Gap Case Analysis
Gap Company has recorded an increase in sales and a corresponding expansionary feat in the first decades of its inception. However, there are challenges that emerge in the first decade of the millennia. There are decreasing sales, rising operational costs coupled with increasing competition. There are various factors responsible namely; the inaccurate prediction of fashion trends, inability to forecast on the feasibility of expansionary programs and the challenge of maintaining the traditional customer base. One effect of the shortcomings is decreasing the customer base, as the company is unable to satisfy its traditional customers with the new merchandise and designs.
In addition, there are decreasing share values that are attributed to the decreasing sales. This triggers an increase in the cost of acquiring new capital for expansion. However, the company has a reputed brand name, extensive distributive channels as well as a high volume of production granting it an advantage in terms of the economies of scale. This is further complimented by the substantial market knowledge and classification leading to high product differentiation. As a matter of using the internal and external advantages to regain competitive advantage and increase market penetration, there are two alternatives presented. The first is to extend the existing product lines and the second alternative involves introducing new product lines.
Basic Concerns/Key Issues of the Company
The list of concerns that faced the GAP Company was rather long. First, there were the declining sales due to predicting the fashion trends wrongly, as the market was characterized by a high rate of change in taste and grouping of customers (Hunger & Wheelen, 2009). Moreover, the trendy styles that the company was embracing left out its traditional customers. In addition, there was increasing competition from other cloth line manufactures such as H&M. The ultimate...