Gap industry Analysis and recommended strategy.

1. Gap Inc.
Case Study No.19 Gap Inc
By: Waqas Ahmad
Gap Inc.

2. Gap Inc.
The Gap Inc. is a diversified USA company dealing in
the manufacture of Casual Apparel, accessories and
personal care products for men, women and children.
The company currently provides a wide range of family
clothing products, including denim, and T-shirts, fashion
apparel shoes, accessories, and personal care products.
Opened : 1969
Net Income of 2007 1st
Quarter 45 Million dollar
CEO : Fisher
Competitors : Nordstrom Inc, American Eagle Inc, TJX Companies
and Abercrombie & Fitch Company.

5. External and Internal Analysis
Gap Inc.

6. Gap Inc.
Strength Weakness
Diversification Inefficient labor
International reputation Decreasing sale
Latest technology Inefficient inventory turnover
As compare to competitors High EPR ratio
Opportunity Threat
Economic growth Shift purchasing priorities
Industrial production Apparel market goes down
Increase customers (Population) Asian competitors low level cost
Low unemployment
SWOT Analysis

7. Gap Inc.
Internal Strategic Factors Weight Rating Weighted
Score
Strengths
• Diversification .10 3 .30
• International reputation .20 3 .60
• Latest technology (Online transaction) .20 4 .80
• As compare to competitors High EPR ratio .10 4 .40
Weaknesses
000 0
• Inefficient labor .15 1 .15
• Decreasing sale .15 2 .03
• Inefficient inventory turnover .10 2 .20
TOTAL SCORES 1.00 2.48
IFE Matrix .

8. Gap Inc.
EFE Matrix .
External Strategic Factors Weight Rating Weighted
Score
Opportunities
• Economic growth .20 2 0.4
• Industrial production .10 3 0.3
• Increase customers (Population) .10 2 0.2
• Low unemployment .10 2 0.2
Threats
000 0
• Shift purchasing priorities (to other Expenditures like education, food,
health and housing expenses etc)
.20 3 0.6
• Apparel market goes down .20 2 0.4
• Asian competitors low level cost .10 2 0.2
TOTAL SCORES 1.00 2.3

9. Gap Inc.
Competitive Profile Matrix (CPM)
Critical Success Factor Weight
Gap Inc Nordstrom Inc American Eagle Inc
Rating Score Rating Score Rating Score
1. Advertising 0.25 3 0.75 3 0.75 3 0.75
2. Financial Position 0.1 4 0.40 4 0.40 3 0.30
3. Global Expansion 0.25 4 1.00 4 1.00 2 0.50
4. Market Share 0.1 3 0.30 3 0.30 3 0.30
5. Product Diversity 0.15 4 0.60 3 0.45 2 0.30
6. Consumer Demands 0.15 3 0.45 2 0.45 3 0.30
Total 1 3.50 3.30 2.45

10. Gap Inc.
Problems
…

11. Gap Inc.
Minor Problems
• As compare to previous history sale is going
down.
• Underperformance 100 stores.
• Increase employees turnover
• Gap sold its German operations unit to H&M.

12. Gap Inc.
Major Problem
• CEO improper management

13. Gap Inc.
Alternative Strategies

14. Gap Inc.
TOWS Analysis or SWOT
Matrix
Strengths – S
S 1. Diversification
S 2. International reputation
S 3. Use latest technology
S 4. High EPR ratio
Weaknesses – W
W1. Inefficient labor
W2. Decreasing sale
W3. Inefficient inventory turnover
Opportunities – O
O1. Economic growth
O2.Industrial production
O3.Increase customers
O4.Low unemployment
S2O1
S3O2
W1O1
W2O1
Threats – T
T1. Shift purchasing priorities
T2. Apparel market goes down
T3. Asian competitors low level cost
S2T3
S3T1
W1T3
W2T2

15. Interpretation of SWOT Matrix
S2O1: The Gap Inc. having good market reputation though this they can
acquire more shares in the market if they introduce new product in
the same market (Product Development strategy)
S3O2: By using the latest technologies the Gap Inc can able to increase
their market shares.
W1O1: If Gap Inc. able to maintain their distinctive competence they can
take advantage from market potential.(Market penetration)
W2O1: By increasing or by properly utilizing the technical personnel Gap
may able to capture more shares in the growing market.

16. Interpretation of SWOT Matrix
S2T3: The Gap Inc has good reputation in market, if they able to
maintain their good reputation they can easily take lead from their
competitors.
S3T1: The Gap Inc using latest technology for their production to make
them more effective and efficient, by this they can easily take a
competitive advantage and can overcome on the competitors in the
market.
W1T3: If Gap Inc able to overcome and increase or maintain their
distinctive competence they can easily compete with their
competitors. If they introduce new product in the market they may
able to avoid the threat of competitors. (Product development)
W2T2: By increasing or properly utilizing their technical labors and start
advertisements, Gap can again improve sale position.

17. Financial Strength (FS)
•Earnings per share : 4
•Liquidity : 3
•Inventory turnover : 3
Competitive Advantage (CA)
•Product quality : -3
•Technological know-how : -3
•Market Share : -2
Environmental Stability (ES)
•Price elasticity of demand : -4
•Competitive pressure : -3
•Price range of competing products: -4
Industry Strength (IS)
•Ease of entry into market : 3
•Growth potential : 4
•Profit potential : 4
Space Matrix

18. Gap Inc.
SPACE Matrix

19. Gap Inc.
The BCG Matrix

20. Gap Inc.
IE Matrix
I II
III
IV V VI
VII VIII IX
EFEWeightedScores
IFE Weighted Scores
4.0
3.0
2.0
1.0
4.0 3.0 2.0 1.0

21. Gap Inc.
Recommended Strategy and Plan ofRecommended Strategy and Plan of
actionaction

22. Gap Inc.
Quantitative Strategic Planning Matrix (QSPM)
Strategic Alternatives
Key External Factors Weight Market Development Product Development
Economy 0.20 3 0.60 3 0.60
Political/Legal/Governmental 0.20 1 0.20 3 0.60
Social/Cultural/Demographic/Environ
mental
0.10 3 0.30 3 0.30
Technological 0.25 3 0.75 2 0.50
Competitive 0.25 2 0.50 2 0.50
1.00
Key Internal Factors
Management 0.30 3 0.90 2 0.60
Marketing 0.10 2 0.20 2 0.20
Finance/Accounting 0.15 2 0.30 4 0.60
Production/Operations 0.15 3 0.45 3 0.45
Research and Development 0.20 2 0.40 4 0.80
Computer Information Systems 0.10 3 0.40 3 0.30
Total: 1.00 5.00 5.45

23. Gap Inc.
Recommended Strategy
Product develoPment is the
recommended strategy for gaP