Exploring Corporate Strategy - Term Paper Example

Corporate Strategy By Aim and Objective This paper provides the analysis of corporate strategy of GAP Fashion Company. Wewill start our discussion by providing the corporation's background, its size, market position, internationalization feature. Although, the most important part of this paper is to discuss, analysis and evolution external, and internal factors affecting organization, against that the necessary strategic changes that GAP Inc. have made for the betterment and to improve or maintain its organizations competitive position. In the first section I will present a brief introduction to corporate strategy, next there will be the GAP Inc. introductory page, then it will be analyzed that how the external and internal factors affecting Gap Inc. then the necessary strategic changes that have made in its corporate strategy to have better business. At the end I will conclude this discussion. Corporate strategy expresses the marketplace and the commerce in which an organization will perform its function. Competitive or company strategy describes for a given Corporate the foundations on which it will struggle. Corporate strategy is characteristically determined in the situation of significant the company's mission and proposal, that is, declaring what the corporation does, why it survives, and what it is future to become. Competitive strategy pivots on a company's abilities, powers, and flaws in relative to marketplace exceptionality and the equivalent abilities, powers, and flaws of its contestants.1 Corporate Strategy is apprehensive with the in general motive and range of the commerce to assemble stakeholder prospect. This is a vital level since it is a lot prejudiced by financier in the business and operates to direct tactical decision making all through the organization. Corporate strategy is frequently confirmed openly in a mission statement (Johnson, 2002). This section of the paper provides the introduction of the GAP Inc. Gap offers iconic American fashion to clients of all age and personality. Ever since 1969, clients have provided arguments for Gap as efficient, casual clothing and trimmings that facilitate them articulate their own personal understanding of manner. Today, Gap carries on to be the most excellent rationale for clothing basics that is providing great-fitting pants, T-shirts, hoodies and denim. What started as one brand has developed to take in Gap, GapKids, gapbody, babyGap, GapMaternity. Gap has turn out to be an intellectual icon by contributing clothing and accessories entrenched in cool, certain and casual style to customers in the regions of the world.2 Gap Inc. is a most important worldwide field retailer with a physically powerful group of brands and economic 2007 profits of $15.8 billion. GAP is dedicated to helping the wants of there customers while bringing excellence earnings and long term worth to our shareholders (Gap Inc, 2008). Gap Inc. is a top international field retailer presenting personal concern goods for men, ladies, kinds and babies beneath the Gap style, Banana Republic and aged Navy products, by means of a fourth products, Forth & Towne, commencement in 2005. established in 1969 by Doris and Don Fisher in city of San Francisco, California, Gap Inc. has grown-up from a particular store with a few workers to around 3,000 stores in the France, United States, United Kingdom, Canada, and Japan, with approximately more than 150,000 staff. In the United States, clients may as well shop the corporation's online stores. A public corporation, Gap Inc. is operated on the New York Stock-Exchange and is established on the Calvert community indicator, Domini 400 Social indicator, and lot of others (Gap Inc, 2008-a). Part 2 This part of the paper will provide the analysis and evaluation how external and internal factors affecting GAP Inc. How the GAP will cater then this will be addressed in this part. The Gap Inc is one of the world's leading apparel brands and was valued at US$7.7 billion in 2003 (GAP). They first wrote their ethical code in 1990 and provided an update of that code in 1996. The code's main spotlight is on compliance with local labor laws, working conditions and the surroundings. It also communicates to suppliers via a vendor code of conduct (VCC), the company's expectations regarding wages, child labor, health and safety, and workers rights to expand contact to trade unions. GAP states their dedication to ethical sourcing by saying that they do their best to make a difference (GAP, 2008). They also declare that they do not manufacture goods and only sell products manufactured by other companies. Therefore, the company's central part of competencies lies in being designers and marketers. Although improvements have been made since the launch of the Code, 26 of the largest US apparel retailers were named in a lawsuit contending against the law employment practices and breaches of human rights. This three-year official battle was settled in September 2002, creating a $20 million fund to stop further exploitation of labor that produces apparel for the US market. Additionally, a recent survey of 37 codes of practice relating to the apparel industry, acknowledged that two-thirds do not pass on to systems of keeping an eye on and that less than half lay down freedom of association to join trade union activities. It is added that across all codes of practice within the apparel sector, there is imperfect standardization of measurements, and criticize the apple-pie language used. It is purposely criticize Gap's code of conduct for taking no notice of SA 8000 standards and claim that only one Gap factory is in competition monitored. Out of 48 apparel organizations, only six used independent external auditors (The Gap, 2008-a). Gap's affiliations with global apparel producers amount to 3,000 factories all-inclusive, by having branches in more than 50 different countries. In this way it makes easy for the company to react to market changes more quickly and efficiently. Gap maintains that it wishes factory employees to be treated rightfully and with respect. To ensure that it happens they have developed a set of principles and operating standards for garment manufacturers that reflect Gap's values, beliefs, and business ethics, which without a doubt characterize what is anticipated from their vendors (The Gap, 2008-b). Additionally, Gap outlines its aim to increase collaborations between consumer, labor, and humanitarian groups, with the intention of ensure improvements for workers. They also state that prior to an order being placed with a vendor, the global compliance team (GCT) subject the factory to a full exploration under the VCC. Subsequently, they continually monitor every factory that manufactures garments for them, but concede that they live in an imperfect world where human beings make mistakes, the most important subject is how these mistakes are addressed, remedied and prevented in the future (Business Week. 2008). According to GAP, they must all the time balance their duty to give value the cultural differences with their own sense of what is fair and right, when miscommunications or misunderstanding occur; they often intervene between vendors and staff to facilitate them in finding a solution (The Gap, 2008). All this points out that GAP holds its function in the communication process as mediator, rather than moderator in the event of issues or disputes arising. However, as GAP outsources all manufacturing processes in order to search for a low wage lead, company action may be limited in the chance of factories not meeting their required practices and conditions. It is often the case, due to the intense pressure on production, that apparel factory inspectors are trained by government to be easygoing in order to look after trade and industry growth. Lenient inspections along with ruthless purchase strategies indicate that many standards underpinning each company's corporate code are often impossible to meet (The Gap, 2008-a). After almost a decade of criticism from labor organizations and clients groups, GAP becomes visible to have made some progress towards demonstrating its commitment to unfair working practices. Contrary to criticisms, Gap made participation with SAI 8000 in 2003 and extended their independent monitoring programmed to four factories in Guatemala, Honduras, Nicaragua and Kenya. GAP was also approved membership of the ETI in April 2004, being only the third US-based company to do so. Additionally, GAP reports that among the hundreds of factories competing to be successful supplier contracts, 90 per cent failed to meet their VCC standards. Throughout 2003, the company finished business contracts with 136 factories for serious violations of their VCC (The Gap, 2008-b). New Corporate Strategy To investigate buyer purchase influences, face-to-face questionnaires were conducted in February 2003 with 200 respondents from the city of Edinburgh, UK. Respondents were recruited from the fundamental shopping area, which features two GAP stores. Data collection took place throughout the last two weeks of February in which Sundays were not included. As the age range of GAP's target consumers is varied, an expediency sample was preferred due to cost and time advantages. Face-to-face questionnaires also facilitate to ensure that all questionnaires were entirely concluded and used for analysis. The questionnaire used a multiplicity of closed, open-ended and Liker scale questions. A pilot study was conducted with 12.5 per cent of the total sample to make certain taken as a whole quality of the questionnaire, all of which were not included in the final sample. Data analyses were descriptive and carried out using the Statistical Package for the Social Sciences (SPSS) for Windows, Version 11.5. The occupational status of respondents was coded according to standard occupational (The Gap, 2008-a). There 102 samples respondents were female, while 98 respondents were male. Regarding age, the 30-41 age group was the main type of respondents (i.e. 43 per cent), and was also the largest group to have used the services of a Gap store. The 18-29 groups formed 27 per cent, while the 42-53 age groups made up 19per cent. The 54-65 groups made up 8 per cent of the sample population, and 3 per cent were from the 66 years plus age group (The Gap, 2008-b). Part 3 In this part of the paper I will discuss the necessary corporate strategy alternation and positive steps that GAP have taken to improve its business. In proceeding section it will be presented how GAP has made new improvements in their corporate strategy structure to match this novel imaging era of fashion. They have catered the environment, social, worker, new technology and production related issues. Today, industrial unit checking leftovers a very important part of GAP's strategy to get better working circumstances in the garment business. GAP's Vendor Compliance Officers (VCOs) toured 99.9 % of the industrial units that GAP acknowledged for manufacture for all 12 months of economic year 2004. And they joined with industrial unit administration to get better working routine and take curative acts on thousands of infringements of their existing work standards (Business Week. 2008). Over time, although, GAP has approached to understand that check is not sufficient. Factory examinations create it likely for GAP to be familiar with evils and gauge progress next to objectives. But eventually, pouring permanent, significant modifications crossways the manufacturing as a whole needs a broader, additional incorporated approach. Inspect & Measure3: GAP is influencing both its knowledge and the proficiency of outer parties to build its watch agenda an additional effective instrument for recognizing troubles and calculating progress. GAP want to be accomplished to transfer the comparable severity and reliability to industrial unit monitoring that they speak about to other features of there commerce, like trailing inventory flow or recording monetary consequences (Business Week. 2008). In 2004, GAP Inc. sustained to have a focal point on taking participation in fashion right creation and transporting it throughout engaging, easy to shop surroundings. It was shown that 11 % boost in income, and there promise to physically powerful economic organization helped re-establish the company's corporate credit and liability ratings to investment score this year (The Gap, 2008-a). Gap Inc. is a subjected as a retailer that is in service to sell and outlet supplies, which advertise informal apparel, trimmings and individual care products for men, women and for the kids. The corporation is taking schemes to shorten its toil and downsize its business processes. These plans would give support to the corporation in cost decrease and in bringing independence to every business.GAP is hopeful to make easy and improved fulfillment by humanizing supply chain processes and implanting employment principles straight into there commerce performances. eventually, GAP consider garment companies, the greater part of whom are worldwide business in their individual right, have to take possession of and liability for circumstances in the industrial units they own and turn on. To hearten them to take that accountability gravely, GAP is mounting an official tool that will facilitate them to issue in a garment manufacturer's fulfillment record, all along with decisive factors like cost, pace, excellence and innovation when making a decision where to place guidelines (Business Week. 2008). On the other hand, GAP distinguish that their company carry out a contact on fulfillment, and they are aggressively investigating improved habits to effort with there manufacturers. To shun causative to extreme eventually, they are making a superior endeavor to make certain that garment manufacturers have precisely reviewed their ability before GAP place orders with them. GAP is operational to decrease incompetent obtaining practices such as scuttle commands and last minute modifications. And GAP is ongoing to associate with garment manufacturers to assist them augment efficiency and get better fulfillment through better procedures and more stylish management techniques (The Gap, 2008-b). GAP want to carry on to associate with stakeholders from all divisions to address the universal harms that add to deprived working circumstances in GAP's industry. Over the precedent few years, GAP has effort warmly with administrations, NGOs, dealing unions, other products and retailers, and garment producers on dozens of steer programs in regions diverge from employs learning and self-governing monitoring to organization guidance and efficiency enhancement. GAP will as well start placing additional stress on influencing instruction and associations from these agendas to hold up large-scale plans that help make the officially permitted, financial and public trading (The Gap, 2008-a). Gap Inc is devoted in making GAP a place where group can be able to build their profession. In 2004, Gap Inc. Executive Leadership Team set up a novel educational framework fastened in GAP's center principles. GAP Inc. as well started on an obligatory ethics track and turn out a fresh program planned to assist workers maximizes the reimbursement GAP Inc. present. In the approaching year, GAP Inc. will center on additional ornamental there assortment programs and discovering novel conducts to keep and expand there full-time and part-time workers. GAP organization assists to make confirmation levels of worker volunteerism previous year. With an meaning on programs that serve up kids, adolescence and people, they offer millions of dollars in cash findings and in-type aids to associations in the society where they work, exist and source our goods (The Gap, 2008-b). In the year 2004, GAP Inc. was satisfied to see decrease in regular store power expenditure and rates of worker damage. GAP Inc. carried out their initial high-level ecological evaluation to recognize the ecological impacts of there processes, which elucidates the require providing focal point on four key areas: wrapping, power consumption, waste and reprocessing, and water superiority (The Gap, 2008-b). This year, GAP Inc. Risk administration and Product Integrity squads will carry on their hard work to improve the security of GAP Inc. work atmosphere and goods; while there ecological hard works will spotlight on the four areas recognized in the evaluation Gap Inc. demeanor last year. As a member in the U.S. EPA's environment Leaders plan, GAP Inc. are as well dedicated to prevailing additional decrease in there conservatory gas productions (Business Week. 2008). Conclusion In this part of the paper I will present overall conclusion of the discussion. The main influences relating to the purchase of apparel were identified as being price, product quality and style. This would seem to support GAP's policy of continuing to source from developing countries in order to accomplish prepared for competitive advantage. It is also in agreement with who believes that ethics and unethical activity within apparel manufacturing processes are of secondary concern to the consumer. Respondents in general come into sight willing to actively purchase products from less urbanized countries. Consequently, respondents could be interpreted as choosing a teleological (i.e. consideration of the consequences of substitutes for a range of stakeholder groups) rather than deontological (i.e. evaluation of the rightness or wrongness of alternatives) stance towards their apparel purchases. For instance, regardless of negative media scrutiny, respondents may consider the ethical consequences upon members of society in developing countrises by ignoring a more proactive stance (e.g. a personal boycott of Gap stores). The results of this exploratory research also shown that consumers rarely or never looked at the label when shopping for fashion apparel and that increased household income has no impact on levels of observation. Additionally, consumer knowledge of where the item of clothing was manufactured did not appear to significantly affect purchase decisions, with only 6 per cent stating that they would consider it on a regular basis. This suggests that the implementation of an ethical labeling proposal for branded apparel and its effectiveness may be financially questionable, predominantly when the level of label observation, for whatever reason, is so negligible by consumers. With 30 per cent of respondents stating that price was a more important influence than ethical issues, future apparel purchase behavior is revealed to hinge upon companies getting hold of further economies of scale, rather than decreasing outsourcing activities in under-developed countries with lower labor costs. This also suggests that respondents take a company's ethical practices into account only on limited occasions. These findings may offer some explanation as to why ethical market shares for individual sectors rarely account for more than 2-3 per cent of the total market (The Gap, 2008-a). References 1. Business Week (2008), "The 100 top brands", Business Week, available at: www.businessweek.com/pdfs/2003/0331_globalbrands.pdf (accessed 15 Oct 2008). 2. Johnson, G. Scholes K. (2002). Exploring Corporate Strategy. 6th ed., Prentice-Hall, Essex. 3. The Gap Inc. (2008-a). Other third party initiatives, The Gap Inc., available at: www.gapinc.com/social_resp/ifr/partnerships/other_body.shtm (accessed 15 Oct 2008), 4. (The) Gap Inc. (2008-b). Social responsibility report 2003. The Gap Inc., available at: http://65.162.110.78/ccbn/7/637/686/eesearch.html (accessed 15 Oct 2008). 5. Retrieved on October 16, 2008. Retrieved from: http://www.gapinc.com 6. Retrieved on October 16, 2008. Retrieved from http://en.wikipedia.org/ Read More