THE GAP INCORPORATED

Leann Bustamante

Jeffrey Bertinetti

Mary Cassidy

GAP

Gap Incorporated Leading international specialty retailer Founded 1969 More than 3,800 stores worldwide May 19, 1976 initial public offering $18 per

share Began trading on the NYSE 1976 Ticker symbol GPS Also listed on the Pacific Exchange

Provides customers with: Clothing Accessories Underwear Loungewear Personal care items

For women, men, children, and infants

Under the Gap (GapKids, babyGap, GapBody)

Banana Republic Old Navy

Why they lost market share: Increasing competition in the retail

industryNot keeping up to date with current

trends and fashionDecreasing economy due to September

11th events

Interview 20 Gap Customers 10 females, 10 males How long have you been shopping at Gap? Are you satisfied with the quality of Gap’s

clothing? Do you feel it’s consistent with the modern

trends? Do you feel it is adequately priced? Have you noticed any decrease in overall

satisfaction in the recent years?

Results:Customers of over 5 years Decrease in overall satisfactionPrices increasedNo quality increaseHave stayed with modern trendsBut competitors doing a better job

THE GAP INCORPORATED

AHP ANALYSIS

AHP Analysis Strategy A:

Marketing Brands Strategy B:

Design and Merchandise Products

Strategy C:Shopping Environment

AHP Analysis Three criterion:

1. Cost Control2. Quality3. Service

AHP Analysis

Model Name: Gap

Priorities with respect to: Goal: Selecting an Alternative Ma...

Controlling Cost .413

Service .260

Quality .327 Inconsistency = 0.21 with 0 missing judgments.

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AHP Analysis

Performance Sensitivity for nodes below: Goal: Selecting an AlternativeMarketing Direction

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.70Crit% Alt%

Strategy C

Strategy B

Strategy A

Controlling Service Quality OVERALL

Objectives Names

Controlling Controlling Cost

Service Service

Quality Quality

Alternatives Names

Strategy A Strategy A

Strategy B Strategy B

Strategy C Strategy C

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THE GAP INCORPORATED

Future Sales Predictions

Quarterly Sales(Observe Seasonality)

Gap Inc. Quartely Sales

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Gap Inc. Annual Sales(1991-2000)

Gap Inc. Annual Sales

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Gap Inc. Annual Sales

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Linear RegressionA linear model can be used because the

data shows a clear trendHigh R Squared variable shows strong

relationship between annual sales and year

Linear Regression AnalysisY = -333.44 + 1206.95XPredicted Sales(all sales in millions)

2001 = $12943.02 2002 = $14149.97 2003 = $15356.92

MATERIALS MATERIALS REQUIREMENTS PLANNINGREQUIREMENTS PLANNING

New MRPNew MRPSAFETY STOCK

20% of sales should be kept on reserve for unexpected situations

LEAD TIME Should be shortened to get them to

customers when needed IMPROVES CUSTOMER

SATISFACTION!!

NEW MRPNEW MRP

Lot-Sizing-Rule

Minimum Order Size

Lowest amount of inventory possible means NO EXTRA COST!

TOTAL QUALITY TOTAL QUALITY MANAGEMENTMANAGEMENT

CODE OF VENDOR CONDUCT

Clearly laid out set of rules which must be followed

Enforcers of the Code: Vendor Compliance Officers (VCO’s) Inspect sewing machines for safety guards Review Payroll Records Interview Employees

PROBLEMS WITH GAP INC.’S TQM

Workers see the VCO’s as “watchdogs”Workers may hide mistakesWorkers may pass blame onto their

peers

LEADS TO TOO MANY CONFLICTS!!

THE NEW TQMTHE NEW TQM Incorporate Deming’s 14 point program

Break down barriers between departments Eliminate numerical goals/quotas Remove barriers that hinder the hourly

worker

This Leads to More FREEDOM!!

THE NEW TQMTHE NEW TQM Quality Circles

Groups of workers meet regularly/share information about the company

House of Quality Finds out the attributes that a customer

likes Benchmarking

Compares Gap Inc.’s products with the competitors (J. Crew, Abercrombie)