Business / Gap Inc Swot Analysis, Pesti, Five Forces

Gap Inc Swot Analysis, Pesti, Five Forces

Autor:  Maxi  09 July 2012
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Words: 3458   |   Pages: 14
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P.E.S.T.I Analysis

A P.E.S.T.I analysis was conducted for the company Gap Inc, P.E.S.T.I stands for Political, Economic, Socio-Cultural, Technological and International. Each of these are used to determine how strong or weak the company performs when these forces are analyzed.

Political forces entail local and foreign governments, regulator and deregulators etc. Therefore regardless of the size of an organisation they can be affected by this force. Economic forces usually entail the income levels in the society, interest rate, GDP etc the better the economy the more persons are willing to purchase. Socio-Cultural forces include social, cultural, demographic changes. An example is with a younger demographic, persons are willing to spend more money on products or services which are catered to leisure. Technological advancements are very important in enhancing the business those not up to date can be left behind. International forces include Globalisation and its impact on businesses.

Political

Political factors which affect Gap Inc and other businesses within the clothing industry include the implementation of the Multi-Fibre Agreement (MFA) by the WTO. This agreement is one of the main pieces of legislation that led to the number of suppliers which exist increasing the cost to the manufacturer. This created a closed market with respect to the importation of textiles and clothing from the developing countries to the developed ones and this in turn created new and numerous markets which were not effective and efficient in delivering products at low cost.

When the MFA ended in January 2005 China and the USA still continued with restrictions until 2008 which continued to be prohibitive in reducing cost in the supply of textiles.

Increases in minimum wage in China caused increases in the cost of manufacturing and thus forcing manufacturers to seek cheaper sources.

Domestically there was political stability. New entrants were easily allowed to enter and exit the market thus creating greater competition in the clothing industry and this in turn affected profit, with this sector already having a thin profit margin.

Economic

The global recession of 2008 was a major factor when we speak of the economic influences upon the industry. Consumers were price conscious and therefore not spending as much contrasting better economic times. This reduced the number of sales revenue which Gap Inc could acquire thus affecting profits. Also Gap seemed to cater towards the ...