Introduction
GAP Inc. is US based clothing and accessories retail company. It has headquarters in San Francisco, California. The company was founded in 1969 by two partners. The motivation behind the formation of the company was making sure the availability of the pair of jeans at affordable prices. Now the company has expanded its business to different regions as well as divisions. The divisions of the company operating under GAP Inc. are Banana Republic, Old Navy, Athleta, Intermix, and Banner. GAP is the largest specialty retailer in the US. The company is operating in a tight, competitive landscape and faces severe competition from the brands. The presence of the GAP in the world is at second place. H&M tops the list and has more international locations as compared to GAP. The company has company-owned stores as well as the arrangements with other companies for selling GAP merchandise. Such arrangements ensure the presence of the GAP in more than 43 countries. The company has more than 150,000 employees working with it and has more than 3750 stores worldwide. This paper analyzes the difference that people management and information technology is making in enhancing the competitive position of the company among the competition. It also provides insights into the competitive forces that shape the overall competition in the clothing retail market (Well and Raabe, 2005).
People, Information and Information Technology
The people are the real power of the company and are constantly putting efforts in making the company great. The trained frontline staff and the retail employees are engaged all over the world to take care of the customers. Every week more than 130,000 employees take care of more than 15 million walk-in customers in the GAP stores. A lot more employees are involved in behind the scene operations that support the customer service operations. The employees of the company are diverse in their culture and background. The diversity helps in serving the diverse customers of the company. The company has a history, culture and legacy. Such factors attract the innovative and talented people to work with the company. The creative people put innovation into the business operations that make the company best among its competitors (Dumas, Van der Aalst and Ter Hofstede, 2005).
The company has a separate division named Global Innovation Digital (GID). It is an award-winning division of e-commerce that operates to create successful websites. The services of the GID are involved in managing information and providing information technology solutions for creating a most powerful brand in the world. The websites of GID include oldnavy.com, gap.com, athlete.com, piperlime.com, and bananarepublic.com. GID is working in US, Europe, Canada and Japan (Well and Raabe, 2005).
Porter’s Five Forces Analysis
Threat of New Entrants
The threat of the new entrants to GAP is low due to the considerable size of the operations. A new brand can offer products in a few geographical areas. However, GAP has global reach and presence in many countries. Moreover, GAP enjoys economies of scale due to large scale operations. It is very tough for a new brand to compete with the prices of GAP. Furthermore, new entrants will have to spend large sums on the advertising and marketing to snatch the market share from GAP. GAP has a strong brand loyalty that is tough for a new company to gain in short time. Keeping in view these factors the threat of new entrants is low.
Threat of Substitutes
There is no perfect substitute for the clothing and apparel. The consumer need of clothing can only be fulfilled with clothing. Therefore, the threat of substitutes is zero due to non-availability of the substitute products. However, it has been observed that if a brand increases the prices of its products, the customers switch to the other brands due to zero switching cost. Similarly, if all the brands increase the prices of the apparel products customers start purchasing less. The similar effect is observed when the economy is performing poorly. All these reactions are due to the non-availability of the substitute and complements for the clothing and apparel products (Well and Raabe, 2005).
Bargaining Power of Suppliers
The bargaining power of the suppliers is low as GAP has a wide network of the suppliers in more than 60 countries. The suppliers include the fabric mills and the garment factories that convert the fabric into the garment. If a fabric mill or the garment factory is charging a higher price, the company switches to the other factories. There is, however, an exception for the factories that has a certain expertise in a certain design. Moreover, the chances of the vertical integration are rare as most of the suppliers are outside the US (Well and Raabe, 2005).
Bargaining Power of Buyers
The competitive rivalry among the brands is high. It means that the market is saturated with the other fashion brands. Therefore, the price competition among the brands is higher. It gives the customers a wide choice of apparel and garment styles. The price wars also increase the bargaining power of the buyers. Therefore, the overall bargaining power of the buyers for the GAP brands is high.
Rivalry among the Brands
The competitive rivalry among the brands is higher. The fashion industry is saturated with the competing local and international brands. The products of GAP face immense competition in the local as well as international market. The direct local competitors of GAP include American Eagle Outfitters and H&M. However, there are many European and international brands that increase the competitive rivalry. These brands include Zara, Next, Burberry, Billabong and miscellaneous other brands.
Supply Chain Management Systems
The advancement in information technology has changed the way of conducting supply chain activities in the modern organizations. The retail industry has witnessed these changing trends of IT. It enables the brands to carry out the supply chain management that improves the overall organizational performance. The increased communication and transparency through supply chain tools brings increased performance throughout the product life cycle. The way of conducting business changes starting from the sample booking to the documentation handling. IT has affected the production planning, workflow management, sample approvals and tracking of the shipments. The leading retail brands in the fashion industry are using the improved web-based technologies to manage the supply chains. GAP uses product lifecycle analytics to identify the key decision-making points in the product planning. These analytics result in improved decision making regarding the product design and delivery. GAP has formalized ways of looking at the product life cycle so that the supply chain jobs are performed in a better way. The brands of GAP operate on seasonal demands and supply. The company has periods of peak production, peak demand. The company uses information technology to identify at the seasonal swings and make decisions regarding production volume and order placement to the vendors. The technological solutions in the product management have revealed that the vendors appreciate the supply chain tools to manage production flows, and they always try to keep their production lines full (Dumas, Van der Aalst and Ter Hofstede, 2005).
Furthermore, GAP uses scorecards to evaluate the suppliers and their facilities based on the product qualities delivered and their technical capabilities. These scorecards are used in future order placement with the vendors and suppliers and to incorporate innovation into the production systems. The company can track the code of conduct and adherence to the key performance indicators. GAP is using these scorecards to allocate the volumes to the suppliers. The company believes that well performing suppliers get most of the business (Well and Raabe, 2005).
ERP and CRM
The company has Enterprise Resource Planning systems and established customer relationship management systems to maintain the resources as well as the customers. These activities are performed by the GID marketing and analytics teams at GAP. These teams are chartered with the organizational resources and aim to bring increased profits and growth in the GAP’s business. The GID Marketing and Analytics take care of the online as well as the offline business of the company. The activities of the team include the preparation of the analytics, implementation so that the analytics can help in decision making. It forms an integral part of the decision support system of the company. The company has predictive models based on the analytics that helps in maximizing the profit of the firm (Chaffey, 2007).
The enterprise resource planning tools used in GAP include decision systems (DSS), customer lifetime value analysis, customer relationship management, and website performance analysis, optimal price computation, pricing, and planning. Moreover, analytics provide support in inventory collocation strategies as well. The GID marketing and analytics team are formed of the hardworking and dedicated individuals that are passionate in their work and are team oriented individuals. The company aims to retain the talent that is capable of implementation and delivery of high-performance systems and applications (Well and Raabe, 2005).
Database Management System
The retail industry is using database management systems and maintaining widespread data warehouses to aid the decision making. The data warehousing is used at GAP Inc. as well to aid the decisions. The marketing analytics teams working under GID produce analytic reports and store the analytics for the future use. As discussed earlier, the analytics are used for the pre-evaluation of the suppliers. The analytics and their storage lead to a large data that needs special expertise for storage and retrieval. GAP uses Oracle database for accessing and storing this analytics. Oracle is the market share leader in the database management systems, and it is being used at GAP (Dumas, Van der Aalst and Ter Hofstede, 2005).
Agent-Based Technologies
The agent-based technologies have revolutionized the computing paradigm. These technologies involve intelligent agents that are equipped with the business intelligence. These agents perform the tasks of planning, sensing, scheduling, decision-making and reasoning. In an agent-based model or system, the software takes the decision based on the situations. Such software is the intelligence agents that bring autonomy in the business processes. The autonomy leads to the increased performance of the organization. The agent-based technologies enable the independent working of the departments or facilitate the operations. The agent-based technologies reduce the coordinated effort. Such agent-based technologies can be applied at GAP in various operations like Supply Chain Management. The agent-based technologies can also help in conflict resolution and can be implemented in the human resource of the GAP Inc. (Monostori, Vancza and Kumara, 2006).
E-Commerce Business Models
There are nine e-commerce business models, but only a few are employed at GAP. The company has its website and the online stores with different domain names. The online stores are different for all the subsidiary brands of the GAP. The business model of e-commerce that is seen in play in these online stores is a business-to-consumer model. These websites are selling directly to the customers globally. The online stores of the GAP take orders and deliver products to most destinations in the world through the affiliate stores (Chaffey, 2007).
The online sales of the company have shown only 1 percent increase in the recent year. It is a serious repercussion, and the company needs to increase the online sales. Therefore, the business should consider the incorporation of more e-commerce models in its operations. The company can use B2B model in e-commerce in enhancing the interaction with the suppliers and the vendors through web-based applications and pages (Chaffey, 2007).
Systems Development Life Cycle
Systems development life cycle is a multi-step process that results in the implementation of the information technology systems in the organization. It can be used by the experts in the retail industry to create the IT systems for problem solving. GAP can use SDLC by analyzing the business operations and gathering the insights. It will help in the problem identification. The GID already prepares and stores the analytics. This analytics can help in the analysis of the systems and to define the requirements of the IT systems required for the organization. In light of the analysis and the requirement, definition systems can be designed and implemented at GAP. The CRM and other decision support systems are the results of the systems development life cycle approach (Stine, Scholl, Rossman, Fahlsing and Gulick, 2008).
Business Continuity Planning
Business continuity planning relates to the identification of the risks and the strategy formulation to minimize the risk exposure of the business. Business continuity planning is conducted in phases and steps. The phases of the business continuity planning that relate to the business of GAP are given below (Chaffey, 2007)
Risk Identification: The first and foremost important step in BCP is the identification of the risk areas that can disrupt the business operations. The risk areas can include the supplier risks, natural disasters, threat of the humans and technological threats
Analyzing Risks: After identification of the risk areas, these are placed on a scorecard to evaluate the impact. It is done through business impact analysis. BIA gives valuable insights to the company regarding the onset of the situations that can harm business operations
Designing Strategy: The next phase to design the strategy keeping in view the data collected. It is the most crucial part and is performed by the senior management.
Plans Development: The next phase is the development of the plans based on the strategy formulated. The implementation also falls in the phase of development of plans.
Measuring Success: The control is very vital in the business continuity planning. The last phase is to measure the success of the plans in quantifiable factors. It is important to measure success to ensure things are working as planned.
Emerging Trends in Retail
There are emerging technological improvements in the retail industry that are posing challenges for GAP. The company should incorporate such changes and trends in its business operations to stay competitive. The use of robotics and analytics is changing the way to doing online business. Recently Amazon has incorporated robotics into its operations, and the result is the same day delivery of the merchandise. It is a big challenge for the online retailers. GAP should incorporate this recent trend to dispatch the orders placed on same day basis (Chaffey, 2007).
Moreover, the increasing use of mobile phones and tablets by the consumers has been witnessed in the recent past. Therefore, the retailers need to customize their online stores to work perfectly with the mobile devices. It has implications for the online as well as offline sales. The trend of paying from the phone using NFC technology is gaining familiarity. Therefore, it is important for GAP to implement the NFC paying systems in stores. Moreover, the website and online store of GAP and its brands are already customized to work with the mobile devices (Chaffey, 2007).
Protection from Security Vulnerabilities
The increasing use of the information technology and the cloud-based computing has raised the concerns of information theft and mishandling of information for the organizations. The organizational data if not protected can have serious drawbacks for the company. Therefore, it is important for GAP Inc. to protect the information and the data from the security vulnerabilities. The company should secure its hardware and the access to the company network should be limited to the concerned personnel only. The intranet should be kept separated from the public internet offered for the guests and customers. Moreover, the authentication should be made mandatory for the employees and the suppliers to access the database and the other IT solutions implemented in the organization. Furthermore, it is vital for GAP Inc. to have a formal IT policy to check the vulnerabilities and define the course of action in the event of the breach in the systems of the company (Stine et al, 2008).
References
Chaffey, D. (2007). E-business and E-commerce Management: Strategy, Implementation and Practice. Pearson Education.
Dumas, M., Van der Aalst, W. M., & Ter Hofstede, A. H. (2005). Process-aware information systems: bridging people and software through process technology. John Wiley & Sons.
Monostori, L., Váncza, J., & Kumara, S. R. (2006). Agent-based systems for manufacturing. CIRP Annals-Manufacturing Technology, 55(2), 697-720.
Stine, K., Scholl, M., Rossman, H., Fahlsing, J., & Gulick, J. (2008).Security considerations in the system development life cycle. US Department of Commerce, National Institute of Standards and Technology.
Wells, J. R., & Raabe, E. A. (2005). Gap, Inc. Harvard Business School.
