Corporate Governance of the Gap Company - Research Paper Example

GAP INC. Gap Inc. Gap Inc. commonly known as Gap is a multinational clothing and accessories retailer in America. The retailing business was founded by Doris Fisher and Donald Fisher in 1969 with the intention of making a company that sells comfortable jeans clothing at reasonable prices (Moin, 2011). However, the company has grown in several parts of the world. It has varied brands for all people and for all tastes. Its stores worldwide are approximately three thousand three hundred in number, and they are mostly found in France, Japan, USA, Canada, and the United Kingdom. In as much as it is a publicly traded company in the United States of America, Gap’s brand is known all over the world. Currently, it is a billion dollar company that has over one hundred thousand employees in all its stores spread all over the world. Gap Inc. headquarters is currently in San Francisco, California. However, it also has some of its design offices London, San Francisco and London. The company’s brand name is Gap, and it sells clothing to all groups of people ranging from males, females and children. Gap operates five principal divisions namely; Banana Republic, Piperlime, the namesake banner, Athleta, and Old Navy. The Piperlime is its online store that sells handbags and shoes to its customers; the Banana Republic brand demonstrates a high quality and a luxurious brand; Athleta is a novel brand that was created by athletic women to make and sell athletic clothing to active women; and Old Navy brand which meets the demands for all the cost-conscious customers (Rosenbloom, 2008). From all these, it is evident that Gap Inc. covers and all people and meets the demands of almost all age groups. From its inception, Gap Inc. has remained the largest specialty retailer in United States of America despite being surpassed by Inditex Group, a Spanish-based company, as a the world’s leading apparel retailer. Some of its strengths that have enabled it to remain relevant in the market include; brand recognition, multiple stores worldwide, segmented markets, product utility, among others (Maheshwari, 2012). However, it failed to acknowledge the importance of its customers by paying lots of attention to its expansion strategies, instead of meeting the customer needs. It is a fact that expansion strategies can only be successful when apposite research is done. Concentrating on expansion strategies is correct for several stores only when they have a strong foothold in the market, or when their customers are extremely loyal. However, these two fundamental factors were not present in Gap’s case. Gap focused on expanding its stores by cutting expenditures in some areas of the company. This resulted in the loss of the company’s core values, goals and objectives (Moin, 2011). In the long run, its competitors such as TJX, Ross Stores, Wal-Mart, just to mention but a few moved into the industry; thus, grasping a strong prominence. Additionally, these retailers were smaller compared to Gap; thus, they did not find difficulties in keeping up with the changing needs of the industry. Gap could not quickly respond to the changes in the industry; thus, leading to a decline in its sales and dividends. Gap’s strengths that enable it to grow fast after being founded in 1969 included; its massive brand recognition that appealed to its broad target of women, men, children, and babies; its several stores in UK, US, Canada, Japan, France, and Germany; it ran advertisements on televisions, conducted marketing campaigns such as online promotions, outdoor ads and direct mails; and lastly, it adapted to the emerging trends and customized its deliveries. On the hand, some of the weakness that hindered its growth included; its struggle to get back its customers who had left it for its competitors, decline in revenues, overdependence on USA by the North Gap, and lastly, the failure to meet the demands of its customers. Gap saw opportunities in the increase in online spending and opened its online stores that increased its sales through the introduction of BabyGap, Gapkids and GapBody (Staff, 2006). Lastly, its threats came from the shoppers shifting to its rival retailers, increased competition, as well as competing with retailers who offered high discounts. Gap’s objective was to provide its customers with the right clothes that meet their needs. They believed that providing the right clothes would increase their sales. In as much as their assumption was correct, they failed to ask their customers what they wanted. Therefore, whatever they offered was not what the customers needed, and this resulted to decline in sales. On the other hand, its competitors understood the needs of the consumers and were offering trendy lines of clothing which met the needs of the customers. Therefore, Gap’s strategy was inappropriate (Rosenbloom, 2008). It is correct to say that Gap was a threat to itself since it was a massive company that was trying to continuously expanding itself. The different market segments made it difficult for them to decide on which segment or line of clothing to expand. Gap was founded on the principle of conducting business in an honest, responsible and ethical manner. The company’s corporate governance implies going past complies. In a broader perspective, it means that the company aims at taking leadership roles in maintaining and instituting practices that are representative of strong business ethics. Additionally, it strives to ensure that there is consistent communication between shareholders and customers all over the world. The company’s corporate governance policy is aimed at ensuring that the Board of Directors, as well as all the employees not only operates with integrity and responsibly in everything that they do, but also meet legal requirements (Daniel, 2009). In conclusion, Gap Inc. is a company that has weathered storm to become what it is today. From the time it was founded to this moment, it is through the creative nature of its employees and the brains behind it that has enabled it flourish in the fashion industry. Since fashion represents footwear, clothing and accessories that are popular in the day; it is worth noting that Gap Inc. has done tremendously well to remain the leading apparel retailer in the world. References Daniel, R. (2009). Elbit Imaging to franchise Gap, Banana Republic in Israel. Market Watch. Retrieved February 4, 2013, from http://www.marketwatch.com/story/elbit-imaging-franchise-gap-banana-republic?siteid=rss Maheshwari, S. (2012). Gap Gains With Zara Responding to Fast-Fashion Fatigue. Bloomberg.com. Retrieved February 4, 2013, from http://www.bloomberg.com/news/2012-11-08/gap-gains-with-zara-responding-to-fast-fashion-fatigue.html Moin, D. (2011). Gap International Reorganized. WWD. Retrieved February 4, 2013, from http://www.wwd.com/retail-news/specialty-stores/gap-reorganizes-international-business-3586427 Rosenbloom, S. (2008). Gap Acquires Athleta for $150 Million. New York Times. Retrieved from http://www.nytimes.com/2008/09/23/business/23gap.html?_r=0 Staff. (2006, October 8). Piperlime -- the shoe fits, Gap wears it. San Francisco Business Times. Retrieved from http://www.bizjournals.com/sanfrancisco/stories/2006/10/09/story3.html Read More