Gap Inc Case

Five-force analysis:

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. Gap Inc.'s strengths and competitive assets are good customer service capabilities, strong bargaining power over suppliers, and skills in advertising and promotion. Gap Inc.'s weaknesses and competitive deficiencies are there are resources that are readily copied or for which there are good substitutes and there are no distinctive competencies or competitively superior resources. Gap Inc.'s market opportunities are there are openings to win market share from rivals, the company can expand the company's product line to meet a broader range of customer needs, the company can integrate forward or backward, acquiring rival firms or companies with attractive technological expertise or capabilities, and there are openings to exploit emerging new technologies. Gap Inc.'s external threats to a it's future profitability are slowdowns in market growth, the possible loss of sales to substitute products, its vulnerability to industry driving forces, and adverse economic changes that threaten critical suppliers or distributers. The overall attractiveness of Gap Inc.'s situation is moderately strong because the opportunities to improve its market share are greater than the potential external threats. Also, the company's strengths outweigh the potential weaknesses.