Gap Corporation Strategy Analysis

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Table of Contents

Introduction
Internal environmental analysis
External environmental analysis
Conclusion

Introduction

The GAP Corporation is a multinational company that specifically deals with clothing and fashion accessories. The companys brands are Gap for high quality apparel, Old navy for casual family apparel, Banana republic for more sophisticated apparel, Athleta for stylish sports clothes and Piperlime offering casual to high fashion foot wear. The Company has employed many strategic approaches since its inception in order to maintain the influence that it has over the financial market through the clothing industry. The strategy that the company has mainly employed is the business level strategy which has helped it remain a force in the financial market. This is because it has helped it to bring out tactical and innovative ideas that can sustain its existence for a long period. The company has been researching in the market for very many years, and this has helped it maintain a relatively high success as compared to its competitors. This factor can be seen through the companys success from the year 2009 when they sold only 16 units compared to the year 2010 when they sold over six million units.

Internal environmental analysis

The GAP Corporation in 2010 was recognized on the list of 100 Best Corporate Citizens because of focusing on improving factory conditions for the employees and also improving standards for the suppliers. The Company recognizes that employees are their most important asset so they developed diversity and enrichment programs for motivating them and thus increasing productivity. The Company is also concerned with the suppliers and thus formed its own vendor conduct code (COVC).The code was to ensure that the vendors employees also worked in safe and healthy environments and were not over worked and were fairly paid. The Company also does branding and product development from design to distribution in-house but has also collaborated with other celebrity designers to develop their products, for example, Stella McCartney.

The liquidity ratio is calculated as:

Current ratio = Current Assets / Current Liabilities

4664/ 2131= 2.2. This ratio shows that the company can easily pay off its short-term liabilities easily.

Profitability ratios: Return on assets (ROA)

Net income/ total assets= 3125/7985 =0.39. This ratio shows how efficient the company is in using its assets to generate income.

External environmental analysis

The sales of the business have been on an upward trend for two consecutive years and this is a positive aspect. Gap Corporation was among the companies that dominated the clothing industry and dealt with all the market segments but there were new entrants for example Uniqlo from Japan who focused on making designs for the youth demographic. Information systems and technology are very important aspects to ensure the success of the company because through this the company can be able to get feedback from its customers from all their stores in various countries and can also monitor workflow in their various stores. Not only did the company open branches in different countries but also had franchising agreements in other countries for example Bahrain.

Conclusion

A countrys economy affects its operations for example in 2009 poor economic conditions in the United States affected the sales of the brands and the revenue decreased but by mid-2010 the sales had already gone up again. The company faces rivalry from other clothing companies for example Gucci.

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Gap Corporation Strategy Analysis

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