Gap Inc. was established in the year 1969 by Don Fisher to provide maximum customer convenience and satisfaction. The company’s vision was to offer a wide variety of clothing to improve the customer shopping experience. Banana republic, Gap, Old Navy, and Forth and Towne are the best-known clothing brands successfully established globally. While the company’s growth was successful, it was achieved by going through management challenges that the organization is addressing.
The Main Problem in the Case
While the company focused on and successfully built a giant store, it failed to balance the plight of critical stakeholders, an issue that formed the main problem in the case. The fast growth of the company led to increased managerial economies of scale that required technical management approaches.
The Decision That Needs to be Made
In recent years, the company’s expenses have been increasing against the product expansion and differentiation returns. There was a poor distribution of allocation of resources to promote the firm’s growth. The firm invested funds in financing expansion and differentiation projects and forgot to concentrate on employees’ and customers’ welfare. They failed to realize the critical contribution of employees and customers to the organization’s growth and development. Gap Inc. faces the challenge of deciding the best management approaches to eliminate operational difficulties and promote organizational change.
Issues Associated With the Problems
Business environmental change
The biggest challenges portrayed in the case get occasioned by the drastic changes in the business environment in which the organization works.
As the CEO, Wendy Liebmann, notes, the notion of the “Gapification” of America famous in the early days that needed a “one-size-fits-all” policy can never be applied in the current market.
Increasing Competition Due
Competitors have enhanced individual brands’ identification, all of which required similar approaches in shaping its future.
- SWOT analysis – market before developing the relevant growth strategies. Gap Inc. can use the method to analyze the strengths, weaknesses, opportunities, and threats applicable to the organization and help design both the growth and development strategies of their products.
- Corporate social responsibility (CSR) approach to management – Consumers understand the adverse effects Gap Inc. has on society they operate in. The community has a right in sharing of organizational returns. In accomplishing the corporate objectives, the organization should also address the social, political, environmental, and economic issues. CSR strategy will prevent the risk of stiff competition in the future.
- Going online- The twenty-first century is the era of information and communication technology (ICT), and business processes such as marketing, sales, procurement, and staff recruitment are affected online. Gap Inc. is a multinational organization and requires online information systems such as Electronic Data Interchange, Point of Sale, Enterprise Resource Planning, and Decision Support Systems to connect processes in different parts of the world’s distribution facilities. Having an online presence reduces the costs of operations, increases profitability, increases customer satisfaction, and gives the firm a competitive advantage.
Poor Customer Loyalty
The retail store faces challenges of poor customer loyalty that reduce organizational revenues.
- Seek Amazon and other popular stakeholders such as Walmart for recommendations- Gap should build sustainable customer loyalty and not depend largely on its key stakeholders’ loyalty, such as Amazon. They should benchmark the organization’s loyalty-building policies with Amazon and seek their positive recommendations to their customers.
- Allocate more funds to holistic organization promotional strategies- Gap is experiencing negative product perceptions from the customers and some partners’ points of view. The customers prefer working with other firms with positive reputations as compared to Gap. Gap Inc. can make Amazon’s popular advertising powers appeal to customers and key stakeholders to develop a positive public image.
Lack of funds
The raising need for product expansion and specification requires increased funding against constraints of funds.