President Case

Opportunities

Technology Advances

The internet allows The Gap, Inc.'s products to reach a higher percentage of customers. The lower prices, greater selection, and convenience provided by e-commerce all indicate an opportunity for growth. Gap's e-commerce platform, Universality, is targeted to capture this trend. A winter 2010 survey shows that while 71% of parents are personally affected by the economic downturn, 90% say they are spending less on themselves so they can spend more on their children.

Forward Trends

This trend shows that despite the weakening of the retail markets, the childrenswear market offers a strong growth opportunity. The Gap, Inc. has been involved in the children's apparel market since 1986 with GapKids and babyGap stores.

International Expansion

Booming international expansion will allow the Gap, Inc. to offer products available in 90 countries. This is up from 25 countries and we expect 7.55% growth in 2011.

Threats

International Market Inflation

The Gap, Inc. is undergoing the process of global expansion; however, it faces the threat of problems abroad. China market poised for growth: During 2010, China's GDP grew over 10% and we predict it to grow faster than US GDP. The Gap, Inc. recently opened their first store in China, and plans to add more in the future. However, it might be too late, as China now faces increasing inflation costs.

Barbara, David.

Labor Costs in China

Labor costs in China are estimated to increase as Chinese provinces' wages have been

increasing by 10-20%, on average, which will decrease profitability margins. Economic problems in Europe such as increasing unemployment will hinder the European's consumer spending and have a negative impact on apparel sales. China's rapid economic growth raises concern about inflation in China. On April 17th, 2011, China's central bank ordered the nations' biggest banks to set aside large cash reserves, for the fourth time this year. Chinese inflation endangers China's status as the low-cost workshop of the world. Chinese CPI rose to 5.4% in March, its sharpest increase in the past three years.

Barbara, David. "Soaring Inflation Poses Risks Beyond China's Borders-NYTimes.com " The new York Tiimes-Breakind News, World News & Multimedia. N.p.; n.d Web 18 Feb 2011

Competitive Environment

Gap operates in a highly competitive specialty