Journal 4 Gap Inc. Date of Discussion 10.09.14 1. Perform an external factor evaluation of the Gap. What do you think are the most important factors in the external environment The most important external factor concerning The Gap Co. is the fact that their target customers are aging away from the appeal of Gap. Customer preferences are changing and a newer generation is taking over the market place. Although Gap has many different offerings for multiple age groups, they are competing with stores that can offer better discounts and a wider variety of items for sale. Another external consideration would be the green movement focus and international tariffs and trade agreements. Since outsourcing manufacturing processes for fashion is a cheaper option, most of Gaps clothes are made outside of the US. However, this can be problematic with changing trade agreements and labor strikes. The green movement to better package and ship clothing items is also a concern because waste products that are not biodegradable are unfavorable to customers. 2. What are the strengths and weaknesses of the Gap Two strengths that the Gap has are their wide assortment and pricing as well as their international presence. The Gap has a large percentage of their stores located outside of the US, which can be a major advantage or disadvantage to the company that is domestically owned. With the changing value of the dollar, Gap could see major revenues in translation in their international markets in Asian and European countries. Gap also appeals to all age ranges with their Old Navy, Banana Republic, and babyGap stores. Their investment in Althleta was a very smart move on their CEOs part because with a shifting interest in physical health, Gap already has a brand that they have made their own to appeal to this crowd. The major weakness for Gap is that they are an old brand. Many of the new customer bases (Y-Gen and Millennials) see the Gap brand as being the brand of their aging parents and are therefore discouraged to buy from their Gap stores. Old Navy appeals to more of the younger generation and does not have a sullied name, which is why it is Gaps most profitable store in their assortment. 3. How would you improve the organizational structure of the Gap I agree with the authors recommendation of a SBU structure rather than a hybrid divisional structure. I feel that if the stores were managed by region, they could better cater to regional desires. Where there are different age demographics and age percentages (e.g. older people rather than younger people) you might want to implement a better style-wise approach instead of infiltrating the market with items that do not appeal to the overwhelming age group of that area. There are also geographic concerns in style to be