Recommendations for Gap, Inc: Improving Stakeholder Management

Recommendations for Gap, Inc.:

Improving Stakeholder Management

Gap, Inc. has moved the location of its factories many times in order to take advantage of low wages, availability of raw materials, tax incentives, and trade and tariff policies. As the political climate changes, Gap, Inc. has responded. As noted in the previous group paper, The Gap, which manufactures all over the world, currently receives a large portion of its apparel production from Chinese manufacturers. The uncertainty resulting from the 2008 elimination of China's textile safeguards has many implications for the Gap and its subsequent performance. The most recent data reports that The Gap subcontracts over 400 factories in China. This is expected to increase as more lenient trade policies and increased globalization trends continue over the next decade. In conjunction with increased production in China will be a likely decrease in production in Cambodia and Central/South America. These changes have caused Gap to respond, and warrant an even more innovative and interactive reaponse.

Until recently, Gap, Inc. has certainly been proactive in trying to manage its stakeholders, but it would benefit as a firm if it took a more interactive approach, engaging with its stakeholders and creating dialogue, respect and trust. Because of changing societal expectations where people expect more from business, a growing emphasis on ethical business practices, globalization, and evolving governmental regulations, Gap, Inc. must also change its public affairs practices and come up with unique and well-developed strategies for dealing with these ever-changing forces.

Because Gap, Inc. is a multinational enterprise, operating across borders, and having significant amounts of financial assets and technical and managerial skills, it has the potential of making a great contribution to societies around the world. Yet Gap, Inc. must operate in a world of great diversity, and in which its presence is often distrusted or feared. It often confronts situations in which political and economic freedoms are lacking and human rights are routinely violated. The challenge for Gap, Inc. is how to work collaboratively with stakeholders to promote social and economic justice, while still achieving strong bottom line results. Gap thus far has done a fairly good job of staying off the radar as an unethical company, but it has not established itself as a model company with excellent stakeholder management practices. In order to be viewed in this way, Gap, Inc. must create stronger relationships with its stakeholders and develop ways of dealing with conflicting stakeholder desires.

The first recommendation for Gap, Inc is to change their lobbying practices. While it is gap, Inc.'s right to influence governments by voicing its concerns, the right is only legitimate if it is balanced with the obligation to act responsible. Gap's corporate political strategy has focused on trade and tariff policies with China. By aligning with other apparel companies importing textiles from China, Gap, Inc. has been focused on removing trade barriers. Though perhaps they had something to do with the 2008 elimination of trade quotas, it is unlikely that their efforts were the sole cause of this policy decision. In addition, many view this lobbying campaign as contradictory and irresponsible. By focusing only on this policy change, it looks at though Gap, Inc. is only trying to take advantage of low wages. As Kofi Annan, the United Nations Secretary-General stated, "Business must restrain itself from taking away, by its lobbying activities, what it offers through corporate responsibility and philanthropy" (AccountAbility, 2005). One of Gap, Inc.'s corporate responsibility initiatives is to improve factory working conditions abroad, and their lobbying activities currently do not support this initiative. By lobbying to eliminate trade barriers and quotas with China, not only will they be increasing production in poor factory conditions in China, but they will be leaving thousands of workers in Cambodia and South America without work at all. Gap, Inc. should focus on more responsible lobbying efforts that align with their CSR objectives.

One strong recommendation is for Gap's lobbying initiatives to help displaced workers where factories are likely to close. For example, rather than just partnering with human rights activist groups and trying to find jobs for displaced workers, I recommend that Gap, Inc. form lobbying campaigns with unions and activist groups that would push for increased incentives for foreign direct investment in other industries such as the auto industry. Rather than spending money trying to help find jobs that don't really exist in these areas, Gap, Inc. would be better off spending money to get the government to provide incentives for a company to build a factory in the area rather than subcontract one. This initiative would more closely align with Gap's CSR statements because they would be truly looking out for workers' rights and could still take advantage of the China safeguards being removed. In essence, they could move to where they felt would be most profitable without feeling they left other workers unemployed. Other responsible lobbying efforts that should be increased are Gap, Inc's lobbying for governments to require better working conditions. Though Gap does some of this, they could increase their efforts in this area. By making this shift in lobbying efforts, Gap, Inc will no longer seem to be contradicting itself by pushing for China safeguard elimination and thus displacing workers elsewhere while claining in their CSR initiatives to be looking out for workers in their subcontracted factories.

Another recommendation for Gap, Inc. is to expand its business from not only a retail company to a manufacturing company. Rather than subcontracting all of their factories, I recommend that Gap, Inc. actually purchase one factory in each country where they currently contract factories. This factory can serve as the model factory and employees and managers who show excellence in their own factories would be able to go to this factory to work if they so desired. The reason this factory would be so valuable is that it would serve not only as a production site, but also as a site for research and development. Direct employees of Gap would be able to explore the unique challenges of operating a factory in each country and would become more familiar with ways of addressing these problems in their subcontracted factories. After addressing problems of workers' rights and safety issues in the model factory, training programs would be more valuable for subcontracted factories. The trainers would have first-hand