Gap 5 Porter

Topics: Clothing, Retailing, Franchising Pages: 6 (1652 words) Published: March 26, 2010
Gap, Inc. is a leading American specialty apparel retailer based in San Francisco, California. It sells casual apparels, accessories, and other personal care products for men, women, and children. The products of Gap, Inc. include denim, khakis, T-shirts, boxers, casual wear, and others. Currently, the company boasts approximately 150,000 employees and 3,139 stores all around the world. Gap, Inc. sustains a large number of brands, namely Gap, Old Navy, Banana Republic, Forth & Towne, Piperlime, and others. These different companies are bought by the parent company in different times. Started as a general jeans retiling store, Gap, Inc. today has a market value of $13.32 billions. Throughout its history, Gap, Inc. has established itself as a leader in the industry. What began as one brand has grown to include Gap, GapKids, babyGap, GapMaternity and gapbody. Gap has become a cultural icon by offering clothing and accessories rooted in cool, confident and casual style to customers around the world.

The article which title “Gap Goes Global” in 2006 is about Gap, Inc wanted to franchise its business to overseas. It announces a franchise agreement with Dubai-based retailer Al Tayer Group to open Gap and Banana Republic stores in five markets in the Middle East. Besides planning on the Middle East outlets, Gap and Singaporean franchisee F.J. Benjamin expect to open stores in coming months in Singapore and Malaysia. Gap is also wish to follow the example set by other American brands that have successfully expanded in Asia and the Middle East, such as Starbucks. Gap's current international expansion strategy of working with local franchisees reduces Gap's financial risks. Using franchisees, Gap is able to sell its brand and its clothing without the headaches of navigating local real estate markets and hiring armies of store-level employees onto its own payroll. All of Gap's existing overseas stores in Britain, France, and Japan are owned and operated by the company, a setup that has at times proven expensive and unwieldy.

Purpose and Values of Gap, Inc
“Gap Inc. is a brand-builder. They create emotional connections with customers around the world through inspiring product design, unique store experiences and compelling marketing. Their purpose is simply, to make it easy for the customers to express their personal style throughout their life. They have more than 150,000 passionate, talented people around the world who help bring this purpose to life for their customers. Across the company and embedded in culture, their key values that guide their success are: integrity, respect, open-mindedness, quality and balance. Every day, they honor these values and exemplify their belief in doing business in a socially responsible way.”

Five Forces Analysis
Today, retail apparel industry is a very competitive industry to be in. Porter’s five forces model shows that there is already a low barrier to enter but it is hard to establish a distinct brand name, threat of substitutes is strong for the retail apparel industry, the intensity of rivalry is high since the industry is already facing a fast growth, supplier’s bargaining power is weak because they have limited power, and lastly buyers’ power is strong as they have variety of choices.

Threat of New Entrant
Although it is not hard to enter the clothing retail business, it is hard to establish a distinct brand name. Gap faces little threat of increases in price competition by entry of new firms into the market. Smaller boutique-style clothing stores may be able to compete on a local level brand, however such firms likely would not be able to expand, and Gap enjoy a cost advantage in producing staple articles of clothing, such as jeans and sweaters. Due to economies of scale in producing large amounts of clothing, entrants will have extremely hard time producing clothing at cheap enough prices to compete with Gap and its competitors. Entrants would also have...

References: Masaaki, K., (1999), Gap Inc.
Rachel, T., (2006), Gap Tries on European Style, Retrieved from
Louise, L., (2006), Gap Goes Global, Retrieved from
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