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The Gap Inc. Essay

1794 words - 7 pages

1. Analysis of the company's history, development and growth
Founded in 1969 by Donald Fisher and Doris Fisher, Gap Inc is largest clothing and accessories retailer in America. The clothing store began in San Francisco California, where the Fishers opened their first shop because they had been frustrated with the poor service and clothing styles offered at other retailers. The store was named the gap because it supplied clothing to teenagers and college students, the "generation gap" between children and adults.

Originally, Gap did not sell its own brand of clothing, carrying only the Levi Strauss & Co label on its shelves until 1978. At this time Gap had opened more than 300 stores and was selling its own, increasingly popular brand with the Gap label. While manufacturing products under its own label Gap saw its dominance begin, and ultimately stopped selling Levi's altogether in 1992; this move allowed Gap to lower transaction costs and reduce supply threats created by Levi's.

For years, Gap was popular for its basic T-shirts, khakis and sweaters, bringing in the kind of cash-generating revenue that helped fuel its explosive growth in the 1990s.
But as competitors began offering similar styles and prices and apparel sales began to lose momentum, Gap slipped away from basics and tried to pull ahead with unique fashions. The strategy backfired, and the Gap subsequently alienated its core 20- to 30-year-old customer base with far-out fashions that appeal to younger consumers, or that missed completely. Gap chose to chase trends, instead of reinforcing its strengths.

2. Identify the company's internal strengths and weaknesses
Strengths
Branding
The Gap's multiple brands have become some of the most recognizable labels within the apparel industry. Its product line offers a selection of clothing for all ages. Products include: Gap, Gap Body, Gap Kids, baby Gap and Gap Maternity.

Increased sales have resulted primarily from the Gap's ability to expand into specialty markets. Banana Republic is known for casual luxury, with high-quality apparel for men and women and sophisticated seasonal collections of accessories, shoes, personal care products, intimate apparel and gifts for the home. Old Navy, is known for its low cost, and is famous for its denim, graphic tees, cargos, and tops. In addition, the Old Navy Item of the Week which, offers a special item every week at a discounted price.

Financial Control
Gap's financial control and expense discipline have been excellent. A decrease in liabilities generated tremendous free cash flow that provides the company with flexibility regarding its strategic long-term options.
Celebrities in Gap Ads
Gap is well known for featuring celebrities in its print and television advertisements. They have featured over 300 celebrities of various statures in their campaigns.
Number of retail locations
There are 1,250 Gap stores within the domestic U.S; as well as nearly 500 Banana Republic...

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