The GAP clothing chain was founded in 1969, by Donald and Doris Fisher, and over the next few decades, it grew into America’s largest fashion retailer. Now, sales have slumped, with same-store sales either flat or declining in 29 of the last 31 months and down 9 percent in each of the last two years. The wheels began to come off in 2000 when the company’s efforts to attract teenagers alienated its twenty and thirty year old customer base. At the same time, CEO Mickey Drexler, whose brilliant management of the fashion side of the business had propelled GAP to success, had let the financial side of the business slip. With production costs out of control and a burgeoning inventory, Drexler was replaced with Paul Pressler, who rapidly closed underperforming plants, reduced inventory, and began carefully tracking the company's finances. Unfortunately, the fashion side was left with no real direction. As the new interim CEO Robert Fisher said, “We almost tried to institutionalize creativity.” GAP needed to find a way to balance its financial controls with the focus on design and creativity that made them a fashion competitor to begin with. Fisher emphasized the importance of Pressler’s controls; however, certain changes needed to be made to encourage creativity. Fisher decentralized certain operations, such as fabric purchasing, that were slowing things down and limiting the individual companies. While looking to maintain the control versus creativity balance, Fisher felt GAP needed to reestablish its focus. Ultimately, fashion, which brings in the customers, must come first. With numerous successful companies in the fashion space, there is a lot that GAP could gain from analyzing its competition. Abercrombie & Fitch has made significant success in the teen market. Chico’s, which particularly specializes in the quality of store personnel, has been leading the way recently with an eclectic approach to working women’s apparel. From an efficiency standpoint, GAP could also examine the efforts of Land’s End and its move to sell merchandise in Sears stores. GAP also needs to work on achieving a balance between operational efficiency and creativity. Offering employees incentives for finding creative ways to market and sell merchandise might be useful, as well as tacking performance on a company-wide scale. GAP should also allow design teams and purchasers to establish their own norms, which might be quite different from store operations. _____ occurred when Gap concentrated its efforts more on control and less on creativity. A. Control loss B. Cybernetic infeasibility C. Satisficing D. Suboptimization E. Feedforward control
The GAP clothing chain was founded in 1969, by Donald and Doris Fisher, and over the next few decades, it grew into America’s largest fashion retailer. Now, sales have slumped, with same-store sales either flat or declining in 29 of the last 31 months and down 9 percent in each of the last two years. The wheels began to come off in 2000 when the company’s efforts to attract teenagers alienated its twenty and thirty year old customer base. At the same time, CEO Mickey Drexler, whose brilliant management of the fashion side of the business had propelled GAP to success, had let the financial side of the business slip.
With production costs out of control and a burgeoning inventory, Drexler was replaced with Paul Pressler, who rapidly closed underperforming plants, reduced inventory, and began carefully tracking the company's finances. Unfortunately, the fashion side was left with no real direction. As the new interim CEO Robert Fisher said, “We almost tried to institutionalize creativity.” GAP needed to find a way to balance its financial controls with the focus on design and creativity that made them a fashion competitor to begin with.
Fisher emphasized the importance of Pressler’s controls; however, certain changes needed to be made to encourage creativity. Fisher decentralized certain operations, such as fabric purchasing, that were slowing things down and limiting the individual companies. While looking to maintain the control versus creativity balance, Fisher felt GAP needed to reestablish its focus. Ultimately, fashion, which brings in the customers, must come first.
With numerous successful companies in the fashion space, there is a lot that GAP could gain from analyzing its competition. Abercrombie & Fitch has made significant success in the teen market. Chico’s, which particularly specializes in the quality of store personnel, has been leading the way recently with an eclectic approach to working women’s apparel. From an efficiency standpoint, GAP could also examine the efforts of Land’s End and its move to sell merchandise in Sears stores.
GAP also needs to work on achieving a balance between operational efficiency and creativity. Offering employees incentives for finding creative ways to market and sell merchandise might be useful, as well as tacking performance on a company-wide scale. GAP should also allow design teams and purchasers to establish their own norms, which might be quite different from store operations.
_____ occurred when Gap concentrated its efforts more on control and less on creativity.
| A. |
Control loss |
|
| B. |
Cybernetic infeasibility |
|
| C. |
Satisficing |
|
| D. |
Suboptimization |
|
| E. |
Feedforward control |
The case of Gap, formerly a retail juggernaut in the fashion industry, demonstrates the delicate balance a corporation must achieve in a fast-paced market between financial control and innovative design. Gap found itself at a crossroads in the late twentieth century, with dwindling sales and a loss of focus that hampered its competitiveness. This circumstance caused a change in leadership and a rethinking of the organization's priorities. To remain relevant in the ever-changing world of fashion, Gap has to balance financial stability with rekindling its creative spirit. The next inquiry delves into what happens when Gap leans too heavily on control at the price of creativity.
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