PESTEL Analysis of GAP Inc

A PESTEL analysis of GAP Inc. indicates the strategic and competitive situation of this company considering the dynamics of the market within which it operates. PESTEL analysis, also called PEST analysis, refers to a marketing principles’ concept that companies use to track the situation of the environment where they operate in or where they intend to launch a new product, project or service. Gap Inc. is a clothing, as well as accessories retailer whose headquarters are in San Francisco, California.

This American company also sells personal care items for children, women and men. The products of this American company that was established by Doris F. Fisher and Donald G. Fisher in 1969 are available in over 90 countries across the world in about 3,3000 stores that the company operates, e-commerce websites and about 400 franchise stores.

Detailed PESTEL analysis of GAP Inc

The PESTEL analysis of this company is as follows:

Political factors

The fashion and apparel industry has been affected by globalization which is the current industry trend. Whenever this company trades its products, different political policies and regulations are present. There are times when global policies and regulations may impair the operations of GAP Inc. There are also countries that control foreign companies’ entry into their markets and this can affect how GAP operates in such countries. Implementation of huge taxes as an attempt by the government to control the market and foreign companies can also affect the operations of this company. In such situations, the retail industry will be affected negatively past the established limits which will have adverse effect on the business. GAP may incur higher operational costs due to the involved charges.

Economic factors

There are many sales of underground, unbranded apparel. This extends even to apparel export to different countries. Additionally, the economy undergoes slow and rapid growth. This can have negative and positive impact on the company because it influences the buying power of the consumers. Fast economic growth means that consumers have a higher buying power. Slow economic growth means that consumers’ purchasing power will be low. Low-cost sources are another economic factor that can affect GAP Inc. This can also affect the economy negatively or positively. Positive effect can be seen in the event when the company get more consumers after sourcing from low-cost destinations and therefore offer cheaper products to consumers. Local suppliers on the other hand can be affected when the company opts to get outsourced products.

Social factors

GAP Inc. has many employees and with the increase in the number of retiree, the firm may have difficulties in finding more employees. This is the current situation where the rate at which employees are retiring is increasing without a corresponding increase in the equally qualified persons to replace them. Additionally, there are regional disparities in the living and poverty conditions of the people in places where the company operates. This implies that the profitability of the stores of this company is different and this can affect its overall profit and operations.

Technological factors

There has been a rapid change in the technology that is used in the fashion and apparel industry over the past few years. This change has led to the development of sophisticated fashion items and apparels which offer more comfort as well as aesthetic value to buyers. These apparels are made using different technologies. Additionally, new software is being used to market apparels. This software is very important because it makes work easier for the management of this company and the employees.

Environmental factors

The increased globalization trends have made societies more concerned about environmental degradation. Most societies want companies to act responsibly while offering products and services. As such, GAP Inc. must know the global environmental issues that people are aware of and concerned about. This will enable it to operate smoothly in places where it opens new stores.

Legal

Being a multinational company, GAP Inc. must adhere to the regulations and rules that govern different places where it has its operations. Some of the legal issues that may affect this company include the rights of corporate employees, safety and health of consumers and the local communities.

Importance of PESTEL analysis of GAP Inc

Being a theoretical framework that indicates the external factors that affects an organization, PESTEL analysis of a company is very important when it comes to strategic planning. With this analysis, GAP Inc can come up with a more effective strategic plan that will increase its sales or enhance its expansion.

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Sources

What is PESTLE Analysis? An Important Business Analysis Tool

http://www.gapinc.com/content/gapinc/html/aboutus.html

http://www.managementparadise.com/forums/principles-management-p-o-m/208694-pest-analysis-gap.html