Case Analysis: How well is the company’s present strategy working (quantitative and qualitative analysis)?
The present strategy of GAP Inc. currently is working well for the company as demonstrated in their financial records.
(a). Identify Company’s Vision, Mission, and Objectives (financial and strategic)
GAP Inc. has not clear or explicit mission or vision. However, the vision of the founders Doris and Don Fisher, when it was formed in 1969, was “to make it simple finding a pair of jeans” (Annette, 156).
To be the leading apparel brand globally
- To cutcosts of theoperations
- To improvetheproductlinesappeal of thecompanyandto expandinternationally
- To focus on the 25-35-year-old demographics
(b). Identify company’s competitive approach (business and functional strategies)
The Company’s first functional and business competitive approach was redesigning the website of the company and making it have an online presence. This was a totally new platform for e-commerce where three websites were redesigned to provide more shopping experience and greater functionality. These websites included OldNavy.com, BananaRepublic.com, and Gap.com (Annette, 164). Another online platform started was the Piperlime.com, which was a store for shoes offering children, women and men third-party assortment brands (Annette, 165).
Another competitive approach taken by GAP Inc. was to expand their brand offerings for the women aged 35 years and above, in which Forth & Towne Chain stores of branded clothing was created in 2005. However, it was closed in 2007 because it was ineffectively launched, some customers hated them (Annette, 165).
By 2007, GAP Inc. opened franchise stores in eleven international countries, franchised Banana Republic stores in nine countries (Annette, 166). Annette pointed out that the number had reached 100 franchised stored by 2008. Moreover, it expanded the Banana Republic and GAP factory outlet stores in Canada and diversified the apparel store variety of the company in 2008, by acquiring Athleta worth $150 million. Athleta was the direct marketer of athletic inspired leisure wear, swimwear and athletic apparel (para 3).
(c). Identify and analyze key performance indicators (will include indicators for both financial and strategic objectives; financial results should include a summary of relevant facts from your financial analysis)
The first key performance indicator for GAP Inc. that showed that their strategies were functioning well was the financial improvements. Annette indicated that by 2002, the company had a debt of $2.9 billion and by the end of fiscal year 2005, the long-term debt had been reduced to $513 million (165). The reduction of debt by GAP Inc. enabled it to increase dividend payments consistently to shareholders to $0.32 in 2007 per share, from $0.09 in 2002 per share. Additionally, GAP Inc. executed plans for share purchase reducing outstanding shares to 794 million outstanding shares in 2007, from 887 million outstanding shares in 2002 (para 2).
However, despite the fact that the company’s balance sheets strengthened, the essay believe the company had excessive expenditure cuts related to product development, marketing and design. Furthermore, the decisions of the company to cuts supply chain costs led to the slowed cycle times of product-to-market, making the company less able to be responsive to changes in fashion (Annette, 166).
It is also important to note that GAP Inc. earnings and revenues began declining after peaking in 2004 at .15 billion and .2 respectively (Annette, 166). Annette stated that this was due to constant disagreements between personnel of design and research leading to delayed decision makings and eventually unwise compromises just to get anything on the store shelves. This hindered the company in the marketplace (para 3).
Annette, Lohman. “GAP Inc. In 2010: Is the Turnaround Strategy Working?” (2010). Print.