Read below and provide an executive summary

key issues

GAP, like most retailers, has been going through a tough time in recent years. There have been several factors that contributed to the suffering of retailers. Many stores had to be closed. Some companies managed to adapt to the rapid transition of the industry. That has not been the case with GAP. Giant American Apparel seems to have problems of its own in addition to the industry's struggle. The company is having trouble staying focused on its main objective. Facing problems to keep their managers, which in turn impacts the stability of the company. The international brand is struggling to keep its customers, let alone attract new ones. On top of all that, GAP, like most retailers, is struggling with the transition from a point-of-sale market to a more experience-oriented market, and digitization has had a significant impact on the retail industry. (Gustafson, 2016)

GAP's problems are more drastic than the struggle of retailers in general. The company seems to have lost its identity and with it many of its customers. That lost identity is possibly the fact that the company is not focusing on its main objective. Some of that may date back to recent years when the company released two contradictory campaign slogans; In 2014 using (Dress Normal) and in 2015 using (Spring is rare) this confusion shows that the company is not focused, does not know or does not have a target market/customer. Which is crucial for any company. All of this was happening as competitors quickly adapted to the transitioning market. Competitors like H&M and Zara who know their target and work precisely on it. (Li, 2016)

Evaluation and Analysis

PESTEL analysis of GAP Inc.

PESTEL is a framework used to analyze the macro-environmental factors that affect a company's performance in the marketplace. Factors include: political, economic, socio-cultural, technological, environmental and legal aspects.

Political factors. The political and environmental US, where GAP Inc. originates and is based, is relatively stable but currently presents some problems. The substantial expansion of the size and reach of government, the increase in regulatory and tax burdens, and the loss of trust that has accompanied a growing perception of cronyism, elite privilege, and corruption have seriously undermined America's global competitiveness.

While in previous years, the government has deregulated some companies and has passed laws that control monopolies and has enacted trade agreements that facilitate trade with foreign countries, which has positively impacted Gap to conduct business and obtain labor and raw material in international markets. The recently elected president in November 2016, Mr. Trump, promised a radical break with the regulatory, tax and trade policies of his predecessors, which may negatively affect GAP Inc. However, due to its size and inherent strength, the US economy has shown considerable resilience.

Economic factors. These factors are related to the general nature of the economy in which the company operates. Large budget deficits and a high level of public debt, both now reflected in the Index methodology, have contributed to America's continuing decline in economic freedom (for 2017, its overall score is 75.1). Having posted its lowest ever economic freedom score, the United States is no longer among the 15 freest economies in the world (heritage.org, n.d.). Regarding interest rates, the Federal Reserve, believing that the economy is doing well (low unemployment and moderate inflation), increased its benchmark interest rate by a quarter of a point (March 2017) amid growing confidence when the economy is poised for stronger growth. The move, widely anticipated by financial markets, brings the overnight funds rate to a target range of 0.75% to 1% and puts the Fed on a rate-hike path at least two more times by 2017. (Cox, 2017) Policy makers raise rates to tighten financial conditions and higher rates make the loan more expensive, increase mortgage rates and generally increase the price of real estate (which translates into a higher price paid). by retailer stories). On the other hand, the rise in interest rates encourages savings among consumers since they can generate a higher return on their savings, which means less spending on clothing, which negatively impacts the income of retailers and the company GAP Inc.

In addition, the rise in interest rates has strengthened the US dollar, which has a negative impact on exports. Because GAP Inc operates internationally, a stronger dollar means its products are now more expensive for consumers in foreign markets. Current US economic conditions are not favorable to retailers or GAP Inc, and slow growth and revenue sharing are expected.

Sociocultural factors. Sociocultural factors assess the mindset and behavior of consumers in a given market. Socio-Cultural Environment, considering the fashion trend, is demanding an increase in the diversity of products offered by retailers in the market. In addition, there is a trend towards professional appearance that contributes positively to the company's profits, especially of an objective professional with a high income. In addition, the aging of Baby Boomers demands new clothing orders for a thriving market.

Technological factors. Technological changes have become an important driver of competition between national and international companies. The extensive use of e-commerce and online ordering system has significantly reduced the cost in the supply chain activity. On the other hand, the extensive use of the Internet has made shoppers more powerful in terms of exposure to cross-retailer price comparison. In addition, increasing competition from e-commerce companies negatively affects GAP Inc.'s operations and profits.

Environmental factors. Currently, customers are more aware of the externalities of companies and are giving preference to natural and environmentally friendly products. GAP Inc must firmly embrace the concept of "going green" and ensure that its suppliers also take an environmentally friendly approach. In addition, environmental factors, such as a region's climate, affect the type of products customers are most likely to purchase. Global warming may be a driving factor for retailers, and especially Gap Inc., to provide more diversity, style, and supply for spring-summer clothing. Furthermore, as GAP Inc is an international company,

Legal factors. Operating in a global economy, Gap Inc. is continually challenged to comply with various national, regional, and international laws and regulations (especially with regard to business ethics, discrimination, antitrust, and health/safety). These laws and regulations have a positive correlation with the operating costs incurred if they are not fully complied with. Gap Inc. has a robust and comprehensive corporate compliance program that ensures that all employees and the company's Board of Directors not only comply with legal requirements around the world, but also operate responsibly and with integrity in all that they do. do.

The legal aspect of operating on a global scale raises concerns about copyrighted designs in the fashion industry operated by GAP Inc.

SWOT analysis

A SWOT analysis by GAP Inc. explores the strengths, weaknesses, opportunities, and threats of the popular classic American brand. Determining the company's strengths and opportunities will give management a picture of future success. The weaknesses and threats show us where the company needs to improve, eliminate errors and avoid failures in the future.

Strengths. Gap is one of the largest apparel retailers in the US, operating in a market since the 1990s. Gap influenced the way people dressed by creating high-quality jeans and business casual wear . Since 1999 the company has remained stable in sales until the year 2000 when the company has lost more than 60% of its market capitalization. Gap has several major competitors in the US To compete, Gap expanded the brand, creating several brands, and also collections like GapBody and BabyGap, which are the most profitable lines. Gap has a wide customer base and introduced its stores all over the world. The company diversified its market using multi-brands, which target different types of customers. In this days,

Weaknesses. Gap has been facing a drop in sales for quite some time. The performance of Gap shares has continued to fall. The decline in sales may be related to cannibalization, the opening of a large number of stores. The Gap is known for selling the most basic clothing as well as business casual wear. Over time, people's tastes also change with a lifestyle, many people prefer affordable multitasking clothing that they can wear not only at work, but also in their free time. Some people have two part-time jobs, and that means they want to spend less time shopping. The Gap does not have a good shopping website.

The company is trying to produce clothes on a large scale, but finding factories in the country is very difficult. Most of the clothing is produced in the international market, so the purchase of production rights is difficult and the investment is more expensive.

Opportunities. Gap has penetrated the domestic market; however, the company has to expand internationally. Gap is increasing product lines in demographic markets. For example, launching plus size, maternity, BabyGap and sport collections. As the children's collection brings the most profitable results, the expansion of the same will increase the performance of a product because this line has been presented in a limited number of shopping centers and outlets.

The use of technology would be another opportunity. Improving campaigns and online purchases can attract more customers.

Threats. Gap has a significant decrease in price competition with the entry of new companies in the market. Other American brands offer a wider variety of fabrics and lower prices, and are also quick to adapt to changing fashion trends. Gap's signature style is gone and the brand has lost its quality. The industry is overloaded and new businesses open every day. The store promotions do not help the company, their "take 40% discount on all items in the store" campaign has failed to make any profit.

VRINE

GAP Inc.'s business strategy in the global market for elegant fashion and accessories can be categorized as cost leadership. GAP Inc. offers modern and fashionable clothing and accessories at reasonable prices. In simple terms, The GAP, Inc. has a business strategy that is related to giving people the opportunity to be fashionable and cool at an affordable price. GAP Inc.'s portfolio includes The GAP Inc., Old Navy, banana republic, Athleta and Intermix brands. GAP Inc.'s competitive advantage is traditionally linked to innovative casual design of apparel and accessories with choice selection that enables self-reflective opportunities for a broader range of customer segments.

From the analysis of the VRINE model, it is obvious that although The GAP Inc. has a variation of capabilities and resources that are certified by VRINE, but only to a limited extent. Consequently, the organization achieves only a few justifiable competitive advantages in the industry. Excellent customer service is one of the main activities that any organization can adhere to. With technology on the rise, The GAP Inc. stays well connected with its consumers by communicating through text messages, email, and of course, social media. Besides the service,GAP Inc. has a competitive product return policy. Consumers can return within 45 days all items brought in from GAP, Inc., Banana Republic and Old Navy and there is no time frame for returns with items purchased from Athleta.

Differentiation will allow The GAP Inc. to gain a competitive advantage by developing a marketable feature that sets them apart from their competitors. The business strategy related to cost leadership with respect to all the brands within its portfolio offers accessories, apparel and fashion products at prices that are significantly affordable compared to the prices of other premium fashion brands.

GAP, Inc.'s business strategy to deal with the issue of declining sales contains the following initiatives and plans:

GAP Inc. will continue to focus on its core products that have contributed to the global success of the company. Specifically, management has expressed its commitment to bring back GAP's iconic denim, in addition to a variety of on-trend washes, fabrications and silhouettes.

Internationally with respect to market expansion, management is developing a strategic plan to open additional Old Navy stores outside of the United States. These stores will include Japan, Mexico and China, with additional Gap stores. In addition, there will be international outlet stores and The GAP Inc. will continue to increase online sales internationally.

GAP Inc. will make clothing and other items accessible to shop on Amazon. The organization has avoided partnering with online retailers for more than a decade primarily because online stores are unable to convey eye-catching store design as well as point-of-purchase brand marketing efforts. However, in a more recent meeting with shareholders, CEO Art Peck announced that "Gap is open to selling its merchandise on Amazon or other third parties in the US."

Competitive defense strategy. Currently, the importance of corporate social responsibility is imperative for GAP Inc. as the organization wants to be seen by others as responsible and concerned. In doing so, this gives GAP Inc. the competitive advantage of being appreciated and preferred by both its shareholders and consumers, particularly those who are socially conscious. GAP Inc. Gap Inc. management recognizes that Corporate Social Responsibility (CSR) is one of the critically important characteristics of the organization. The organization has won several awards for its CSR initiatives and programs, as well as receiving the 2016 Catalyst Award in recognition of its commitment to equality, diversity and inclusion. Additionally, The Gap Inc.'s 2015 Annual Report. was named a Most Ethical Company by The Ethisphere Institute. "If Gap wanted to position itself well above other retailers on the social responsibility scale, it did."

By maintaining the above competitive advantages, The GAP Inc. can develop a defensive strategy. By doing so, this creates a distance between them and their competitors. Eventually, The GAP Inc. will benefit as long as competitors continue to find it difficult within the industry to compete with any real resistance to the business.

GAP and its competitors

Well-known fabric retailer Gap has been filling warehouses with slacks and khakis, T-shirts and poplin since the Woodstock issue. The company, which operates in around 3,750 stores worldwide, made its notorious laid-back brand with rudiments for men, women and children, but over the years has expanded through the urban-chic chain Banana Republic, the family budget Old Navy, online retailer. Piperlime and Athleta, a sportswear supplier. Other brand boosts include GapBody, GapKids and BabyGap; each also has its own online incarnation. All Gap garments are private label stock made solely for the organization. From the planning board to the shoe store, Gap controls every part of its signature casual style. The US apparel retail scene is deeply developed and focused with several strong brands, retail chains, and multi-brand chains competing with each other on design, variety, and cost. In recent years, specifically, moderate fast-design chains like Zara and Forever 21 have taken an impressive part of the broader industry from strong retailers. In fact, even Gap Inc., one of the biggest players in the industry, has seen its share of the US apparel storefront drop from 5.1% to 4.7% in recent years, despite to outperform other quiet brands. variety and cost. In recent years, specifically, moderate fast-design chains like Zara and Forever 21 have taken an impressive part of the broader industry from strong retailers. In fact, even Gap Inc., one of the biggest players in the industry, has seen its share of the US apparel storefront drop from 5.1% to 4.7% in recent years, despite to outperform other quiet brands. variety and cost. In recent years, specifically, moderate fast-design chains like Zara and Forever 21 have taken an impressive part of the broader industry from strong retailers. In fact, even Gap Inc., one of the biggest players in the industry, has seen its share of the US apparel storefront drop from 5.1% to 4.7% in recent years, despite to outperform other quiet brands.

Michael Porter's Five Forces Model for GAP Inc.

Competition from rival sellers . Competition among existing firms in the apparel and extras industry is savage. Hole Inc. Major rivals include Abercrombie and Fitch Co., American Eagle Outfitters, Inc., Belk, Inc., Guess, Inc., JC Penney Company, Inc., J.Crew Group, Inc., Michael Kors Holdings Ltd, Urban Outfitters, Inc. ., Williams-Sonoma, Inc. what's more, others.

It is imperative to note that "despite being one of the major apparel players in the US, Gap Inc. has less than a 5% slice of the pie, which obviously shows how differently the industry is." of the US garment industry. The highest shares are held by multi-brand retailer Macy's (9%) and general retailer Wal-Mart shares (over 7%), JC Penney (3.3%) and Target (5.4%) also have a comparative share of the market, and American Eagle Outfitters, Aeropostale, and Abercrombie and Fitch together account for just over 2% of aggregate US apparel transactions.

Bargaining power of suppliers. The barter strength of Gap Inc.'s suppliers is low. The organization purchases from around 1,000 suppliers with manufacturing plants in around 40 countries. Crevice's two largest merchants each accounted for around 5 percent of the dollar measure of its aggregate currency purchases in 2015. Likewise, Gap Inc.'s business is not reliant on a specific vendor and this reality builds its power. haggling in supply management. Furthermore, it is basically vital for the dominant part of the suppliers to do business with Gap Inc. due to the high volume of their requests.

Competition from potential new entrants. The danger of new entrants to the design, apparel, and trim industry is direct. Access to circulation channels speaks to one of the most critical limits for new market entrants, as it is difficult to find empty spaces in attractive areas to open new stores. Also, major market players such as Gap, Macy's and Zara benefit greatly from economies of scale and this open door is not available for new market steps, at least for the first few years of operations. The requirement of large capital needs to establish the business and the expected counterattack from current market players are additional difficulties that potential new market entrants must face.

Bargaining power of the customer . Gap Customers have high bargaining power over the fabric retailer. According to Hofstede, buyers tend to have control over an industry if they are essential to the organization, this could be if the company ultimately has buyers buy in mass or can easily switch. to another provider. A predetermined number of strong buyers might have the ability to apply critical control over a seller. Also, if an item is like its rival with close to zero spacing, then chances are the organization needs to give the supplier the opportunity to manage the terms with the ultimate goal of not losing the customer in mind.

Competition from producers of substitute products. Gap Inc. is under great threat from potential substitutes because the companies offer low prices. The danger of substitutes is influenced by components, for example, brand firmness, switching costs, relative costs, and also prevailing patterns and fashions. Within the system characterized by Porter, substitute items are those that exist in another industry but can be used to satisfy a similar need. The more substitutes there are for an item, the higher the aggressiveness of the organization and the lower the profit potential. One case of this is for a boxed juice maker, new juices, water and soda are all substitutes yet exist in separate classes. A high risk of substitutes will affect an organization's ability to set the costs it needs. Should a replacement be priced lower or fill a need higher than anything else, you could end up drawing buyers to it and lower deals for existing businesses.

The following are recommendations for the key issues facing GAP, such as declining revenue, high turnover, and difficulty in coping with the transition in the industry.

The company must establish clear and consistent objectives and goals in the short, medium and long term.

The company should create one or two focus segments for itself, such as high-income professionals.

GAP needs to focus more on the online channel, as it can help you reduce costs and the impacts of the negative economic and political climate.

GAP must increase the diversity in its offer and develop new product lines and even brand lines according to the latest trends.

GAP can focus on improving the efficiency of its supply chain operations through the use of the latest technologies

GAP must develop sustainability in its product offering and highlight the same in promotional activities to attract more customers

A review of HRM policies is required