The Value Chain Advantages and Weaknesses Portrayed by GAP - Research Proposal Example

Business Report XXXXXXXXX XXXXXXXX XXXXXXXX XXXXXXXX XXXXXXX The topic to discuss in the paper below is that concerning the incorporation and understanding of value chain in a given setting and business environment. It is important to recognize the role played by value chain management provided the fact that many companies in the contemporary digitized business environment do not recognize its role. The company to focus on in the paper is GAP which has had tremendous impact on people with regard to clothing. Research Problem What are some of the value chain advantages and weaknesses portrayed by GAP with regard to contemporary technology? Literature Review Gap is one of the oldest clothing companies in the United States of America. Since its founding in the year 1969, the company has had numerous milestones that it has overcome. This built the company’s reputation in the 1990s making it one of the top clothing sellers in the United States. Despite the fortune that it made, its market went down with the dawn of the new century due to numerous factors. However, the year 2010 saw the company begin rising again against all economic odds. It is imperative to analyze the internal situation of Gap amongst other factors in an effort to gain an in-depth understanding of the company. Analyzing the resource capabilities of the company, one major aspect to observe is the incorporation of intangible assets. Overlooking of these assets is a contemporary trend when understanding the structure of a company because people pay more attention to the corporeal assets within a company. However, it is important to understand that these assets play a key role in either the success or failure of a company. Technology is the intangible asset to focus on. In an effort to uphold quality inventory in its earlier years, Gap ensured that it had innovative technology that would also help the company reach a larger audience. The easy to navigate website captured the attention of many customers making it very simple for people to order clothing. As years have gone by, the company has incorporated modern age technology in an effort to increase the market value of its products. In 2009, Gap introduced a software package that would assist in monitoring its workflow and make forecasts on the effects caused by various real estate decisions made. Moreover, it acquired a system that would help intensify its e-commerce trades by faster processing of orders. With the advent of new technology, the company is bound to make even higher sales (Fleisher, 2008, 48). With relation to tangible resources, it is important to note that the company has made numerous strides in an effort to keep in touch with advancements in the industry. The company has had the ability to buy new machinery that has assisted in cutting down the costs per production. This is from the fact that in earlier years, the company had faced numerous challenges having to outsource some of its departments facing the uneven market demographics. Human resource has also worked to ensure that the company gets back to its high market position that it enjoyed in the 1990s. This is from the increased number of retail shops around the world majoring in the sale of Gap products Understanding the relative price position of Gap is also vital in comprehending the internal situation of the company. With the increase in its sales over the 90s decade, Gap made the mistake of lowering the quality of its products due to high demands and also increased the prices of its products. However, by the year 2003, the company had reduced its income from the loss of customers. The company thus reduced the prices of its commodities with an effort to lure back the customers but it faced numerous challenges from the market entrance of other clothing lines. The year 2010 saw the company increase the sales of its products from the moderation of prices innovation introduced by a new Chief Executive. By the month of May that year, the net sales had increased by two percent which was a considerable improvement looking at the market cost price over the previous years. The percentage of losses made by the company had also decreased by 9% as compared to the previous years due to improvement of quality that led to fairly higher prices and consequently captured a large customer base (Blyth, 2009, 128). One competitive advantage that Gap has as a clothing company is experience. Having been in the market for long and facing different types of challenges has given the company an upper hand on issues pertaining marketing strategies. The economic downfall experienced by the company towards the end of the 20th century was a great lesson for the company and has since then focused on getting back to the top of the industry and avoiding a repetition of the mistakes (Lohman, 2012, 2). Another competitive advantage that Gap takes is the fact that in their globalization strategies, they focus on the increase of outlet stores that assures them of increased profits. This is as opposed to other companies that dwell on specialty of the products, which wastes time and resources and does not bring in as much profits. Value chain analysis is a key point to consider when analyzing the situation of Gap. The 2010 market strategies outlined by Gap are some of the outstanding value chain strengths for the company. This is from the fact that Gap dedicated a substantial amount of resources towards advertising and client service. The market situation was rather tough on Gap over the earlier years of the 21st century; however, with increased resources directed towards print media advertising, the company has had an increase in sales (Lohman, 2012, 3). The hosting of an international “simultaneous acoustic concert” comes in as strength in value chain. This is from the fact that all Gap users worldwide dedicated some time to enjoy the music that is a key part of Gap. Another value chain strength recognized is the company’s participation in other events that are not associated with clothing. This is from the fact that the market identifies the company’s willingness to devote time and resources towards other activities and appreciate this by having Gap as their clothing line of choice. One of the notable situations that Gap did this is by donating to art related organizations in an effort to capture the attention of art communities (Lohman, 2012, 4). Holding road tours with music and dancers to entertain the customers is one other strategy incorporated by the company and works towards attracting a high number of customers. Value chain weaknesses make the progress of a company slow and are factors that Gap tries to deal with. One of the major weaknesses is the constant differences between the design team and the research team. These disagreements arise every so often and make the decision-making procedures of the company slow because they higher management does not understand which strategy to use (Lohman, 2012, 6). Deciding to cut costs in the supply chain is another factor that has weakened the value chain. This is because the company has found it rather difficult to adjust to the many changes done to the fashion industry due to fear of spending. Despite the many strategies incorporated to eliminate this factor, the company is yet to recover fully from it. One of the value chain competences that Gap has is with regard to globalization. Gap is an international company with vendors located in over sixty countries. Many of the company’s competitors have their businesses having the market target of the United States solely, which weakens the company base. For the competitive companies that have established links outside the country, they have a lot of rules and regulations concerning the infringement of manufacturing rights. However, Gap being a veteran in the clothing industry has allowed the development of their products in different parts and they do not have to come straight from the United States (Lohman, 2012, 6). The social responsibility strategies taken up by the company have also played a role in the value chain competencies. This is from the fact that unlike many companies that seek to please the customer base by providing the customers with sale discounts and other client based innovations, the company seeks to improve itself in a manner through which the customer is bound to get the effect. The company came in first among all retail companies in the list of “100 Best Corporate Citizens” (Lohman, 2012, 7). This is from environment preservation got by having proper factory conditions. Achievement of this is by the company ensuring that the amount of waste produced in factory processes gets disposed off appropriately. Enrichment programs for employees also get the workers motivated which leads to quality production of goods. Consequently, the customer is pleased with the products. Despite the many problems that Gap has had over the years, it has managed to stay in the clothing market and of late producing goods that appeal to the customers’ needs and thus subsequent contentment as in the 1990s. One of the positive factors that have influenced the company is the ability to manage the competition that it gets from companies such as the American Eagle Outfitters and the Ross Stores. The changing of the Chief Executive was influential towards having the company identify and eliminate its weak links. With appropriate general management and the cooperation of the various levels of the supply chain, the company is bound to exceed with excellence in the industry (Gregory, 2010, 132). Quality and Safety Quality is one of the factors that the company has to observe in an effort to reach their goal of increasing their customer base. Having quality is important in that it ensures that the existing customers are maintained and puts the company in a better position to acquire even more of them. Failure to have quality assurance would have the competitors get more customers and thus lead it to great losses It is also important in ensuring that the employees get boosted to work even harder. This is from the fact that the employees get to understand that the work they carry out is legitimate and are urged to please society that in return would reward them. The reward that the workers get from the community is from an increase in customers and thus the employees have a higher chance of getting a pay rise (Henry, 2009, 75) Brand Recognition Recognition of the brand should be a strategy that the organization puts as a vital priority. The company should invest in marketing modes that strike many people and appeal to their needs. People use clothing products on a daily basis and thus the importance of having them advertised across various fields effectively. With this, the company is bound to get more customers and eliminate competition Staffing Improved training for the personnel is very important. This is from the fact that these people are required in an effort to increase the produce and consequently have a higher number of customers. One strategy that these people have to incorporate is the increase in the number of training grounds in countries where they seek to launch their branches. This would save a lot on outsourcing and have a positive impact on the community surrounding the new branches. This factor would ensure an increase in the number of customers as a means of payback for employment creation (Henry, 2009, 76) Research Methods In understanding the situation of the company, it is important to understand the methods through which the research was made and how the data came to be. The most effective method that helped in getting the information is the primary research carried out in the internet. One had the ability to acquire the financial figures of the company both in the contemporary environment and information that was there prior to the changes made in the administration. Another method that proved effective is the visit to various people across all ages that have the reputation of being GAP fans. These people helped answer the numerous questions on the subject with much passion which showed the steadfastness of the brand. Moreover, there was the questioning of the various people in different levels of the chain which proved effective in understanding both the challenges and the strengths that they have when dealing with the company and its executives (Fleisher, 2008, 44). Implications of Research The research can gain use in different fields in the contemporary environment. However, the most appropriate use is that of review of literature for other studies carried out on the topic. This is because it has the ability to offer insight on the best strategy to use with regard to the value chain. Businesses can also benefit from the research and use it as an incentive to correct their mistakes on the subject of value chain. Competition commission is clearly portrayed in the case of GAP as the clothing industry is not a monopoly. With this, the company has the ability to change the various factors in different value chain levels. This ought to be carried out with the consequential effect of having an increase in quality and time management. These are the two major factors that draw customers to a company despite the competition. References Lohman, A. 2012. Gap Inc in 2010 is the Turnaround Strategy Working? Retrieved on 13th November from http://www.albany.edu/faculty/vanness/682/CASES/CaseTeam5.pdf Gregory, A. 2010. Planning and Managing Public Relation in Business. London: Oxford University Press. Blyth, J. 2009. Principles & Practice of Marketing. Chicago: Chicago University Press. Fleisher, K. 2008. Analysis without Paralysis. New York: Cengage Learning. Henry, A. 2009. Understanding Strategic Management. New York: McGraw Hill Publishers. Read More