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B M G T 4 9 5 - S T R AT E G I C M A N A G E M E N TD O C T O R V E R N O N S W I N T O N

4 M AY, 2 0 1 4

C H R I S T I A N S N U G G S ( T E A M C A P TA I N )D I S H E K A B U T L E RR A C H E L K E N L O N

C L E M E N T E M O R E N OM AT T H E W U L I C H N E Y

Strategic Team Four

Agenda2

Alternative Strategy Generation

SWOT Analysis Strategy & Prioritization

Selection Action Plan Evaluative Plan

Vision and Mission Background Organization Industry Analysis Competitive Analysis Financial Analysis Technique Analysis

1st HALF (8:00-0900) 2ND HALF (9:15–10:15)

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Vision and Mission

Current Vision & Mission Statement = NONEXISTENT Proposed Vision Statement:

“World’s leader in Casual, Classical, and Stylish apparel… at accessible prices”

Proposed Mission Statement:“Provide exceptional services and clothing apparel to

customers as well as providing a responsible ethical work environment for employees”

References: (David, 2013, pp. C-55)

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Background Organization

1970s – 1980s: First public offering 1.2 million

shares Focused on private label Purchased Banana Republic Introduced GapKids Opened stores in England and Canada Sales reaching $1billion

1990s: Opened stores in France, Tokyo Introduced Old Navy

2000s: Purchased PiperLime and Athleta Inc. Opened stores in China and Italy

Currently: Stores in 24 countries 3,500 stores 136,000 employees Six brand names

1969 – Doris and Dan Fisher opened first Gap

References: (David, 2013, pp. 54-65); (Gap, 2014)

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Industry Analysis

Economic Forces Disposable Income Unemployment Trends

Political, Governmental, and Legal Forces World Oil, Currency, and

Labor Markets

Social, Cultural, Demographic and Environmental Forces Population Changes by Race,

Age, Sex, and Level of Affluence.

Technological Forces Communication Marketing

Competitive Forces

References: (David, 2013, pp. 54-65); (Gap, 2014); (Bureau of Labor Statistics, 2014)

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Real Disposable Personal Income: Per capitaDATE Chained 2009 Dollars Percent Change

2007-01-01 35870 1.153382008-01-01 36082 0.591022009-01-01 35600 -1.335852010-01-01 35705 0.294942011-01-01 36294 1.649632012-01-01 36759 1.28122013-01-01 36773 0.038092014-01-01 #N/A #N/A

Source: U.S. Department of Commerce: Bureau of Economic Analysis

Industry Analysis (Cont’d)

References: (FRED, 2014)

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Competitive Analysis

Competitive Forces

Key Questions

Knowing Your Competitors The TJX, Companies, Inc. American Eagle Outfitters, Inc. Abercrombie & Fitch Co. Nordstrom Inc.

Porter’s 5 Forces Rivalry among competing

firms Potential entry of new

competitors Potential development of

substitute products Bargaining power of suppliers Bargaining power of

consumers

References: (David, 2013); (Yahoo Finance e, 2014); (Yahoo Finance f, 2014)

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GAP’s Competitors – 2013 (in thousands)

Family Clothing Retail Competitors

Company Revenues Profit Margin Net Income PE Ratio

TJX Companies 27,422,696 7.79% 2,137,396 19.88

Gap Inc. 16,148,000 7.93% 1,280,000 14.51

Nordstrom 12,540,000 5.85% 734,000 16.76

Abercrombie & Fitch 4,116,897 1.33% 54,628 53.41

American Eagle Outfitters 3,305,802 2.51% 82,983 26.72

Competitive Analysis (Cont’d)

References: (Gap, 2014); (Yahoo Finance a, 2014); (Yahoo Finance b, 2014); (Yahoo Finance c, 2014), (Yahoo Finance d, 2014); (Yahoo Finance e, 2014); (Yahoo Finance f, 2014)

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Financial Analysis

Financial Statements

Financial Position

Profitability

Cash Position

Ratio Analysis

Liquidity Ratios

Leverage/Financial Ratios

Turnover/Activity Ratios

Profitability/Performance Ratios

References: (David, 2013)

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Technique Analysis

Competitive Position 2nd in revenues compared to competition Global presences and expansion Multiple business entities Annual growth in sales .3%

Market Growth Shift in consumer priorities Opportunity to pursue age groups Industry is growing

References: (David, 2013, pp. 54-65); (Grannis, 2011)

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Technique Analysis (Cont’d)

The Grand Strategy Matrix

GAP

Quadrant II

1. Market development2. Market penetration3. Production development4. Horizontal integration5. Divestiture6. Liquidation

Quadrant I

1. Market development2. Market penetration3. Production development4. Forward integration5. Backward integration6. Horizontal integration7. Related diversification STRONG

COMPETITIVE POSITION

WEAKCOMPETITIVE POSITION

SLOW MARKET GROWTH

Quadrant IV

1. Related diversification2. Unrelated diversification3. Joint ventures

Quadrant III

1. Retrenchment2. Related diversification3. Unrelated diversification4. Divestiture5. Liquidation

RAPID MARKET GROWTH

References: (David, 2013, pp. 54-65); (Horizontal, 2014)

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Alternative Strategy Generation

Steps toward Alternative Strategy Development 1. Identify potential disruptive events 2. Spot Strategic trigger points 3. Evaluate possible effects of potential disruptive events 4. Create Alternate Strategy 5. Evaluate counter action(s) of alternate strategy 6. Establish warning signs 7. Develop/Establish implementation “time-phase indicator(s)”

References: (David, 2013)

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Alternative Strategy Generation (Cont’d)

Potential Disruptive Events to consider Major Competitor change

Dramatic changes in Sales/Profits

Supply/Demand changes

Disaster/Crisis/Opportunity occurrence

References: (David, 2013)

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SWOT Analysis

Strengths: Global Presence

Global Business Expansion

Internet / On-line websites

Multiple Business Entities

“Casual, American Style,

Classical Apparel at accessible

prices”

Weaknesses: Unclear Current Vision/Mission

Statement

Focused mainly upon “private-

label” merchandise only

Complete lack of Contingency

plans and planning

References: (David, 2013); (Gap, 2014), (Kotler, 2012)

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SWOT Analysis (Cont’d)

Opportunities: Pursue 15-19 age group

Remember “Baby Boomer” age

group

Enhance On-line websites

“Green” Production Operations

Threats: Global Economy

Competition / Competitors

Rising prices of resources,

materials, transportation

Retaining Key employees

Security of data

Unexpected disasters / events

“What-If” sales fallReferences: (David, 2013); (Gap, 2014), (Kotler, 2012)

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Strategy & Prioritization Selection

#1: Employment of Technology

#2: Product Differentiation

#3: Expansion

#4: Strategic Distribution

#5: People Differentiation

References: (David, 2013); (Gap, 2014), (Kotler, 2012)

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Action Plan

Implement ST4’s proposed Vision-Mission statement Consider/Remember Gap’s historic background:

“Continue Gap’s Legacy!”, “Build upon it!” Conduct/Continue Competitive, Financial, & Technique Analysis Generate/Possess Alternative Strategies

Capture/Address current industry events Establish Contingency Plans

SWOT Build upon Gap’s Strengths Address/Correct Weaknesses (if able/if applicable) Take Advantage of Opportunities “Watch/Avoid” Threats

Employ/Engage Strategy Prioritization Selections

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Evaluation Plan

Review Bases of Strategy Revise IFE (strengths/weaknesses) and EFE Matrix

(opportunities/threats) Compare to existing IFE and EFE Matrix

Measure Organizational Performance Compare planned objectives to actual objectives Forecast future trends

Take Corrective Actions Reposition Create formal mission and vision Revaluate

References: (David, 2013)

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QUESTIONS?

Contact Information:Strategic Team 4 email box: www.ST4@BMGT495.com

ST4: Providing Strategic Business Guidance since 2014

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References

Bureau of Labor Statistics.(2014). CPS Tables. Retrieved April 25, 2014, from BLS.gov: Labor Force Statistics from the Current Population Survey

David, F. (2013). Strategic Management Concepts and Cases: A Competitive Advantage Approach. (14th ed). New Jersey. Pearson Education Inc. FRED. (2014). Real Disposable Personal Income: Per capita. Retrieved April 26, 2014, from FRED Economic Data: http://research.stlouisfed.org/fred2/series/A229RX0/downloaddataGap (2014). 2013 Annual Report. Retrieved from Gap Inc.com: http://www.gapinc.com/content/attachments/gapinc/GPS_AR12.pdf

Grannis, K. (2011). NRF forecasts 4.0% increase in retail sales for 2011. Retrieved on April 29, 2014 from National Retail Federation. Website: https:///www.nrf.com/modules.php?name=News&op=viewlive&sp_id=1083

Horizontal Integration (2014). Retrieved on April 29, 2014 from Investopedia; http://www.investopedia.com/terms/h/horizontalintegration.asp

Kotler, P., Armstrong, G. (2012). Principles of Marketing. (14th ed). New Jersey. Pearson Education Inc.

Yahoo Finance a. (2014). The Gap Inc. (GPS). Retrieved April 27, 2014, from Yahoo Finance: http://finance.yahoo.com/q?s=GPS

Yahoo Finance b. (2014). GPS Competitors. Retrieved April 26, 2014, from Yahoo Finance: http://finance.yahoo.com/q/co?s=GPS+Competitors

Yahoo Finance c. (2014). The TJX Companies, Inc. (TJX). Retrieved April 26, 2014, from Yahoo Finance: http://finance.yahoo.com/q?s=TJX

Yahoo Finance d. (2014). Nordstrom Inc. (JWN). Retrieved April 26, 2014, from Yahoo Finance: http://finance.yahoo.com/q?s=JWN

Yahoo Finance e. (2014). Abercrombie & Fitch Co. (ANF). Retrieved April 26, 2014, from Yahoo Finance: http://finance.yahoo.com/q?s=ANF

Yahoo Finance f. (2014). American Eagle Outfitters. (AEO). Retrieved April 26, 2014, from Yahoo Finance: http://finance.yahoo.com/q?s=AEO