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In the past few decades retailers have come up with their exclusive brands which have been competing against the strong international brands pretty successfully. Such brands are the real competitors for the other international brands in the retail market and the real asset of any company. Brands are an integral part of our society and everyday there are endless number of encounters between consumers and the brands. These successful assets of a company create a positive impact upon the mind of the consumers due to the result of specific marketing programs which are solely executed for those brands.
In other words it can be said as a total investment of resources in marketing the brand as all the activities which are involved from market research, developing a product, and advertising, promoting, sampling and finally distributing it to the selling units in order to create a positive brand image upon the mind of the target audience. (Kotler. 1991)
To be a success in a competitive business market where change is taking place at regular basis, organizational leaders are going through tough challenging situations while managing change in order to become competitive market player to acquire a big piece of the market share. There are several aspects which need to be studied and reconciled for a better understanding of change management. This is why management and leadership share the same importance as they remain on top of the hierarchy as they play an important role in any organizational change process.
Gap Inc. is a leading global specialty retailer which offers clothing, accessories and personal care products for men, women, children and babies. Under the Gap, Banana Republic, Old Navy, Piperlime and Athleta are brand names. The fiscal 2008 sales of Gap Inc. were $14.5 billion. It operates more than 3,100 stores in the United States, the United Kingdom, Canada, France, Japan and Ireland. Â In addition to this, Gap Inc. is expanding its international existence with franchise agreements in Asia, Europe, Latin America and the Middle East. Under these agreements third parties will operate as stores that sell apparel which has been purchased direct from Gap Inc and its brand names. The company was founded in the state of California in July 1969 and was reincorporated under the laws of the state Delaware in May 1988. (www.gapinc.com)
Following is the brief introduction about Gap and its brands:
Gap stores offer a wide range selection of classically styled casual apparel at moderate price. Its products range from wardrobe basics such as denim, khakis and T-shirts, fashion accessories and personal care products for men & women. In 1986 it came into the market with GapKids and later babyGap in 1989. These stores offer casual attire and accessories with the same traditional Gap style and quality for children, ages new born to pre-teen. It also deals with the maternity apparel and in 1998; it launched GapBody for women offering under garments, sleepwear and loungewear along with sports apparel.
Gap Inc. launched Old Navy in 1994 in order to address the market with the concept of value for money. It offers wide range of attire, shoes and accessories for adults, children and infants along with other personal care items. It also deals with maternity wear.
Became a part of Gap Inc. in 1983, it offers elegant, fashionable collections of casual and tailored attire, shoes, accessories and personal care products for men and women at a higher price compare to Gap. It also operates its factory stores which deal in similar categories of merchandises. As of January 31st, 2009 it has operated a total number of 3,149 store locations.
Piperlime was launched in October 2006. It offers customers a mixture of the leading available brands of the market in footwear and handbags for women, men and kids along with the trends and advice from the prominent style authorities.
In 1997, Gap Inc. introduced Gap online, a web based store located at www.gap.com. It offers almost same products which are available in the Gap stores for men, women and kids along with the extended sizes which could not be found in the stores. It introduced Banana Republic on the web at www.bananarepublic.com in 1999 and Old Navy in 2000 at www.oldnavy.com
Gap Inc. also has brands which are only online located at www.piperlime.com and a catalogue store, Athleta which is located at www.athleta.com
(Gap Annual Report, 2008)
Since the 1980's, Internationalisation, without doubt, has become more and more important in today's rapidly changing world and conventional industrial/market boundaries between countries are disappearing. As the world is changing, companies also have to change in their business environments to keep up this alteration. Some organisational concerns therefore have to be taken into consideration in order to remain competitive in the international market (Robert, 1999, cited Pullin, 2004). Such studies have identified that an important concern faced by international marketers is the issue of branding because having a brand is a powerful way for a company to differentiate itself among the crowd and increase preference (Lindstrom, 2003; Kotler et al, 2002).
Organisational targets are constantly being modified to meet the changing realities. This could be a new political re-alignment, a changing relationship with suppliers or clients, a proposed merger (internal or external to the organisation), a new market opportunity, and so on. Whatever it is, the effects will always ripple down the corporate hierarchy. Change is concerned with shifting from one stage to another or breaks down existing structures and create new one (Chonko 2004). The causes of change might but technology, communication, general instability, mergers, and reengineering organizational growth or by institutional and market volatility.
Literature reveals that, change is a source of feeling of threats, uncertainty, frustration, alienation, and anxiety (Ashford, 1998).
How change is tackled
Who is responsible
Senior managers define targets and timescale. Consultants advise on techniques. Change program is rolled out from the top down. Training is given to bridge behaviour gap.
Change must be driven. Resistance can be managed. Targets set at the start of the process define the direction.
A powerful group of individuals build a new coalition with new guiding principles. There are debates, manoeuvrings and negotiations which eventually lead to the new coalition either winning or losing. Change then ensues as new people are in power with new views and new ways of allocating scarce resources. Those around them position themselves to be winners rather than losers.
Those with power
There will be winners and losers. Change requires new coalitions and new negotiations.
There is first a research phase where data is gathered on the relevant issue (customer feedback, employee survey, etc). Next to the data is presented those responsible for making changes. There is discussion about what the data means, and what needs to be done. A solution is collaboratively designed and moved towards, with maximum participation. Training and support are given to those who need to make significant changes.
Business improvement/HR/OD Managers
The must participation and involvement, and an awareness of the need for change.
The change is collaboratively designed as a response to changes in the environment. People need to be supported through change.
Flux and Transformation
The initial spark of change is an emerging topic. This is a topic that is starting to appear on everyone's agenda, or is being talked about over coffee. Someone with authority takes the initiative to create a discussion forum. The discussion is initially fairly unstructured, but well facilitated. Questions asked might be "Why have you come?", "what is the real issue?", "How would we like things to be?" The discussion involves anyone who has the energy to be interested.
Someone with authority to act
Change cannot be managed; it emerges.
Conflict and tension give rise to change. Managers are part of the process. Their job is to highlight gaps and contradictions.
Gareth Morgan's Approaches to the Change Process
Sourced by: Cameron, E. and Green, M. 2004. "Making sense of Change management", Krogan Page, pp.93-94
Mintzberg (1994: 119-30) pointed out that creating and integrating the efforts of the organization properly can be made sure by developing efficient internal coordination of activities with decision making in a single process.
It also allows for greater control, which is vital in formalizing strategy making, for it makes certain that actions are taken care of progressively and quality, accuracy and completeness are taken into account, optimal coordination of these gives the organization the control for the future, both internal and external (Dean and Sharfman, 1995: 450-63). Integrating control into preparation, evaluation and implementation of decision making will result in realization on ways towards the desired future of an organization (Miller, 1987, 7-32). In other words, effectiveness and efficiency as a whole can be attained when strategy is divided into measurable and realistic objectives to each part of the organization by expressing courses of actions clearly (Eisenhardt, 2001: 106-16).
Gap is a highly recognizable brand all over the world which includes all the segments of the markets such as men, women and children. Moreover, is has clarified its brands through Adult, Gapkids, babyGap and Gapbody (Gap Annual Report 2007, p.7)
The business has advanced to a more brand-centric organization in order for them to provide more independence to their divisions.
Gap has put an accent on the process of hiring people. They are looking for people who are passionate about retail and the company, which is one of Gap strength. "Gap store's employees act as brand ambassadors, working to present an exciting store experience for our customers" (Gap Annual report, p.7).
Most of the business target market is a bit too broad. Gap has a defined target market not enough narrowed concerning the adult business market. It's imperative for them to narrow their focus as consumers are nowadays exposed to a specific marketing (Gap Annual Report, p.11).
The lack of ability to improve sales constitutes an impact on the gross margins and operating margins. It has been due to the change in fashion trends, competition and the changes in economic conditions and merchandise mix. The operating margins have increased to an 8 percent in fiscal 2006 from 12 percent in fiscal 2004 (Gap Annual Report, p.13).
A global market expansion has to be considered as an important growth strategy because of the fact that the business is trying to reach space capacity but the UK demand slows. Therefore, there are some thoroughly unexploited opportunities in the East of Europe. It actually represents an area of potential buyers as well.
An expansion beyond the clothing sector is advisable, by creating and implementing more sales of branded handbag, shoes and accessories, they will be able to improve their market share, in order to get a competitive advantage from rivals such as Arcadia Group and ASDA's George.
There is also a possible increase of the customer loyalty. It's one of the most important factors contributing to the sales growth in order to generate more profits and guarantee a defence from the competition. As a matter of fact, parents will be able to be rewarded by doing their back-to-school shopping at Gap, or even buying clothes for Babies as it is getting seen as another growing potential area of the market.
Changes in the organisation's credit rating may limit their access to the capital market. According to their annual report 2007, it is said that Gap does not have meaningful access to the commercial paper market because of the changes to their long-term credit ratings. Nevertheless, they may require additional cash for unexpected contingencies (Gap Annual Report 2007, p.13)
The competitive market for real estate is an effective future problem as the company will need estates to open new stores, so that they will be able to meet their financial targets. If they can shelter their preset locations to meet the annual targets and profitability, they could be exposed to a material undesirable effect on the results of the operations.
PEST Analysis of the Organisation
The organisation has to operate within a flexible environment and react to many factors over which they may have no power over. Many of these factors relate to policies which impact on social, legal and economic areas of the UK.
The political influences on the retail sector have been especially prominent during the recent years and will continue to have an impact over the next few years. Moreover, planning in particular encourages the renaissance of town centres and the redevelopment of the neighbourhood.
Besides, the introduction and development of minimum wage legislation has hit retail significantly due to its heavy dependence on part-time and flexible workers. Such kinds of increases to costs will continue to wear down the business' decreasing margins.
The Apparition of the Credit Crunch inside the economic atmosphere in 2009 is considered to be one of the strongest economic factors which are supposed to make the retail market quiet. So, the consumers are now opting for cheap, classy and affordable clothes these days. This can have an impact on the company turnover at the end of the year.
Moreover, the predomination of the highly recognised Clothing Company Primark must also be seen as a threat as their rise in the net profits since Winter 2008 has been significant. Gap must then find a solution in order to tackle these matters. The power of buying has drastically reduced, therefore, not many people are buying clothes, and many organisations had to downsize their organisation.
Because of the recession, people are not buying according to their preferred choice, but according to their revenues. This is going to create a flexible kind of trends to appear on the market. Therefore, the organisation will not go through this recession with good figures if they don't plan to produce some "credit crunch" sales or a new range of products just because of the need to adapt the changing environment to the organisation strategy.
Also, cultures are getting mixed in the fashion, and this makes the world be flexible in the clothing retail. For example, these days, we can see young people dressing properly, then using scarves wrapped around their necks like the babies' napkins. There are so many different styles coming out these days.
New information technologies have an impact on the working practices of the organisation. As a matter of fact, there are few things that we don't need to do or hassle for with the technology nowadays. The workforce is partly computerised, and the members of the organisation are getting more training on how to handle it.
Furthermore, the use of online shopping is a vital fact as the company gets more and more orders from their website. The only thing that they need to make sure is the stability of the supply channel in the organisation, which can also be assisted by a regular review of the inventory level. By doing this, they will avoid some inventory's matters, such as "out of stock" problems when customers are in the need of specific goods. They will have to find out what are the pre-requisites which have to be undertaken.
The other aspect of the model talks about the culture in the organisation, for companies of the size of Gap Inc., the tendency is to have a set of authoritarian borders in place between organizational levels, and for everything to be well renowned and strongly associated with 'company policy.' However, from our analysis we learned that even though Gap Inc. has a strong backbone running throughout the company from store managers to the executive team, they continue to preserve a level of relaxed attitude that ensures that the culture remains satisfying to all employees.
Impact of change management to Gap:
According to an analysis from Leavitt's Model, Gap Inc. is currently focusing on three priorities to increase their market share and return profitability to the shareholders: stabilize Gap, put the right leaders in place, and redesign the organization. A task identified for the reconstruction of the business is to do a better job of identifying the target customer, and delivering the right product in an attractive store environment. The BabyGap and GapKids businesses are doing well because the right product is being delivered in store environments that speak distinctly to the customer.
However, the Gap adult business has defined its customer too broadly. But it requires quite much attention to control the situation because of variety of impacts on employees. Furthermore, another task identified for rebuilding management and strength is to preserve, develop, and recruit the best talent in the industry with a focus on key creative positions such as design and merchandising. Many of Gap's issues were finely tuned by the lack of aligned leaders in key positions. It is imperative to promote a culture where creativity will thrive.
Concerning the structure of the organisation, Gap Inc.'s cost structure has developed considerably over the past years. The company made investments that they believed at the time would provide for future growth; however that increase has not shown up.
Managing Change Successfully:
Organisations at all levels need to develop this ability to collect and utilise information about their external and internal environments.
This requires the creation of a positive climate for change, the identification of future directions and the linking together of action by people at all level sin the organisation.
Linking strategic and operational change:
This is a two-way process of ensuring that strategic decisions lead to operational changes and that operational change influence strategic decisions.
Human Resources as assets and liabilities:
Just as the pool of knowledge, skills and attitudes possessed by an organisation is crucial to its success, it can also be a threat to the organisation's success if the combination is inappropriate or managed poorly.
Coherence of purpose:
This concerns the need to ensure that the decisions and actions that the decisions and actions that flow from the above four factors complement and reinforce each other.
Ten Commandments for executing change:
Analyse the organisation and its need for change.
Create a shared vision and common direction.
Separate from the past
Create a sense of urgency.
Support a strong leader role.
Line up political sponsorship.
Create an implementation plan.
Develop enabling structures.
Communicate, involve people and be honest.
Reinforce and institutionalise change.
Why Change initiatives fail?
Error 1: Allowing too much complacency.
Error 2: Failing to create a sufficiently powerful guiding coalition.
Error 3: Underestimating the power of vision.
Error 4: Under communicating the vision by a factor of 10 (or 100 or even 1000).
Error 5: Permitting obstacles to block the new vision.
Error 6: Failing to create short-term wins.
Error 7: Declaring victory too soon.
Error 8: Neglecting to anchor changes firmly in the corporate culture.
Managing Change pages (475-483)
There are three people-related activities that need to be undertaken:
Creating a willingness to change;
Sustaining the momentum;
Creating a willingness to change:
In order to create willingness for change, a sense of urgency, a feeling of dissatisfaction with the present, there are 4 steps an organization needs to take.
Make people aware of the pressures for change.
Give regular feedback on the performance of individual processes and areas of activity within the organisation.
Understand people's fears and concerns.
Publicise successful change.
Make people aware of the pressures for change. The organisation should inform employees on a continuous basis of its plan for future, the competitive/market pressure it faces, customer requirements and the performance of its key competitors. This should be a participative process where staff has opportunities to question, make comments and suggestions. Many companies now encourage staff at all levels to spend time meeting and working with customers.
Give regular feedback on the performance of individual processes and areas of activity within the organisation. This allows a company to draw attention to any discrepancy between actual performance and desired present and future performance.
Understand people's fears and concerns. One of the major mistakes companies can make when introducing change is to fail to recognise and deal with the real and legitimate fears of the managers and staff. Though people's concerns tend to focus on the proposed change, they will also be strongly influenced by the outcome of previous change in initiatives.
Publicise successful change: In order to reduce fears and create a positive attitude towards change, companies should publicise the projects that are seen as models of how to undertake change; and the positive effects change can have for employees. This does not mean that mistakes should be hidden or poor outcomes ignored, these should be examined, explained and lesson learned. Staff should, however, be encouraged to expect and set credible and positive outcomes for change programmes.
John P. Kotter (1996) "Leading Change" Harvard Business School Press, Boston, Massachusetts, p.20-21
The methods used in successful transformations are all based on one fundamental insight: that major change will not happen easily for a long list of reasons. Even if an objective observer can clearly see that costs are too high, or products are not good enough, or shifting customer requirements are not being adequately addressed, needed change can still stall because of inwardly focused cultures, paralyzing bureaucracy, parochial politics, a low level of trust, lack of teamwork, arrogant attitudes, a lack of leadership in middle management, and the general human fear of unknown. To be effective, a method designed to alter strategies, re-engineer processes, or improve quality must address these barriers and address them well.
The Eight-Stage Process of Creating Major Change:
Establishing a sense of urgency.
Creating the guiding coalition.
Developing a vision and strategy.
Communicating the change vision.
Empowering broad-based action.
Generating short-term wins.
Consolidating gains and producing more change.
Anchoring new approaches in the culture.
Examining the market and competitive realities.
Putting together a group with enough power to lead the change.
Creating a vision to help direct the change effort.
Having the guiding coalition role model the behaviour expected of employees.
Encouraging risk taking and non-traditional ideas, activities and actions.
Planning for visible improvements in performance, or "wins."
Hiring, promoting and developing people who can implant the change vision.
Creating better performance through customer and productivity-oriented behaviour, more and better leadership, and more effective management.
Economic and social forces driving the need for major change in organisations:
Faster and better communication
Faster and better transportation
More information networks connecting people globally
International Economic Integration:
Currencies linked via floating exchange rates
More global capital flows.
Maturation of Market in developed countries:
Slower domestic growth
More aggressive exporters
Fall of communist and socialist regimes;
More countries linked to the capitalist system
More large-scale change in organization
To avoid hazards and /or capitalize on opportunities, firms must become stronger competitors. Typical transformation methods include:
Mergers and acquisitions
Based on our analysis, our recommendation would be;
Through communication, the managers can spread the information and create an
Understanding, but also create opportunities to involve co-workers as well as identify their needs. Through that, the required leadership can be identified and applied in order to create the best possible opportunity for the department to develop. Finally, it is vital to make decisions based on what was communicated and needed aside from securing the implementation of it. Our research has showed that these three was proven to be vital in order to drive change, along with Kotter's (1996) 8 steps of successful changing. They were also
â€¢ adapt to needs and situation
â€¢ identify need
â€¢ share information
â€¢ involve co-workers
â€¢ base on communication and need
â€¢ secure implementation
â€¢ follow up
Through communication, the managers can spread the information and create an
Understanding, but also create opportunities to involve co-workers as well as identify their needs. Through that, the required leadership can be identified and applied in order to create the best possible opportunity for the department to develop. Finally, it is vital to make
Decisions based on what was communicated and needed aside from securing the implementation of it. Our research has showed that these three was proven to be vital in order to drive change, along with Kotter's (1996) 8 steps of successful changing. They were also the factors that underlined success in change management considered in this study.