The internal analysis of Polo Ralph Lauren and Gap provides a unique outlook of each corporation’s competitive advantage. Both Polo Ralph Lauren and Gap share similarities and have their value chain strategies that allow them to compete competitively within its industry. Furthermore, the resources that Ralph Lauren and Gap are able to pull from give them the capability to sustain their competitive advantage for the years to come.
In order to gauge each firm’s competitive advantage, it is important to identify the resources and capabilities of each firm. Polo Ralph Lauren has resources that include a strong financial position, a complex infrastructure, and a prominent brand. Polo Ralph Lauren’s financial resources have always been considered to be very strong within its industry. Its free cash flow margin or the money that the company can return to shareholders is doing very well against the industry average.
Being financially flexible and strong within its industry gives Polo Ralph Lauren a valuable and rare resource. It has also provided the social complexity of a brand based on the culture and reputation. In turn, this resource extends Polo Ralph Lauren’s capability to expand internationally. This is directly enhanced by the changes that Polo Ralph Lauren has made in its value chain. One of the reasons that Polo Ralph Lauren has been able to reduce the costs internationally is that the company does not own or operate any of its own production facilities. Instead, they contract and outsource to over 400 different manufacturers around the world to produce their products. By outsourcing its production line, Polo Ralph Lauren has effective control over its costs and is able to diversify its products through its wholesale and retail segments. As one of its biggest resources, the supply chain for Polo Ralph Lauren has become more than “800 factories and product licenses, 400 vendors, 200 consolidator logistics carriers, 20 distribution/fulfillment centers, 60 non-inventory holding DC’s and 10,000 points of delivery” .“The company also has over thirty thousand global associates. Polo has become a supply chain organization that is best described as a shared service, with its core value being able to collaborate with international enterprises” to build a network . In this way, the marketing and sales portion as well as the services is primarily dealt with Ralph Lauren itself rather than other corporations.
Polo Ralph Lauren’s brand is also regarded as a marketing tactic because the brand name and Polo’s logo are both recognizable and highly regarded in the fashion world. It has marketed itself as a luxury brand that represents the “American Classic” clothing line. As a result, high customer...