Global Production Network for Gap Inc - Case Study Example

Global Production Network for Gap Inc Name: Institution: Date: Table of Contents Table of Contents 2 1.0.Introduction 3 2.0. The types of labor creating the product or service at the different points in the GPN of a GAP Inc 4 3.0. The institutional arrangements that best explains the structure of this GPN 6 4.0. The distribution of the capture of value 10 5.0. Conclusion 12 1.0. Introduction The term Global Production Network (GPN) is applied to describe the production systems of the present age with the characteristic feature of processes of production involving multiple organizations across several nations. There are different and varied legal forms that link the firms through global production networks. The exchanges among the businesses are established in such a way that the subordinate or franchisees abroad are not owned legally by the parent company that only outsources production. Global value chains characterize the contemporary world economy through trading and intermediate products and services in divided and globally spread processes of production (UNCTAD 2013). The Global Production Networks change the market associations businesses to quasi-production from trade unions without risking ownership (Henderson et al. 2002). The Gap Inc. is one of the firms that employ the mechanism of GPN in their general business activities (Sayım et al. 2011). Gap Inc. is a clothing and accessories retailer headquartered in San Francisco, California United States. The first store was founded by a real estate developer Donald Fisher and his wife Doris Fisher in 1969. Donald was excited by the notion of selling clothing in chain stores. The founder was primarily interested in attracting the generation of young customers with a desire for durable, comfortable and cheap apparels such as jeans. The company grew from just a single store to make its presence globally as a business fashion with some brands that are appealing to the clients; intermix, Athleta, Old Navy, Banana, and Gap. 2.0. The types of labor creating the product or service at the different points in the GPN of a GAP Inc The Gap Inc. has become one of the largest widespread apparel retail businesses. The firm produces and supplies its products and brands in many parts of the world with more than one hundred and fifty thousand employees running over three thousand stores. The labor is widespread according to global production network theory. Because of the extensive activities of the company from production to transportation to the warehouse and future consumption by the customers, there is the need and utilization of labor at every stage. The organization offers an opportunity for employment globally at various points of the product life cycle (Kolk & Van Tulder 2002). The supply of the brands and products of the company involve a sequence of processes entailed in the production and distribution of the commodity. There is planning, manufacturing, distribution and giving back to various methods of work (Pedersen & Andersen 2015). The channel of supplying at the Gap Inc. begins with the stage of designing and engaging in the in-store promotion of the sales by developing the brand assortments by the merchants and designers and creating samples by the makers of the pattern. The distinct part of the sequence or cycle that occurs during the process is the sourcing and planning stage where the experts find out the order quantity and select the factory that will produce the clothes. The manufacturing and marketing cycle's following during which the chosen plant provides the samples and the approval of the fit is conducted by the organization before commencing the production. Another group with the mandate for outsourcing market works on the review of the sample works and develop the strategy for selling the produce (Bose & Pal 2005). The distribution phase follows with the sending the company’s merchants out to the points of distribution during which they perform auditing, the product, and inventory and designating for specific shops, followed by the shipment to the retail centers. The last phase of the process is the interaction with the final consumer in the selling at the retail stores. The merchandising team that is visual does the analysis by determining the setup of the floor for the gods. The work does not end at that point, but the analysts mandated with the planning, distribution, monitoring and the evaluation of the company review the data on sales of the stores for re-ordering and assessing the progress (Backer 2007). This process runs for about one year at the organization. Gap Inc., however, noticed the need to work in some areas so that it will remain relevant in the competing market after the business realized a decline in the sales in the recent years. Every labor that is put into the production of the brand at the different point in the global production network for Gap Inc. managed by a well-trained and efficient managers and leaders who work hard with the desire of maintaining the flow within the organization as smooth as possible. The team also reports any encountered and arising challenges that they are not in a position to address to the top management who then react appropriately (Gaukler et al. 2007). Providing solution to the problems may comprise the sale of or liquidation of a subsidiary company and or capital expenditure, and that is dependent on the form of the required solution. Key to Gap’s existence and continued presence in the market that is flooded with vigorous and well-established competitors such as Eddie Bauer, Express, Ann Taylor, Abercrombie & Fitch, and the American Eagle is the marketing and the strategy used. The company’s stores are primarily located inside shopping plazas and malls, but occasionally some shops stand alone. The Gap stores located inside the malls are often larger than the typical mall stores to provide enough room for the warehouse of the major categories of the Gap brands (Jacobs & Singhal 2017). An increase in the international outsourcing is one significant characteristic of the contemporary phase of globalization. The global outsourcings involve the partnership between the locally owned businesses and the international organizations and suppliers without legal ties, formal ownership, and fixed investments. The export productions through the global outsourcing do not introduce raised employment levels but rather encourage the utility of natural and weak means of work within their supply chain. Because of the stiff completion in the GPN, there is much pressure on the local industries to employ in manners in flexible ways costs that are not fixed. The various forms of labor are not under the regulatory and legal institutions. It is possible to have multiple types of work practices coexisting within the same global supply chain or supplier organization (Backer 2007). 3.0. The institutional arrangements that best explains the structure of this GPN The Gap Inc. has continuously supported international labor organization’s better Factories Cambodia program. The international labor organization approves facilities regularly, and the Gap company staff has a close operation with them to review the reports. To follow up with the remediation plans of the factory, the company works in partnership with the rehabilitation unit of the best factory Cambodia. The firm has reduced its action of monitoring and evaluating the remediation of the Best Factory Cambodia and depending on the reports by the international labor organization hence creating more time for assisting plants to establish effective plans of restoration. In association with the single arm of the World Bank, the International Finance Corporation, the company has launched a global better work program (Fisher et al. 2005). The organization is determined to promote an ethical and a responsible work environment through its foundation of the code of business conduct. Gap Inc. has a code of behavior that helps its workers in avoiding the conflicts of interest and ensuring that the employees comply with the set regulations and laws leading to the protection of the assets and information of the firm (Santos et al. 2007). Apart from giving out the accepted behaviors in the workplace, the code of business conducts also provides directions to the employees on the right people to contact in case of an issue whose solution they are in need of. In measuring the understanding and the awareness of the code by the employees, on whether the or not the units in the firm are clear about the system, the company conducts an annual audit. To ensure that all their employees the code of conduct, the company engages all the staff in a mandatory online training. There are human resource representatives spread in most of the countries of operations with whom the workers can fight to improve their working environment (White & Taft 2004). Gap Inc. engages in the regulatory and political activities affecting their operations. The firm’s participation in the political processes has increased because of the increased presence of the company in the apparel industry and retail in the world. Gap approaches the public policy with social engagements aimed at ensuring excellent outcome for their stakeholders, workers, shareholders and clients (McWilliams & Nahavandi 2006). The strategic works are made to comply with the government and the public policy. Gap Inc. started tying the performance of the personnel at the production level with the factory compliance. Pollution, CO2 emission regulations and other laws on the environmental policies are applicable because of the nature of the manufacture of the company’s produce. The factories that produce goods are obliged to work in full compliance with all the laws and regulations in their respective countries of operation. The partnering companies must meet all the necessary requirements for the factories in the different legal and cultural environment. The organization has faced constant accusations from environmentalist over logging of the Northern California’s Mendocino redwood forests and employing the use of herbicides (Smith, Ansett & Erez 2011). The company, however, can be said to have a high score card in putting much effort into ensuring they positively contribute to the communities of their operation, the environment, and the individuals. The workers are provided with a clear code of conduct on the conditions of work. The statement details the laws governing the facilities that create goods both in the United States and globally. With the increased number of networks of people stationed globally and continued time, man force, resource commitment, the firm is capable of, monitoring the compliance to the regulatory policies of the factories efficiently. Ethisphere Institute has recognized Gap Inc. as one of the leading companies in with advanced levels of ethical business activities (Carroll & Buchholtz 2014: Patil 2015). The Institute recognizes the firms that instill an ethical culture at all the levels of the organization. The leaders in the clothing industry do acknowledge the need for complying with the set standards by other agencies so that they do not function alone. The company benefits regarding cost saving by corporation sustainability and responsibility throughout the supply chain. To incorporate compliance and accountability further into the corporate culture, the factories are linked to the staffs at the headquarters that conduct reviews annually and train the teams of managers. The company has a policy that aims always to improve the conditions of work to benefit both the people and the business as a whole. They strategize on the ways of putting the policies and ideas into practice. The firm is engaged in daily activities aimed at taking the best possible actions that can cause them to improve by creating long-lasting and sustainable changes rather than short-term. To meet the global production network standards, Gap Inc. management continuously do the assessment of their company to find out the areas of improvement and the parts that need changes. The business focuses on the conservation of the environment regarding the reduction of waste, sustainable design, and preservation of energy. The workers at the headquarters in San Francisco sort the scraps of their food using recycling and composting bins in the cafeteria. There are many steps taken by the firm to lower their dependence on fossil fuel and reduce their impact on the environment. The company’s west coast distribution center has seen a full installation of solar power system grid that was completed by 2008. There are energy efficient fluorescent lights installed in the other distribution centers helping the business save close to two million US dollars per year. There is an ongoing program at the old Navy stores to change the paints, fixtures, and lighting to designs that are increasingly energy efficient. The recycling methodologies implemented include aggressively reducing solid waste in the retail stores and lessen the use of corrugated cardboard. At the same time Gap Inc. is in collaboration with other firms like National Defense Council and CERES. The business also seeks industrial accreditation and recognition for LEED or Leadership in Energy Environmental Design. As part of the movement to be environmentally friendly, there is the use of recycled denim and recycled packaging and innovation. The office of the designers is also working to explore sustainable trims and fabric that are cost-effective to the organization and are commercially viable. The team has a challenge of utilizing soy, paper, and hemp in the collection of their produce and being able to keep the clothes at a price point that is accessible to the clients. The campaign termed “From Blue to Green” and the collaboration with the Cotton Inc. became one of the most successful environmental programs the company has ever had. Through the campaign, the firm can conduct the marketing of their environmental awareness and efforts to the customers. The consumers get encouragement and take their unwanted and used denim to the Gap stores all over the United States for recycling and get a 30% off their purchase of denim nest time they come to the stores. In 2010, the organization managed a total collection of 270,000 denim jeans. The jeans were converted by Bonded Logic into “Ultra Touch Denim Insulation” for donation to the poor communities and insulation of homes (Kalleberg 2009). 4.0. The distribution of the capture of value It is possible to conclude that the capture of value is evenly distributed in the global production network. The obtained value such as the flow of power, interest, wages, the power relationship, who benefits most, how it helps the company, country or different nations and the wealth requirement for various parties and occasions at various production processes are evenly distributed throughout the structure of the organization (Ansett 2007). The leadership structure is divided into five categories each category standing in for a separate brand and headed by a president. There is also a hierarchy of the structure of each group with several divisions of management between the shop floor assistant and the unit director (Arrigo 2013). The firm is composed of a talented and diverse team of executive managers who focus on implementing the strategy of the company to include customers and their satisfaction and at the same time maximizing the returns of the shareholders (Worley et al. 2010). The team combines the managers and owners of factories and representatives of local and international trade unions. The organization creates an atmosphere where all the players shared interests are not compromised, and they have the freedom of working together as a team and failing to thwart the objectives of the partnering businesses. The application of the cost effective leadership is especially vital because the clients are capable of walking to the next retail store. Both the company and the customers benefit at ago. The business can attract new customers as well as keep the existing ones while the clients get their taste of the best quality at a lower and affordable cost. The diversification of the stores and brands makes the company focus on different types of customers. Apart from the sales at the physical stores located in many nations of the world, the Gap Inc. also conducts sales through the online medium at piperlime.com, oldnavy.com, bananarepublic.com, and gap.com making it able to reach customers and be at par with the increasing trend in online shopping (Wolfinbarger & Gilly 2001; Goersch 2002; Iwanow et al. 2005; Laudon & Traver 2007). The shops focus on creating a customer experience that is long-lasting. To obtain the loyalty of clients the company creates an enjoyable shopping experience for the consumers that lead to the satisfaction of the customers. The concept that benefits both the clients in making them feel welcome and chose their best from the variety and the company which is able to evade the risk of theft and at the same time keeps the customers who also refer their friends and relatives to the shop (Anderson & Vincze 2000; Ginsberg & Bloom 2004). Gap Inc. invests in the shareholders, employees, stakeholders and the community with the faith that such a program collectively benefits everyone who is touched by the company. The firm goes to the extent of leveraging its assets and business to assist in the innovation for social challenges. The program for corporate social responsibility develops into three features that are widely distributed within the industry’s framework. Firstly, supply chain comprising of factories, suppliers, vendors and the channel's distribution to market. Second is the impact on the environment, and third is the charitable and community giving. The interests of the workers have been put at the core of the company’s value where they follow and support them and encourage them to participate in the volunteer and identify charitable causes. The employees gain by getting leadership training, through self-management and development workshops (Iwanow et al. 2005). 5.0. Conclusion Gap Inc. is a global production network company that with a sequence of processes entailed in the manufacture and distribution of the commodity employing various forms of labor at each stage in the cycle of manufacture and supply. The company employs a workforce globally to manage its global presence and compete effectively in the market that is full of strong opponents. It has managed to come up with programs to curb the environmental pollution and works under regulations of the laws of the various countries of operation. The value capture is well distributed and benefits both the shareholders, the executive managers and all the employees and the community as a whole. References Anderson, C. H., & Vincze, J. W. (2000). Strategic marketing management: meeting the global marketing challenge. Houghton Mifflin. Ansett, S. (2007). Mind the Gap: A journey to sustainable supply chains. Employee Responsibilities and Rights Journal, 19(4), 295-303. Arrigo, E. (2013). 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