Gap Ethics Case Analysis
TABLE OF CONTENTS
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I. Facts of the Case Background Company Profile TOWS Analysis II. Objectives of the Case III. Ethical Issue IV. Stakeholders V. Alternatives Courses of Action VI. Effects of Alternatives on Stakeholders VII. Choosing the Best Alternative Decision Criteria and Weights Evaluation of Alternative Courses of Action VIII. Discussion of Results IX. Implementation Plan X. References |
- Facts of the Case
- Company Profile
The Gap, Inc. is a global retail store. It was founded in 1969 by Donald Fisher and his wife, Doris in San Francisco, California. The store is currently operating with five distinct brands such as Gap, Banana Republic, Old Navy, Piperlime, and Athleta.
The company started as a single store that sells a variety of apparel for men, women, and children. In 1971, The Gap expanded into six stores. In 1983, Millard Drexler as newly appointed president initiated innovation by developing high-quality cotton clothes.
The Gap, Inc. established numerous stores in different countries. In 1995, the retail store had 1,348 well-located stores in the U.S. and Puerto Rico, 72 in Canada, 49 in the United Kingdom, and 3 in France. The company’s growth resulted to substantial sales and profit.
- Background – brief description of the situation
The work of producing products of Gap is labor-intensive. Meanwhile, labor is less regulated and much cheaper in developing countries. Thus, an intense pressure from imports depressing both wages and working conditions in the United States. According to study, the majority of the garment shops in the New York were sweatshops and 93 percent of the shops in the California had health and safety violations.
The apparel industry in the United States like the Gap purchased their clothes from the manufacturers across nations. The Gap contracted their clothes from 500 manufacturers around the world wherein 30% came from the United States and 70% were vendors from foreign countries.
One manufacturer of the Gap was a plant in El Salvador which was operated by Mandarin, International. EL Salvador was a constitutional democracy which allowed a free trade zone. There were several labor issues and troubles that transpired at the Mandarin plant. The Gap became aware and connected to the issue and tried to investigate the situation.
- TOWS Analysis
TOWS ANALYSIS
EX T ERNAL | OPPORTUNITIES
| THREATS 1. Gap’s suppliers are mostly sweat shops (p.2) 2. Growing economy of China versus the United States (p.2) 3. Negative publicity against Gap (p.1) 4. unenforced labor regulations (p.2) |
I NT ERNAL | STRENGTHS 1. GAP is a global brand which has a substantial market share (p.1,2) 2. Bargaining Power of Customers as Gap has lot of suppliers (p.1) 3. Gap has a good financial position (p.2) 4. Increasing employment rate in developing countries (p.2) 5. GAP adopted “sourcing principles and guidelines” (p.2) | WEAKNESSES 1. Lack of adherence to the sourcing principles and guidelines 2. Gap’s undisclosed investigation |
The TOWS are discussed in greater detail below:
Threats
- Gap’s suppliers are mostly sweatshops (p. 2)
Most apparel stores in the United States purchased their clothes from the manufacturers around the world. Apparently, 70 percent of Gap manufacturers are from foreign countries and 30 percent are from the United States. However, suppliers from both United States and developing countries are mostly sweatshops. Therefore, Gap needs to verify their suppliers as most of them have poor labor conditions.
- Growing economy of China versus the United States (p.2)
Several companies in the United States were struggling to survive because of their current working conditions. The apparel industry was under the intense pressure of imports. Many developing countries offers labor-intensive, less regulated and much cheaper labor costs. For instance, China wage rates in the apparel industry were one-twentieth of U.S. rates. Therefore, most apparel retail stores purchased their supplies from other foreign apparel manufacturing companies. As result, more companies in the foreign countries were encouraged to establish more businesses. Likewise, a rapid increase in the employment rate in the China and other countries and concurrently great depression in the U.S economy.