Gap Inc.

Gap Inc. in 2010: Is the Turnaround Strategy Working? 1. What does a five-force analysis reveal about the strength of competition in the U.S. family clothing stores industry? * The retail wearing industry is highly competitive, with buyer power being the strongest force. The painful materials needed for manufacturing are relatively abundant, which limits supplier power and accommodate room for price negotiating. There is low cost of entry, so the industry is flooded with competitors and knock-off substitutes, but it’s the consumer who decides what is fashionable and trendy. The retail clothing industry is driven off customer loyalty, and must instantly adapt to the customers economic needs. 2. What factors are critical to success in the U.S. family clothing stores industry? * It’s the ability to successfully develop new product lines that reflect the latest fashion trends and then quickly bringing them to market, having a broad network of retail stores located in prime real estate locations, building brand loyalty, and having excellent financial and inventory management skills to control cash flow, reduce debt and keep costs low. 3. Develop a competitive strength assessment of the four major competitors in the U.S. family clothing stores industry using the methodology presented in Chapter 4. Based on the results, who is the strongest overall competitive position? Who is in the weakest position? * A competitive strength assessment shows Gap Inc. to be the strongest competitor, and Abercrombie & Fitch to be the weakest. Gap Inc. holds 15% of the market, while Abercrombie & Fitch only has 4.1%, the lowest of all. Abercrombie & Fitch fit’s a specific category that is not in demand due to economic decline. 4. What is Gap Inc.’s strategy? Which of the five generic competitive strategies discussed in chapter 5 most closely fit the competitive approach that Gap is taking? What type of competitive advantage is Gap trying to