Essay Sample on Gap Inc.'s Competitive Strategy: Differentiation & Best-Cost Provider

Introduction

The most critical competitive strategy for Gap includes broad product differentiation, low-cost provision, best coat provision, as well as focussed differentiation. The Gap Inc. owns various companies resulting in different plans for banana republic, Gap as well as the Old Navy.

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For instance, Gap's strategy was to ensure that they offer a wide range of clothing selections with high quality and are of moderate prices. The concept of best-cost provider, for instance, is more essential as it focuses on value buyers. This is practical since other direct competitors in the market do not offer luxury brands. Ideally, a company that is a best-cost provider fundamentally provides the right products which are appealing to the consumers at lower costs than the competitors. The main competitors for Gap Company include; TJX Companies, Ross Stores, American eagle as well as Abercrombie, among others (Sweeney, 2009). The Old Navy, on the other hand, focuses on the customers who are interested in low-cost shoes, accessories, and family apparel. This indicates that they are intentionally focused on offering products to consumers at relatively low costs (Israeli & Avery, 2017).

The other significant competitive strategy for the Old Navy, which is a sub-branch of Gap Inc., is that it offers a variety of products for the men, women, and children. Comparatively, Gap Inc. companies provide products that relatively lower-priced to other competitors such as Ross Stores, American eagle, and Fitch, among others (Israeli & Avery, 2017). As such, the low prices offered by Gap Inc. companies attract more consumers compared to other companies. In the case of a low-cost provider strategy, it is often advisable that the product line becomes more basic with little or no-frills (Sweeney, 2009). Unlike the essential products offered by the competitors, Gap offers classically styled clothes with various features to meet the needs of the consumers. For amicable strategy management, the Gap companies ought to indulge in continued cost-cutting as well as improved quality of the products offered to the consumers.

Analysis Of Gap Inc.'s Competition

The clothing retailing industry is increasingly competitive with the pressures emanating from various sectors of the market. For instance, the firms often face competition from other companies that offer product substitutes. These companies include; TJX companies, American eagle as well as Abercrombie companies (Sweeney, 2009). The competition from these sources is characterized by pressures of the market attempts of the outsiders to ensure they win buyers over their products. However, Gap Inc. companies have successfully delved into addressing the eminent competitions through maintaining and attracting some skilled expertise as well as the development and maintenance of quality brands in the market.

Moreover, many companies within the industry also face competition from other buyers, which are exhibited in the form of pressures that arise from the seller-buyer collaborations and bargaining. However, Gap Inc. is not significantly affected by the new entrants as well as the partnerships between the buyers and the sellers. This is major because of the inability of the small entrants into the market to produce apparel at lower costs compared to Gap Inc.'s companies.

One of the significant strengths of Gap Inc. is the global presence of the organization in the market. As such, the company has maintained a properly-balanced portfolio, which enables it to maintain a better supply chain. Furthermore, the organization has also invested in research and development, which has boosted the company-owned stores as well as the online presence. However, one weakness of the organization is the fact that it is heavily dependent on the outside merchandise vendors for product supply.

The job done by Gap Inc. is far much great as compared to the other competitors. For instance, the current share price of Gap Inc. as of 2010 was $20.59, while the combined shares of the major competitors i.e., Abercrombie and Fitch Co., were almost $63 (Scherrer & Deflorin, 2017).

Strategic Issues and Problems to Be Addressed by Gap Inc.'s Management

There are a few issues that Gap's management ought to address going forward. For instance, the company ought to solve the problem of having a narrow niche within the market environment (Scherrer & Deflorin, 2017). Another challenge that should be addressed by the company is the fact that it has not effectively maintained the fashion identity. Improving on the company's strategic weaknesses would emphasize on increased social responsibility so that it is viewed as a responsible and concerned organization.

The corporate responsibility would also improve social responsibility and ethics in the face of the consumers and other stakeholders. As such, the company would broaden its niche and improve the general reputation of the company as compared to the other competitors within the market (Israeli & Avery, 2017). Most fundamentally, the company ought to improve promotion through television advertisements as well as billboards to broaden the market niche.

Ways in Which Gap Inc. Could Increase Their Competitive Position with Consumers Locally and Globally.

To increase their competitive positions both locally and internationally, Gap Inc. ought to venture a lot in advertisement and promotion as well as increased emphasis on the provision of classy, affordable, and trendy apparel that pleasant to the intended consumers (Israeli & Avery, 2017). Again, embracing corporate social responsibility would go a long way in improving the general perception of the company both locally and internationally (Scherrer & Deflorin, 2017)

References

Israeli, A., & Avery, J. (2017). Predicting Consumer Tastes with Big Data at Gap. Harvard Business School Case, 517-115.

Scherrer, M., & Deflorin, P. (2017). Linking QFD and the manufacturing network strategy. International Journal of Operations & Production Management.

Sweeney, R. A. (2009). A Strategic Analysis of Foot Locker, Inc.