Gap Strategic Overview
Gap Strategic Overview
Strategy exercise
Three corporate directional strategies for the Gap:
Concentration – Horizontal Growth – Joint Venture
– Pros:
Reduction in cost of international trade by operating in foreign markets
Increased market power
Higher survival rate by broadening product lines
Reduce possible niches competitors may enter by continually adding additional sizes and multiple variations to existing product lines
Introduces successful products from one part of the world to other regions
Growing internationally is positively associated with firm profitability
– Cons:
Legal issues
Restrictions such as percentage of ownership
Low survival rate for lower performers
Stability – Pause/Proceed-with-caution strategy
– Pros:
Allows Gap to put its growth on hold and take care of internal issues and figure out who its customers are
Temporary, very useful in short run
– Cons:
Dangerous if followed for too long
Retrenchment Strategy – Turnaround
– Pros:
Allows Gap to implement a program to stabilize the corporation
Emphasizes improvement on operational efficiency
– Cons:
Overemphasize on cutting costs can hurt performance
Failure to encourage and involve employees in improvements can create an obstacle
Recommendation:
The corporate directional strategy that I recommend for Gap is a Pause/Proceed-with-caution strategy because I think Gap needs to reposition the brand and to do that it needs to first understand who its customers are and how it can satisfy their needs. After Gap has found a market to target and has repositioned the brand to satisfy that market, it can then focus on continuing to satisfy the market and grow the brand. In addition, I do not think Gap can continue forward until it understands who its customers are because it if does not, it will continue to see a decline in sales.
Business competitive strategy recommendation:
A business competitive strategy that I recommend for Gap Inc. is a niche cost focused strategy because once Gap obtains geographic, demographic, and psychographic information on its customers it will be able to better position itself