Beruflich Dokumente
Kultur Dokumente
Forest David
A. Case Abstract
Gap is a comprehensive strategic management case that includes the company’s year-end 2010 financial
statements, organizational chart, competitor information and more. The case time setting is the year 2011.
Sufficient internal and external data are provided to enable students to evaluate current strategies and
recommend a three-year strategic plan for the company. Headquartered in San Francisco, California, Gap’s
common stock is publicly traded under the ticker symbol GPS.
The huge clothing retailer Gap has been filling closets with jeans and khakis, T-shirts, and poplin more than
three decades. The firm, which operates about 3,100 stores worldwide, owns and operates the urban chic
chain Banana Republic, budgeteer Old Navy, online-only retailer Piperlime, and Athleta, a purveyor of
activewear via catalog. Other brand extensions include GapBody, GapKids, and babyGap; each also has its
own online incarnation. All Gap clothing is private-label merchandise made exclusively for the company.
From the design board to store displays, Gap controls all aspects of its trademark casual look.
1. Customers
2. Products or services
3. Markets
4. Technology
5. Concern for survival, growth, and profitability
6. Philosophy
7. Self-concept
8. Concern for public image
9. Concern for employees
1. Eastern Europe is a fast growing market with Ukraine leading the way.
2. Baby Boomers are the largest per capita consumers of apparel.
3. 71 million teens in the US are maturing into young adults.
4. Consumers age 20-34 account for 24% of the appeal spending in the US.
5. Consumers make choices at the last second and styles must be adaptable.
6. Social media enables retailers to listen to customers in real time.
7. US consumers spent $192 billion in 2010 on apparel.
8. Southeast Asia has many skilled workers trained in apparel.
9. There continues to be reduced trade regulations and elimination of tariffs.
Threats
1. US is still suffering from high unemployment around 9% and low home prices.
2. High oil prices increase transportation costs.
3. Volatile nature of world currency rates.
4. Cotton prices are up over 100% from 2009.
5. Many consumers are obsessed with promotional pricing.
6. Strong competition from Abercrombie & Fitch, American Eagle, VF Corp. and others.
7. S&P lowered the job outlook several times in 2011.
Critical Success Factors Weight Rating Score Rating Score Rating Score
Advertising 0.09 3 0.27 2 0.18 4 0.36
Market Penetration 0.11 3 0.33 2 0.22 4 0.44
Product Variety 0.07 4 0.28 3 0.21 2 0.14
Store Locations 0.10 4 0.40 3 0.30 1 0.10
R&D 0.08 3 0.24 2 0.16 4 0.32
International Markets 0.06 3 0.18 2 0.12 4 0.24
Financial Profit 0.10 1 0.10 3 0.30 4 0.40
Customer Loyalty 0.09 3 0.27 2 0.18 4 0.36
Market Share 0.10 4 0.40 2 0.20 3 0.30
Product Quality 0.08 4 0.32 2 0.16 3 0.24
Top Management 0.04 3 0.12 2 0.08 4 0.16
Price Competitiveness 0.08 3 0.24 4 0.32 2 0.16
Totals 1.00 3.15 2.43 3.22
E. Internal Audit
Strengths
1. Has stores in 29 countries in Asia, Europe, Latin America, Middle East, Australia, and the US.
2. Has 180 franchise stores and plans to increase that to 400 by 2015.
3. Employs 134,000 people with 3,321 stores worldwide.
4. Diverse brands including Gap, Banana Republic, Old Navy, Piperlime and Athleta.
5. Is working with Visa to deliver real-time discounts via SMS text messages.
6. Well represented with women in upper management.
7. Excellent liquidity ratios.
8. Expects to have 45 stores in China by year end 2012.
9. Is the largest US clothing seller.
10. Only 1.5% of Gap’s total assets come from Goodwill.
Weaknesses
1. By the end of 2013, Gap plans to close over 100 more of its namesake stores in the U.S.
2. Has no formal vision or mission statement.
3. Has a hybrid divisional structure and would be best suited with a SBU structure.
Liquidity Ratios
Debt/Equity Ratio 0.53 1.04 0.98
Current Ratio 2.2 2.4 1.3
Quick Ratio 1.4 1.4 0.9
Profitability Ratios
Return On Equity 29.3 30.2 26.0
Return On Assets 14.4 12.0 8.8
Return On Capital 20.0 16.0 11.8
Return On Equity (5-Year Avg.) 21.1 19.5 23.8
Return On Assets (5-Year Avg.) 12.4 9.3 8.0
Return On Capital (5-Year Avg.) 17.1 12.7 10.8
Efficiency Ratios
Income/Employee 8,134 24,619 126,792
Revenue/Employee 109,694 342,949 1 Mil
Receivable Turnover 82.6 78.4 15.2
Inventory Turnover 5.3 5.0 12.4
F. SWOT
SO Strategies
WO Strategies
WT Strategies
G. SPACE Matrix
FP
Conservative Aggressive
7
CP IP
-7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7
-1
-2
-3
-4
-5
-6
-7
Defensive Competitive
SP
Quadrant II Quadrant I
Gap
Weak Strong
Competitive Competitive
Position Position
High
3.0 IV V VI
The
EFE Gap
Total Medium
Weighted
Scores
Low
1.0
Region:
US $3,454 $4,945 $2,084 -0- $10,483 71%
Canada 341 427 190 -0- 958 7
Europe 703 -0- 36 47 786.5 5
Asia 872 -0- 118 59 1,049 7
Other Regions -0- -0- -0- 89 89 1
Total Stores reportable 5,370 5,372 2,428 195 13,365 91
segment
Direct reportable segment 365 533 155 246 1,299 9
Total $5,735 $5,905 $2,583 $441 $14,664 100%
J. QSPM
K. Recommendations
1. Add 300 new stores over next 3 years. $750M
2. Develop new strategic plan $50M
M. Epilogue
Gap plans to close over 100 more of its namesake stores in the U.S. by the end of 2013, part of a company
strategy to reduce its total square footage across all brands, and Gap in particular. By the end of 2012, Gap
Inc. will have reduced its total real estate square footage in North America by 10 percent compared to 2007
levels. Gap brand will cut its square footage 34 percent overall (compared to 2007 levels), resulting in 700
U.S. and Canada Gap stores and 250 Gap Outlet stores at the end of 2013. The company has 78 stores in
and around Los Angeles.
International sales and emerging Gap brands such as Athleta and Piperlime remain Gap's primary growth
vehicles as well as e-commerce. Athleta and Piperlime appear to be the only brands who will add North
American square footage in coming years. Gap plans to test a bricks-and-mortar Piperlime store concept
next year. A similar test of Athleta led to the activewear brand opening its first flagship in Fillmore Street
in San Francisco in January 2011.
The company plans to open Gap and Banana Republic stores in Panama starting with locations in Panama
City in January 2012, and it will open stores in Bogota, Colombia, in late 2012. All of these new stores
will have Gap, GapKids, babyGap and Banana Republic products. Gap has expanded to 29 countries in
Asia, Europe, Latin America and the Middle East in the past five years, opening franchise locations in 10
new countries in fiscal 2011 alone. Gap remains the largest U.S. clothing seller.