle East, Europe
and Africa. Gap is headquartered in San Francisco, California, the US.
FOUNDER
GAP was founded in 1969 by Donald Fisher and Doris F. Fisher.

Their headquarterd in San Fransisco, California.

GAP Inc. is the largest specialty retailer in the United States and is third in total
international locations.

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 US.
Donald & Doris Fisher
 Equality & Belonging

An Open to All mindset drives every aspect of our

business. When we include and respect people from all
walks of life, we create a better, stronger company and a
VALUE
better, stronger world.
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor
Gender Equality & incididunt ut labore et dolore magna aliqua.

Empowerment
Equality is woven into the fabric of our culture because it’s
the way the world should function. We are proud to be
the first Fortune 500 company to announce equal pay for
equal work.

Sustainability

We believe strongly that we can create amazing products

and experiences for our customers while also ensuring
we create opportunity and a healthy environment
MILESTONES
GAP Inc. operated stores in 70 different countries in 2016 and was positioned
as casual attire, with an emphasis on blue jeans and khakis

1969 1980 2008 2013

The Company was founded and GAP acquired Banana Republic. GAP launched its online fashion GAP acquired boutique retail
first began selling Levi-branded marketplace Piperlime. chain Intermix.
jeans due to Don’s Experience in
trying to find his own pair that
fit.
MAIN ISSUE
• The retail industry is changing with a sharp decline in foot traffic in malls, but
retail sales growth is accelerating with online sales.

• Fast fashion strategies from the Inditex Group and others that successfully
satisfy consumers' desire for fresh and fast-growing clothing styles

Strategic Management in Business

MAIN ISSUE
PERFORMANCE ANALYSIS
Net Sales
The sales decline between 2014 and 2015 was reflected in every
16500
geographic region except Asia and every brand except Old Navy. When
16000 compared to 2011, net sales across brands had only increased from $14,5
billion to $15,8 billion in five years.
15500

15000

14500

14000

13500
2011 2012 2013 2014 2015

8% MARKET SEGMENTATION
Typically sales of clothing to women made up the

32% majority of industry sales. Also, age demographics with

gainful employment and disposable income were the
60%
largest purchasers of clothing in the United States.

Women's Men's Children's

Competitive Advantage
COST LEADERSHIP

a. Offers fashionable , trendy, and the stylish product s and services at

competitive prices.

a. It was associated with innovation of clothing products and accessories for

abroad market for any customer (variety by segment and variety of
generation). The customer base of the company shows that it is diverse and
integrates nearly customers of all ages and income groups.

c. Their strategies expanding international market also gave benefit to raise their
brand reputation and also their market.

Gap Inc’s Porter’s 5 Forces tell’s how Gap Inc maintain their competitive advantage in
fashion store’s industry.
PORTER’S 5 FORCES ANALYSIS

MODERATE HIGH MODERATE

01 THREAT OF NEW
ENTRANTS 02 THREAT OF
SUBSTITUTES 03 BARGAINING POWER OF
BUYERS
The need for large capital requirements to set up Is high if it offers a valuable products that The GAP Inc has small powerful customers base which ask
the business, expected retaliation from the is different from present product offering for more discount and offers. GAP Inc can tackle this by
current market players, brand loyalty, and of the industry build large base of customers which will reduce the
recognition are additional challenges to be faced bargaining power and provide an opportunity for firm to
by potential new market entrants update its sales and production process

HIGH LOW

04 INTERNAL
COMPETITION 05 SUPPLIER BARGAINING
POWER
(RIVALRY) The company purchases from about 1000 suppliers with factories in about 40
Gap Inc.’s holds less than 5% market share, which clearly indicates the countries. Gap’s two largest vendors each accounted for only about 5 percent of
diverse nature of the U.S. apparel industry. the dollar amount of its total fiscal 2015 purchases.
Major competitors include Indexta, Abercrombie & Fitch Co., American Accordingly, Gap Inc.’s business is not dependent on any particular supplier and
Eagle Outfitters, Inc., Belk, Inc., Guess, Inc., J. C. Penney Company, Inc., this fact increases its bargaining power in dealing with supplies.
etc
 STRENGTH WEAKNESS
Its products are well known for quality and durability. Low Inventory turnover ratio compared to peers
GAP has an extensive network of outlets and stores GAP is weak in adapting and innovating, causing
spread across many countries poor financial performance
GAP provides a wide range of clothing products for Bad image in the eyes of customers because many
men, women and children, casual to premium style, shops are closed
so that it reaches all segments

SWOT
ANALYSIS
OPPORTUNITY THREAT
Targeting Growth in global apparel retail market Increasing competition in the retail and online
industry
With a discount strategy and the advantages of
clothing brands, GAP focuses on market penetration The increasing cost of design and market research
to increase sales along with the very fast changing trend
Positive outlook for online market Design models that can be imitated by competitors
and even competitors with better quality can cause
shifts in customer tastes
 P E S T E L
Political

Political situation is
Economic Social Technological Environmental

The G A P Inc.
Legal

stable Advancement in o u ld follow

sh
co n o m ic fa ctors i ro n m ental
Some e fashion is a form of technology became a env The GAP
eflation by
The Government has like i n f la t io n / d
implementation of a key factor for policies gy inc.
ce en er operate
developed some
rates, resour person for self- international saving s global
policies for business d GDP f o l low
ava il a b il it y a n
actualization organizations to a n d
ange which p ly
which control the ational t e c h uts
affects intern sustain a position in a clim a
challeng
market position for organization
and competitive world through te e of
the firm t o f t h e r ev en u e c t i v e was
complyi
amoun effe ent ng with
erates g e m
the firm gen ma n a various
As Gap Inc. run
s Dynamic community internat
y,
From manufacturers ional
business globall lifestyle. perspective, domest
s also Business ent ic and
government ha technology improves ities regiona
d eve lo p e d ru le s and efficiency in constantly us
e l laws an
afety ntr y's the concept p regulati
regulation for s o u
Every c ifferent production by f ons
and employee is d “going green
lifestyle automation process ”
benefits.
Strategies Competing in
International Markets
STRATEGIC ALLIANCES WITH FOREIGN PARTNER

The best strategy to develop and compete in the international market is through
cooperation with local companies. This concept has been implemented by several
competitors such as TUMI, ZARA, etc.

In Indonesia, there are retail companies that have collaborated with several leading
brands. It is these companies that usually collaborate with well-known brands and then
give permission to sell these brand products in Indonesia.

The advantage of this strategy is that manufacturers do not need to do market research,
small investment value, guarantee and security protection, etc.
Strategies Competing in
International Markets
Transnational Approach – Think Global Act Local

- The firm attempts to combine the benefits of global scale efficiencies with the
benefits of local responsiveness
- Which part they should notice when a company decide to expand their market
trough international market :
a. There are major differences in local laws, economic conditions and
infrastructure.
b. Consumer tastes or preferences vary in different countries.
- GAP might consider to build factories in developing countries with low labor costs
and low factory operating costs.
- Gap Inc might consider allying with a local company such as MAP in distributing both
through e-commerce and offline stores.
- Gap Inc. may consider expanding its market in highly populated countries such as
China, Indonesia and other Asian countries.
BUILD COMPETITIVE
ADVANTAGE
Cooperating with local retailer/e-commerce companies.

Products sold in each country are adjusted to the trends and culture
of that country.

Expanding the supply chain or establishing a factory network in

several low-cost countries such as China, Vietnam, etc. to reduce
transportation and operational costs.

Providing access for consumers to be able to purchase GAP products sold

abroad.
THANK YOU