Course Title: Corporate Strategy & Entrepreneurship

Course Code: MGNM571 -I

Course Instructor: Ms. Aaliya

Ashraf Section: Q2145

Academic Task No.: 1 Academic Task Title: Assignment

Date of Allotment: 20/09/2022 Date of Submission: 01/10/2022

Student Roll No: RQ2145B54 Student Registration No: 12101756

Evaluation Parameters:

Learning Outcomes: To understand, analyse and evaluate corporate strategies and business
generic strategies of given fortune 500 company.

Declaration:

I declare that this Assignment is my individual work. I have not copied it from any other
student’s work or from any other source except where due acknowledgement is made
explicitly in the text, nor has any part been written form by any other person.
Student’s Signature: Jayashree Pilli

Evaluator’s comments (For Instructor’s use only)

General Suggestions for Improvement Best part of assignment

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Evaluator’s Signature and Date:
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GAP INC.

American company GAP sells apparel and accessories all around the world.
Donald Fisher and Doris F. Fisher started Gap in 1969.

Its corporate headquarters are in San Francisco, California. Gap, the company's
namesake banner, Banana Republic, Old Navy, and Athleta are its four main
divisions.

Corporate strategy

A corporate strategy is a long-term plan with specific objectives for a business.

The main aim of a corporate strategy is to advance the business.

Business / Generic strategy

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Generic strategies outline how a business seeks for competitive advantage within
the parameters of its preferred market scope.

CORPORATE STRATEGIES FOLLOWED BY GAP OVER 10 YEARS

1. Gap Acquired Athleta Inc. for $150 Million (In 2008)

 This is a corporate expansion strategy. It is a horizontal integration

strategy.
 The company Gap Inc. had acquired Athleta Inc., which is a famous
women's sports and active apparel company based in Petaluma, California,
for $150 million in cash.
 With the acquisition, Gap will significantly increase its online presence and
increase its market share in the $31 billion US women's activewear market.
Online sales at Gap increased by 52% in 2007 to $905 million from $595
million in 2005.
 The new Gap website will sell Athleta products and allow customers to
browse all the company's brands, including Piperlime, Old Navy, Banana
Republic, and Gap, while only incurring a single shipping charge.
 This strategic acquisition nicely combines with Gap's brands and enables
Gap Inc to use new online platform to enter this important retail market.

2. Gap expands in China with locations in Shanghai and Beijing in

addition to the online business Gap.cn. (In 2010)

 This is a corporate expansion strategy by expansion through

Internationalisation.
 On one of Shanghai's largest shopping areas, Huaihai Road, Gap opened its
1,140 square metre flagship store.
 Gap also launched www.gap.cn, its Chinese online store, in an effort to draw
customers from the nation's 420 million active online users.
 Gap wants to be able to expand their reach to many customers around the
nation, thus their debut outlets will be in Shanghai and Beijing.

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 Gap wanted to go global and was looking for opportunity to explore beyond
domestic.

3. Gap acquired Intermix (In 2013)

 This is a corporate expansion strategy through diversification.

 Gap had acquired Intermix a multispecialty retailer of luxury and

contemporary women’s apparel and accessories, based in New York
for $130 million.
 Intermix, a 32-store chain of upscale shops established in 1993 by the
brothers Khajak and Haro Keledijan, is acquired by Gap Inc.
 Gap Inc. sees a chance to grow Intermix's distinctive network of retail
locations as well as significantly improve and increase the visibility of its
website.
 The effectiveness of their brand vision and leadership team is demonstrated
by this strategy.

4. Gap Inc. purchases the premium children's retailer Janie and Jack (In
2019)

 This is a corporate expansion through horizontal integration.

 Gap Inc. acquired Janie and Jack for about $35 million with an extra
agreement to buy the Janie and Jack inventory at cost plus other fees and
expenditures.
 Gap brought Jack and Janie during parent company Gymboree’s bankruptcy.

5. Allyson Felix joins Athleta as its first sponsored athlete. (In 2019)

 This is a corporate expansion strategy through concentration by market

penetration strategy.

 One of the most accomplished track and field competitors in American

history, Allyson Felix, has been selected as the first sportswoman to be
sponsored by the Gap-owned women's athletic clothing company Athleta.

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 Athleta's planned 2020 "Power of She" campaign will feature Felix, a six-
time Olympic gold medalist and 11-time world champion, prominently.
 Felix will also collaborate with the company on initiatives aimed at
empowering women and girls through sport.
 Therefore, the way in which this sponsorship agreement has been structured
appears to be perfectly in line with Athleta's objective to stand out from its
competitors in the sportswear business as a company dedicated to
empowering and serving women.

6. Gap closes the men's performance brand Hill City as part of its Power
Plan and sells Janie and Jack to Go Global Retail as well as Intermix to
Altamont Capital Partners. (In 2021)

 This a corporate retrenchment strategy by divestment.

 With this strategy Gap wanted to focus only on its profitable brands and
close the underperforming brands it is associated with.

7. Gap and Walmart partner together to launch Gap Home, a new line of
timeless essentials for the modern home that will only be sold at
Walmart. (In 2021)

 This is a corporate expansion strategy through cooperation.

 Gap Inc. and Walmart have expanded their collaboration to create a

children's home products collection.
 More than 200 items in the categories of bedding, bath, pillows, throws,
carpets, and window treatments are part of the Gap Home Kids collection,
which is only offered at Walmart.com. These goods range in price from $20
to $79

8. Simone Biles has joined Athleta's expanding group of elite athletes and
trendsetters. (In 2021)

 This is a corporate expansion strategy through concentration by market

penetration strategy.

  The renowned Olympian will be given a platform by Athleta to advocate for

women and female athletes, something that Biles claims is vital to her.

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 With the most gold medals won by a female gymnast at the World
Championships, Simone Biles is one of the most dominant athletes in the
sport.

STRATEGIC EVALUATION OF CHOSEN STRATEGIES USING

STRATEGIC INTENT-ACTUAL RESULT COMPARISON

 With effective advertising campaigns and marketing initiatives centred on

the prevailing fashion and social trends of the moment, Gap has continued to
penetrate the retail apparel market throughout its early years and throughout
its expansion.
 Gap's goal when it originally launched in 1969, a watershed year for the
United States, was to provide clothing—in particular, Levi's jeans—that
would appeal to different consumer generations.
 Gap has made a conscious effort to continue serving the demands of a
variety of customers. Over the years, well-known celebrities and cultural
icons have appeared in marketing and advertising efforts.
 Gap deliberately teamed up with well-known figures like Simone Biles
 The "Power of She" advertising campaign from Athleta reimagines value
alignment for the community's function in gender empowerment. In a recent
earnings call, CEO Sonia Syngal stated that the brand's "All Powerful"
campaign generated more than 160 million impressions across print and
digital, with engagement exceeding industry norms.
 Gap has expanded its market over the years mostly by entering new market
categories, as evidenced by the variety of its stores.
 In addition, Gap has made other acquisitions along the way that have
broadened its portfolio by adding businesses like Banana Republic, Athleta,
and Intermix.
 Hill City was a high-performance men's lifestyle brand that has since closed,
whereas Old Navy was created to cater to the needs of more value-conscious
consumers.
 Through a cooperation with Walmart, the company even entered the home
products market in 2021. "
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 The agreement with walmart enables Gap to debut a new category in a
smart, scalable approach," Mark Breitbard, President and CEO of Gap
brand, stated in the news statement.
 Opening a new entrance for Gap as a lifestyle brand that offers traditional
American style in brand-new ways, Gap Home at Walmart
 Over the years, Gap's growth approach has been audacious; the company is
also reducing its portfolio. The company is exiting Europe and closing about
350 Gap and Banana Republic stores in North America as leases expire to
avoid malls, many of which were having financial difficulties even before
the COVID-19 outbreak.
 Power Plan 2023 is the strategy which would save Gap $45 million in rent.
On the other hand, the Power Plan 2023 will put more of an emphasis on
increasing sales at Old Navy and Athleta and relocating Old Navy physical
locations to smaller cities with populations under 200,000.
 Gap sales decreased from $16.4 billion to $13.8 billion in the fiscal year that
ends on January 30, 2021. Gap's response included pulling out of Europe
and divesting of underperforming stores. The growth in revenue to $16.7
billion in the fiscal year ending in January 2022 is noteworthy given this
divestment strategy.
 Additionally, the business turned a $665 million loss into a gain of $256
million. During the pandemic, Gap's stock price dropped to as low as $9.80.
 In 2010, the company's sales increased for the first time in five years,
reaching $14.664 billion, only to drop once more to $14.549 billion in 2011.
In the fiscal year that ended in 2011, the five-year percent revenue change
was -1.81%.
 Due to competition from discount retailers like H&M and specialist shops
like Abercrombie & Fitch, sales have decreased in the United States. Gap
Inc. started shutting 189 stores in October 2011 and expects to finish by
2013. The business has had more success, though, in foreign markets, and it
has plans to keep growing there, particularly in China.

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BUSINESS/GENERIC STRATEGIES FOLLOWED BY GAP OVER 10
YEARS

1) The Mad Men collection by Banana Republic (A Brand of Gap Inc.), a

unique collaboration with the Emmy Award-winning television show's
costume designer, Janie Bryant, was made available (In 2011)

This is a differentiation focus generic strategy adopted by Gap.

 Banana Republic announced that the "Mad Men" collection will return with

a third edition for Spring 2013 in response to consumer demand following
the Fall 2011 and Spring 2012 collections.
 Beginning March 1, 2013, the capsule was only made available at a limited
Banana Republic retail locations worldwide and online.

2) Banana Republic designed Virgin America's uniforms, who joins a long

list of prominent fashion designers who have done so in the past. (In
2012)

This is a differentiation focus generic strategy adopted by Gap.

 The uniforms designed by the company included nine styles for men and
thirteen styles for women.
 Banana Republic needed 18 months to develop the uniform. As part of this,
Banana Republic designers competed in an internal "Design Challenge" for
the chance to design the uniforms.

3) The "Dissent Collar" was re-issued from Banana Republic and sold out
within one day of being restocked. (In 2019)

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 This is a differentiation generic strategy adopted by Gap.

 Banana Republic is reissuing the original "dissent collar" necklace in a

limited edition to support the effort of the American Civil Liberties Union
(ACLU) Women's Rights Project to advance gender equality and women's
economic rights through systemic legal reform.
 The American Civil Liberties Union Women's Rights Project will benefit
from half of the product's purchase price.

4) Old Navy introduces BODEQUALITY, redefining the shopping

experience by selling all women's styles in every size at the same price.
(In 2021)

This is an integration cost leadership and differentiation generic

strategy adopted by Gap.
 By making all women's fashions available in every size at no additional cost,
Old Navy will redefine size inclusiveness.
 Old Navy will be the first discount store to provide sizes 0-30 and XS-4X
for all women's designs at price parity as a company dedicated to the
democracy of fashion.

5) The BR Look, the Banana Republic's updated brand identity,

positioning, and brand promise is reintroduced. (In 2021)

This is a differentiation generic strategy adopted by Gap.

 The brand identity of Banana Republic has been updated to emphasise

democratic, approachable, and inclusive luxury.
 The company's new positioning is represented by the Imagined Worlds
campaign, which depicts Banana Republic as it was once imagined: as a
fictional, remote location from the legends of explorers and adventurers.

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  The company is revamping its product designs and textiles as well as
developing new product stories for its physical locations and digital
platforms as part of this initiative.

6) With a series of NFT drops, Gap and Old Navy enter the metaverse and
influence the cultural dialogue through their dedication to creativity
and innovation. (In 2022)

This is a differentiation generic strategy adopted by Gap.

 Anyone and everyone will be able to buy and own an NFT and learn about
web3 at the same time thanks to the release of this reasonably priced and
enjoyable collection of generative NFTs.
 A one-of-a-kind NFT will also be up for auction. Boys & Girls Clubs of
America, a long-time charity partner of Old Navy, receives every penny
from shirt sales and the NFT.

BCG MATRIX OF GAP

The Gap Inc. BCG Matrix will support Gap Inc. in implementing its business units'
level strategies into action.

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 STRATEGIC EVALUATION OF CHOSEN STRATEGIES USING
STRATEGIC INTENT-ACTUAL RESULT COMPARISON

 Cost leadership has been Gap Inc.'s approach as it competes in the apparel
sector. At incredibly low costs, they provide things that are current,
contemporary, and stylish. Pricing may vary depending on the brands they
carry, although most often a brand is associated with fashionable, high-
quality products rather than extremely high prices.
 Due to their affordable pricing, which serves as a competitive advantage,
they have a very varied customer base that spans practically all age and
income brackets.
 Gap Inc. has been successful in maintaining its position in the apparel
business and expanding its market share.

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 It currently has tens of thousands of physical stores in about 90 different
countries, in addition to internet shops
 Gap has been successful in creating its own famous products that are of the
highest quality and have completely unique designs from those of its rivals.
After introducing fashion items with their brand on it, Gap gained
widespread recognition.
 As soon as customers began donning clothing bearing their recognisable
insignia, they began to recognise and relate to the brand. Wearing their
distinctive jeans, shirts, and sweatshirts with "GAP" emblazoned on them all
around the world contributed to the brand's popularity.
 Due to the picture that Gap presented in their marketing, people began to
associate themselves with the brand. This further aided them in creating a
powerful, well-known brand name that became their competitive edge.
 Because of the outstanding products they have made for so many years, Gap
is now recognised as a company that consumers can rely on for quality and
fashion trends.
 Gap Inc.'s growth into new international markets helped them further their
brand's development. Their growth and success in each of these markets
gave them a competitive advantage over their rivals.
 Gap is easily able to enter the worldwide market and compete with the local
brands in terms of competitive pricing as well as the kind of image that they
carry globally because they have reached a stage of growth where they have
developed their brand recognition.
 Gap is also committed to continuous improvement in terms of growing their
product range, breaking into new markets, meeting the requirements of their
clients in terms of fashion, and even giving them convenience through
online shopping.
 All these factors combine to support the development and success of their
brand.
 Gap, Inc. launched more stores like Old Navy, Banana Republic, and
Intermix to suit the requirements of the younger consumers, but they also
added more stylish items to differentiate their products.

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 However, they exerted too much effort, which ultimately led to failure as
well as a decline in interest from their current clientele. Because of this, it
started a fresh "back to basics" effort to win back the lost clients.
 Apart from differentiation techniques, Gap Inc. uses multichannel and e-
commerce strategies. For instance, customers can return anything they
purchase online to physical stores, and because of Gap Inc.'s well-known
brand and reputation, they feel more at ease shopping online.
 Gap Inc. also entered new areas while concentrating on fashionable value-
driven products and maintaining strict internal control over value-drives.
Therefore, they may improve the user experience for customers by putting
technology into websites.
 Gap's competitive advantage has historically been attributed to its unique
casual apparel and accessory designs as well as its vast range of options,
which gives a larger range of customer segments the chance to reflect on
themselves.

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