GAP Inc Case Study Strategic Management

Keywords: gap tactical management, distance swot, space pest

Strategic management is a vibrant process of aligning strategies, performance and business results; it is focused on people, authority, technology and procedures. Effective combination of the elements can help with strategic direction and successful service delivery. It really is a continuing activity of setting and preserving the strategic course of the company and its own business, and making decisions over a day-to-day basis to cope with changing circumstances and the difficulties of the business enterprise environment.

Importance

An organisation needs to be able to react effectively to challenges - both problems and opportunities - as they arise. For example, the resident has increasing anticipations of service benchmarks and availableness. In response, organisations are working towards an outward-focused view of just how services should be provided - a simple shift from the original focus on inner concerns. At the same time, major opportunities for improvement may occur from innovations such as new information and communications technologies, and the option of additional financial resources including the Invest to Save Budget.

In many situations the response to the challenge or opportunity will:

  • Require the continuous attention of mature management
  • Affect most or every one of the organisation
  • Have long term implications
  • Require substantive resources
  • Be interconnected with other issues and advancements.
  • Factors identifying effective tactical management
  • A clear business strategy and eye-sight for the future
  • A strategic way endorsed by older managers, taking profile of associates and other stakeholders
  • A device for accountability (to the resident in interacting with their goals, as well regarding the centre in interacting with policy focuses on)
  • The potential to exploit opportunities and react to exterior change (turbulence) by taking ongoing strategic decisions

1. Conditions Of Reference

This research statement examines Difference Inc, and its proper decision making into business areas.

2. Business Background

2. 1. Founding: Distance Inc. was founded in 1969 by Donald and Doris Fisher in SAN FRANCISCO BAY AREA, California.

2. 2 THE BUSINESS: Gap Inc. is a leading international apparel merchant offering clothing, accessories and personal care products for men, women, children and newborns under the Gap, Banana Republic and Old Navy brand names. Distance brand includes Gap, GapKids, babyGap, GapBody and Space Outlet.

2. 4 Going International: Gap has become one of the world's most recognized brands, with stores in the U. S. , Canada, the United Kingdom, Japan, France and Germany.

Who is involved with tactical management?

Key functions include:

Senior professionals and business professionals in public sector organisations; they need to look for opportunities for new means of working that will help the organisation to understand the plan for change in the public sector; they also have to be aware of the implications of realignment if the tactical direction is changed

Staff responsible for developing and critiquing the business enterprise strategy in their organisations; they have to appreciate the wider business context partners and other stakeholders afflicted by the strategy.

Principles

The tactical issues facing the company and its response to them will call on the organisation's skills in strategic management - its ability to recognise and deal effectively with strategic issues. In the general public sector, these will include:

  • addressing the needs of the citizen, not the capability of the organisation
  • greater efficiency and value for money
  • improved and impressive service delivery to the public

3. Heading International : Before going into a international market a corporation should consider its inner and exterior environment. It will also perform SWOT and Infestations analysis.

SWOT Evaluation of Difference Inc.

A SWOT Analysis is a set up approach to assessing the proper position of any business by discovering its strengths, weaknesses, opportunities and hazards (Appendix 1). It offers a simple approach to synthesizing the results of the marketing audit by summarizing the company's advantages and weaknesses as they relate to external opportunities and hazards. Talents and weaknesses will are based on the internal marketing audit analysis. Opportunities and risks will are based on the exterior marketing audit evaluation.

(S)trengths

Global Businesses: Gap has got operations throughout the world. Thus, it has a well built reputation.

Brand Name: Difference Inc. brands; Space, Old Navy and Banana Republic, are more developed and well known. It's been very successful in building its brand image in U. S. A, Canada, United Kingdom, France, Japan and Germany.

Infrastructure: Space Inc. , to be a multinational company, has an extremely strong infrastructure. They currently have 4261 stores in 7 countries. Having large numbers of stores in a wide spread area, contributes to their strong image in the clothes industry. Hence, they have the ability of experimenting further international development.

Experience: Space Inc. has a good experience in venturing in to the international markets. Its experience is actually a support to its establishment in India. Space Inc. has been doing business since 1969 when its first store was opened up in SAN FRANCISCO BAY AREA. They travelled international in 1987. Its experience shows itself as to the level it has already reached today.

(W)eaknesses

High Price: The costs of Distance products are greater than standard prices of similar products on the market. India has a low level of income as compared to other countries where Distance Inc. has successfully ventured. The individuals may not be able to manage such high prices.

Non diversification: Space Inc. is targeted only in the garment industry and everything the business originates from garments. That is their weakness, as any problem encountered by the garment industry, will automatically have an impact on the company immediately.

No Experience in the Asian Market: Space Inc. has the disadvantage of not having operated within an Asian market before. Therefore, anticipating the future trends in such marketplaces would be difficult for the business.

(O)pportunities

Economies of range: Due to expansion, the business would be able to gain economies of range. This would help it gain more earnings and keep their prices competitive.

Transportation Cost: As Gap Inc. already will an integral part of its development in India, reselling the product there will save the company in conditions of the vehicles cost.

Low Labour cost: The expense of the skilled labour in India, being low, would enable Gap Inc. to save costs.

Better Revenue: As the cost will reduce because of the previous advantages, there will be higher scope to boost the profits.

India being truly a growing country: India as a expanding country, offers a better opportunity to do business there. As the united states is growing so is the marketplace.

Legal Distinctions: As the country is developing, there will be less legal obligations. This could be very useful for the companies from the developed countries. The health and safety regulation is also very liberal and also be a benefit to them.

(T)hreats

Government Polices: Government rules can be an opportunity and also a threat at the same time. Sometimes the government regulations and types of procedures are unpredictable and frustrating; this may be a danger for the company.

Competitive market: India is an extremely large exporter of clothes and also owns a big garment industry, which occupies a significant portion of the national income.

Economic Condition: Because of the downturn in the Indian market, the garment industry has been adversely affected.

Taste and Choices: The preference and preferences of the Indian inhabitants is very different from what Space Inc. offers. Distance Inc. has something range that mainly includes simple and sober clothes, whereas the neighborhood market has a development of wearing colourful clothing.

Pest Analysis of India - Difference Inc

(P)olitical

Country's Politics Instability: The country has a political instability because of the communal riots and disputes with the neighbouring countries. This may result in a problem in the sense that the business might be faced with short resource anytime, if such situation repeats.

International Legislation: In 1991 the government of India announced the globalisation of the Indian economy. Since that time, many multinational companies have got into Indian market to exploit the cheap skilled labour and explore the highly potential Indian market to sell their products and services. Distance Inc. , does have a good possibility to indicate its space in the producing Indian market.

(E)conomic

Currency: Indian currency, Rupee, is very unpredictable and its exchange rate is very weak in comparison to US Dollar and THE UK Pound.

Per Capita Income: Indian population is very large but its per capita income is suprisingly low in comparison to other developed countries. This could be a poor factor for the company as most of the population is probably not able to manage its highly price products.

Infrastructure: The infrastructure of the country, like travelling and communication is much less good just as developed country, but still it should not hamper the performing of Distance Inc. in the country.

Terms of repayment: The conditions of repayment in India for their customers and suppliers may differ with the term of payment of USA or UK.

(S)ocial

Culture: The preference and personal preferences of the populace is influenced from culture. However the influence of modernisation and traditional western culture has transformed the preferences of the populace. Thus, it creates it advantageous for Distance Inc. as their products are of the same kind.

Education: The education system in the united states is rolling out since independence. Currently, India has a sizable number informed and skilled labour that can provide at a cheaper price.

Brand Recognition: Due to improvement in technology, in communication and advertising, people have be alert to brands. Hence, the value of using branded products has increased substantially. As Difference Inc. already has a renowned brand, it will be far easier to allow them to build themselves in the intellects of the changing populace.

Religion: India has a huge number of varied religions. This might be a problem for Space Inc. , as different faith might have different choices in the clothing style. For example some religions in India do not favor women to wear the type of clothes that Difference Inc makes, like deep-neck blouses and brief skirts.

Work and Leisure: The development of clothes worn in India for both work and leisure is quite similar. People wear semi-formals or semi-casuals. Difference Inc. has a positive advantage in cases like this, as they have mastery in this kind of clothing.

(T)echnological

Travel and Syndication Infrastructure: The travel and distribution infrastructure in the united states is only up to international specifications in metropolitan towns and economically developed areas; but is inadequate in most places. Gap Inc. won't be much influenced by this drawback as its major goal customers is based on the metropolitans.

Communications Infrastructure: India offers an advanced communication systems. India has become one of the major Information Technology giants. Ironically people remain not used to e-commerce features like online shopping. It has not been successful as people concern with being cheated. Space Inc. won't genuinely have a good business in online shopping as they have in developed countries

Manufacturing Base and Functionality: India has got a good platform for manufacturing garments of good quality requirements. It has got the ability of matching Difference Inc. requirements. That is evident as Gap Inc. products are already being produced in India. Most of the Difference Inc. 's linen founded products are being sourced from India.

Strategic Objectives

As due to the marketing audit and SWOT research, relevant aims will be established. Two types of targets need to be considered: tactical thrust and strategic objectives.

Key factors for strategy development

Strategic Thrust

Strategic thrust defines which products to sell in which markets. There could be four options as follows

Market penetration or expansion (existing products in existing markets): This plan aims at penetrating deeper in to the market. It attempts to make the existing customer brand dedicated and also attract new customer to buy their brand. The practices found in this is to help make the customer use the brand more often and in higher quantities.

Product development (new/related products for existing markets): This plan entails increasing sales by enhancing present products and innovating new products for the current market. This is achieved by enhancing style, performance and comfort of the merchandise. Gap Inc. would need to design new products suitable for prospective customer.

Market development (existing products in new/related markets): This plan is used to market the existing products in new markets. This may entail moving into new physical areas or new market segments. To get into the Indian market Gap Inc. won't have to build up the whole products, but, instead may bring in the already existing successful products to the marketplace.

Entry into new market segments (new/related products for new/related markets): This is the most risk bearing strategy as both, the merchandise and the market is not used to the firms and the customer. But this plan is necessary if the business is displaying discouraging signs or symptoms of future progress or if the business is looking for expansion considering the introduction of services related to the new market. Distance Inc. can use their innovative experience for producing new group of products remember the Indian market segments.

Strategic Objectives

Strategic goals for products need to be set. The goals are to build sales and market talk about, carry, harvest (improve income) and divest (drop or sell product). The strategic objective is to decide based on the company's situation which is determined by SWOT analysis, draw and audit the analysis of strategic options. In the event Difference Inc. , they are preparing to enter the Indian market. Their tactical objective therefore, would be to builtd sales.

  • Core Strategy

Core marketing strategy involves the achievement of marketing aims through the willpower of target markets, the setting of competitor focuses on and the creation of any competitive gain.

  • Target Markets

The target market is where the business is planning to sell its products. In this particular case the prospective market for Space Inc. is India. Considering market segmentation it would further be segmented by get older and gender.

  • Competitor Targets

Besides targeting consumers/organizations, the company will choose competition targets. Weak rivals may be looked at as easy prey and resources channelled to assault them. The choice of marketplace may define competition targets and be influenced by them: market sections with weak competition may be attractive targets.

  • Competitor Advantage

A competitive advantage is an obvious performance differential over opponents on factors that are essential to target consumers/organizations. This gives the foundation of how Distance Inc. competes. Major success experienced by Gap in other overseas markets, has added to make a competitive advantage when you are better at anticipating or giving an answer to customer needs than opponents, or being nearer by creating close long-term romantic relationships with customers.

  • Implementation and control

Implementation and control of the tactical plans the company has made is manufactured by a couple of decision making they are known as

Marketing Mixture Decisions

By defining a target market and understanding the needs with their consumers/organizations, a marketing mixture can be intended to meet those needs much better than the competition. The four key decisions areas to be considered while making a marketing mixture decision are product, advertising, price and place.

Product: Product decision involves finding the dependence on the mark customer segment. The opportunity of the product failing after having completed market research is minimized. Brand decisions like brand name, packaging, warranties and services for the product range, should be based on the targeted customer portion. Due to each day changes in technology and taste of the customer, the brand should be ground breaking and creative to maintain its customer's brand commitment.

Firstly, Difference Inc. should perform a market research to find out base for the prospective customer segment for each and every of its brand in the Indian market. This might help Difference Inc. understand its customer bottom better and reduce their likelihood of failure. The company products should be progressive to meet the dynamic dependence on their related customer basic. This would provide them with regular and repeated customers and would catch the attention of new customers.

Promotion

Promotional blend combines advertising, public relation, sales campaign personal selling, direct marketing, internet and online campaign. This makes the prospective audience aware of the existence of something or services and the huge benefits involved with it. Promotion targets the distinctive features of a product. Thus, the basic goal of the campaign is to converse information to targeted customers and potential users about the products and persuade them to buy.

Promotion bridges the informational gap between the brand and its targeted customers. Space Inc. should use promotional techniques which would reach right to its market. Gap Inc. being truly a garment related company should use a promotional solution like sales promotion, T. V. , magazine, journal advertising and stage and fashion shows to attain their varied customer range and make their occurrence sensed in the Indian market.

Price

Price is an integral element of marketing blend, as it is the only component that presents the financial inflow for the merchandise and services being marketed. The Ps in the marketing combine represent economic outflow for example, costs on product design (product), advertising (advertising), transport (place). The company should be very careful and considerate while pricing their products, as they should think about all the factors that effect their price setting. They have to keep some margin for the future discounts and allowances that they could have to provide to the clients in case of the upsurge in the competition on the market.

There are lots of pricing plans which Distance Inc. may adopt to attain its pricing aims. These include: skim, penetration, merged, differential. Gap can use a penetration rates to raise the market talk about.

Place

Place factor of the marketing combine concentrates mainly on the syndication channels to be used and their management, the positioning of outlets, ways of vehicles and inventory levels to be presented. Its goal is to ensure the availability of the required products at the mandatory time and place. Place where the company should market their products should be chosen very carefully, to ensure that it's readily in touch with its concentrate on customer basic to help raise the sales and therefore the profit engaged.

Gap Inc. should supply and market their products, where they have the required demand for them. They have to set up their bottom part in the marketplaces where there's a demand for the high quality goods, and should also retain in consideration the fact that these marketplaces should be where the supply of recycleables for his or her product is easier. Thus, Difference Inc. can setup their product range in big places in India with good circulation systems. Easy and quick access to the market would also assist in cost-cuttings.

Recommendations

Market Segmentation

Market segmentation recognizes the organisations or individuals having similar characteristics which may have significant implications for the persistence of online marketing strategy. Market segmentation forms the foundation for the id of the target market. A portion that the company decides to try is its target market. Because of the similarities in the characteristics of the clients, only one online marketing strategy is required. If the segmentation is performed in a creative manner, then this may help the companies to recognize new segments which have not yet been offered by any other companies.

10. Conclusion:

We as the Marketing professionals, do not recommend Gap Inc. to expand their business in the Indian market. This is visible after having examined the negative factors that can affect Space Inc. in extending in India and the ones factors that can be advantageous if Distance Inc. holds out the enlargement.

  • High competition
  • Cultural differences
  • Lack of experience in Asian markets
  • High listed product range
  • Difference in tastes of clothing
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