Gap, Inc. Swot

1224 WordsOct 31, 20085 Pages
Introduction The Gap is a leading international retailer, whose revenues for 2007 surpassed $15.8 billion. As with any company, The Gap seeks to increase these revenues and to accomplish this task, they must analyze the external environment they operate in to determine the threats that exists and the opportunities to overcome. The Gap, as an incumbent firm, must try to maintain their position in the market by trying to increase barriers that prevent potential businesses from making a successful entry into the retail business. The threat from potential competitors is not as significant as the threat posed by the other incumbent companies in the retail industry which can leverage certain aspects of the external environment to negatively…show more content…
Large companies include Gap, Limited Brands, Talbots, and Abercrombie & Fitch. The industry is concentrated: the 50 largest companies operate 30,000 stores and account for 65% of industry revenue. Most companies operate a single store. An average store has $2 million in annual revenue. The Banana Republic could see a very competitive rivalry come from Abercrombie and Fitch which is also marketed towards the customer seeking a more luxury selection of clothing. In 2006, Abercrombie and Fitch exceeded Banana Republic’s net sales by over $900 million. Abercrombie and Fitch have the resources to engage in tactics prevalent in competitive rivalries that may include pricing strategies. This is a key aspect that Abercrombie and Fitch may try to exploit to separate themselves from Banana Republic. Under pricing schemes may force Banana Republic to either also change their pricing (which cannot be accomplished overnight) or lose on potential customers. Customer Bargaining Power Another external factor that all retail companies, not only The Gap, will have to contend with is the bargaining power of the customer. This is import from everything from the stocking of stores to production. As the style changes so often it will be the company that can get the new styles to the store fronts in a timely manner to meet the customer demand. Additionally, the successful company also needs to be able to be able to forecast

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