CASE STUDY #3 GAP, INC.’S TURNAROUND STRATEGY
What does a five-forces analysis reveal about the strength of competition in the U.S. family clothing stores industry?
The competition of rivals in the U.S. family industry is strong because the competitors are numerous, buyer demand is growing slowly, and the rivals face high exit barriers. The threat of new entrants is weak because the entry barriers are high and the industry outlook is risky and uncertain. The threat of substitute products is strong because good substitutes are readily available, substitutes have comparable or better performance features, and buyers have low costs in switching to substitutes. The bargaining power of suppliers is weak because good substitutes for supplier products/services exist and the number of suppliers is large relative to the number of industry members and there are no suppliers with large market share. The bargaining power of buyers is strong because buyer costs of switching to competing products are low and the industry’s products are standardized or undifferentiated. This analysis reveals that the strength of competition in the industry is strong especially since the recession that began in 2008 caused buyer demand to decrease. This decrease in buyer demand strengthened the intensity of competition.
What factors are critical to success in the U.S. family clothing stores industry?
The factors critical to success in the U.S. family clothing stores industry are the ability to successfully develop new product lines that reflect the latest fashion trends and then quickly bringing them to market, having a broad network of retail stores located in prime real estate locations, building brand loyalty, and having excellent financial and inventory management skills to control cash flow, reduce debt and keep costs low.
Develop a competitive strength assessment of the four major competitors in the U.S. family industry using the methodology presented in Chapter 4. Based on...