Академический Документы
Профессиональный Документы
Культура Документы
- case study
Jan Giza, Anna Kdzierska, Hanna Suwaa, Marcin Witkowski
Political influences
o Foreign markets make it harder to enter for American brands
o Lower taxes in developing countries
Economic influences
o Slowing U.S. economy
o (2007 - beginning of the financial crisis)
o Increasing participation of developing countries in the global apparel market
o Moving production to developing countries
o Rising cotton price
Social influences
o Social opposition to child labor
o Costumers prefer designer jeans, even if they have to pay more
o Differences between American style of dress and other nations style
o Little expected population increase
o Consumers are looking for attractive designs
o Fast fashion trend
o Buying clothes on the Internet
Technological influences
o New fabrics
o Faster production
o Developing e-commerce
Environmental influences
o Production of clothing often pollutes the environment (chemicals used to produce
fabrics)
Legal influences
o The labor law in developing countries, enabling lower cost of employing workers
o In the European Union - require clothing manufacturers and importers to identify
and quantify the chemicals used in their products (the Registration, Evaluation,
Authorisation and Restriction of Chemicals (REACH) regulations enacted 1 June 2007)
After conducting five forces framework, we discovered that threat of entry is high(need for noveltiesteens & young adults, low costs of entering the market, still some niches (eg. clothes for elder
citizens)), the bargaining power of buyers is moderate (diversification of clients, retail sales, low
switching costs), the threat of substitutes is low (diversification of the offer, jeans always in style),
the bargaining power of suppliers is moderate (diversification of suppliers-each no more than 4%,
image influencing issues like child labor) and the extent of rivalry between competitors is extremely
high (A&F with nearly the same range of brands, European companies well developing in Europe,
new production countries arising- Bangladesh, Vietnam and Zara offering similar range of products at
lower prices).
Strategic groups
As its shown in the graph, U.S. economy for few years is slowing down.
Source: http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?page=1
There are some stable and changing aspects in market. Stable and changing market aspects are, for
example: Jeans as safe product with quite stable demand, we can find different accessories that go
with jeans, and changes in the way of wearing jeans to more elegant . What about consumers? For
them clothes cuts and labels are getting more important so Gaps outlets are rather unsuccessful.
Moreover, now consumers are ready to pay more for designer jeans so there is less demand for
Gaps jeans. And whats also important, Gaps jeans are more in American taste than the taste of
other nationalities, so it is totally unsuccessful outside the American market.
We can observe low birth rate in developed countries, but pregnancy and childbirth are celebrated
there more than ever. As we can see in population trends in Russia there is baby boom, in India,
there are most babies in the world, in UK rise number of mothers over 40. Women wait longer to
have children and families are getting smaller, thats why people can spend more money for
children, and are able to pay more per one child.
Profit ratios shows that GAP Inc. do not have competitive advantages.
Profit ratios shows that GAP Inc. do not have competitive advantages.
Cash flow analysis shows lack of growth tendencies, but investors value Gap Inc. above competitors.
Gap Inc. blocks of competitive advantage (build from its capabilities) are:
Customer Responsiveness
Innovation
Efficiency
After the above analysis we have done SWOT, based on which it was created TOWS.
Strengths
Weakness
Low profitability
Poor effects of investments
Decreasing sales
Decreasing margin
Low efficiency comparing to competitors
Competition between group brands
Limited marketing
No specific image (Gap)
Threats
Rising cotton price
Cloth design is more important than price
Slowing U.S. economy
Slow target growth
Market and culture differences
Low market entry cost
Low customers switching costs
Lower birth rate in Europe and Japan
Aging societies in Europe
Development of European companies
TOWS
Recommendations
As a result of the analysis shown above, we have managed to create some recommendations. In our
opinion, GAP Inc. needs to gain competitor advantage. To achieve this goal, we recommend two
groups of actions. First one would be changing model of retail and marketing, consisting of:
Hiring fashion designers to develop more design clothes answering consumer needs. (in 6
months time)
Frequent collection changes, like ZARA: changing collection every two weeks. (in 2 years
time)
Change of target group to reach unexplored niches and developing target markets. (longterm plan)
o
o
o
Read more:
http://www.businessweek.com/stories/2006-08-25/bubbling-over-at-gapbusinessweekbusiness-news-stock-market-and-financial-advice
http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?page=1
http://www.indeed.com/cmp/Gap-Inc/reviews?start=80&lang=any
http://www.indexmundi.com/commodities/?commodity=cotton&months=120