Commitment to Planning: Connecting with Customers, Providing Value to Shareholders, and Remaining Socially Responsible

Commitment to Planning: Connecting With Customers, Providing Value to Shareholders, and Remaining Socially Responsible

"Making life easier to find a pair of jeans" is the basic principle Don Fisher along with his wife Doris envisioned when they opened the first Gap store in San Francisco, CA in 1969. (Gapinc, 2006) Since then, Gap Inc. has witnessed the company go from a once a thriving company selling over $30 per share in May 2001, to struggling to maintain almost $18 per share in 2005 which equates to about $16 billion in sells. (Yahoo, 2006) Gap Inc. provides a wide of range of products, including denim, khakis, and T-shirts, fashion apparel, shoes, accessories, intimate apparel, and personal care products for men, women, teens, and children. (Gap Inc., n.d.) With more than 3,000 stores and over 150,000 employees worldwide, Gap Inc. has expanded into a brand builder which offers four different retail lines: Gap, Banana Republic, Old Navy, and Forth & Towne. Although Gap Inc. was built on Fisher's basic principle, the company struggles today to maintain its vision to make life easier for customers to express their personal style throughout their lives. Gap Inc.'s greatest challenges are to continue its commitment to connect with customers, to return increased profits to shareholders, and to remain proactive in its approach to social responsibility. This paper will analyze various factors including SWOTs (Strengths, Weaknesses, Opportunities, and Threats) that influence the strategic level of planning within Gap Inc.

As a once leading international specialty retailer Gap Inc. exemplifies strength through diversity by offering an array of products for a variety of people. Expanding their market to specialize into other subsidiary companies enables the company flexibility to reach more customers. Their competitive edge to appeal to consumers of all ages is perhaps their greatest strength.

They have also shown strength in ethical responsibility by allowing independent monitoring of working conditions in a contract factory producing its garments. (Wikipedia, 2006) Gap Inc. stays on the cutting edge by not resting on its laurels. According to Wikipedia, about every decade they have made a major change to keep their company competitive since opening the first Gap store in 1969. (2006) In 1982, they stopped selling Levi's to promote their own private label clothing. The Banana Republic catalog retailer was bought by Gap Inc. in 1983. In 1994, Old Navy was launched and Forth & Towne opened in 2005, in New York, focusing on women 35 years and older. (Wikipedia) The company recently embarked upon a new Product Red initiative developed by singer Bono and Bobby Shriver geared toward raising money to fight AIDS, Tuberculosis, and Malaria, in Africa. (Wikipedia, p. 3) This initial partnership also includes American Express, Converse, and Giorgio Armani. This product line will be launched in the US and UK, in the spring of 2006. (Kaiser Foundation, 2006) According to Gap Inc.:

How we do business is as important as what we do. Gap (RED) takes what we do best - creating great products people love - and channeling it into positive change. In addition to sharing Gap (RED) profits with the Global Fund, we're also investing in Africa by making some of our clothes there. (Wikipedia, p. 3)

Despite Gap Inc. showing strength in diversity and social responsibility the company has been recognized by business analysts to show some weaknesses in profits. Traditionally, Gap Inc. has emphasized a top-down approach in their strategic business plan. But after recognizing a 17% burst of success from its beginning in 1969, Gap Inc., and its spin-offs Banana Republic, Old Navy and Forth & Towne watched profits fall 2% last year. This loss has caused Gap Inc. to seek a new strategic plan that would minimize their weaknesses caused by over cost-cutting, fashion trends changing and potential leadership conflict. (Lee, 2000) According to Bateman and Snell, a potential weakness within Gap Inc.'s infrastructure may have included the contracting of the chairman's brother and wife for consulting and contracting services. This contracting possesses the potential for conflict of interest and prejudice within the strategic process.

With deepening sales in 2005, company shares falling 4 cents to $19.10 on the New York Stock Exchange, and less customer traffic, there is a huge concern for optimism. (Liedtke, 2006) Raising more doubts are the "comparable store sales have fallen in six consecutive quarters, including a six percent decline in the most recent three-month period" states Michael Liedtke in his article tilted "Gap's sale slump recalls troubles before current CEO's arrival". (2006) The problems described are partially caused by the ongoing struggle to keep up with ever-changing fashion tastes, which has forced the Gap Inc. and its executives to look for innovative ideas to make their firms more competitive by designing more appealing clothes. (2006)

Gap Inc.'s Chief Executive Millard S. Dexter's strategy for 2006, predicts he can bring the company back to a profitable situation by an aggressive expansion plan. But both customers and investors are not convinced that expansion or an updated clothing line will bring them back to the top. However, if the Gap succeeds, business analysts still predict that it will probably take some time to lure shoppers back to the stores. (Lee, 2000)

In spite of weaknesses faced by Gap Inc. the company still has great potential and continues to maintain a significant advantage with more than $10 million in market capital over some of its direct competitors such as Abercrombie and Fitch and American Eagle Outfitters. (Yahoo.com, 2006) According to the Gap Inc. press release, "Gap Inc. plans to significantly increase its cash dividend per share by 78 percent" (Gapinc, 2004). With the climbing economic strength and growth, Gap Inc. desires to enhance growth more abundantly throughout the world. As families search for affordable clothing, Gap Inc. seeks to become a leading provider to fulfill that need.

There are numerous opportunities for Gap Inc. today. With the highly competitive nature of the company's business in the United States and internationally, and its dependence on consumer spending; Gap Inc. expects, anticipates, intends and plans for forward thinking. This company understands that future economic and consumer trends could potentially impact sales and future growth. However, Gap Inc. will continue to look ahead and have complete confidence in the company's ability to regenerate a strong cash flow while accessing any threats. (webwire, 2006)

When Mr. Fisher and Gap Inc. detached from Levi's