Gap Inc. in France
Since the 16th century, France has been the epicenter of high fashion. From elegant designs of the old royal court to the stylish threads made by contemporary French Fashion Designers like Christian Dior, Coco Chanel and Jean-Paul Gaulthier. I’m very sure we would all agree that location is a key factor in the success of a business and France is known to many if not all as the fashion capital of the world hosting many world renowned designers such as Gucci, Chanel, Prada and many more.
The country has advantages in being well known for fashion in that many consumers have often travelled to France to obtain firsthand experience of the beautiful glamorous lifestyles associated with the country of fashion. In terms of tourism, France is the most visited country in the world and hosts seventy-five million visitors a year. The success of the tourism industry through the fashion attraction has help the economy grow in that people from all over the world bring money from various countries to spend in France. What better place to set up a GAP, Inc. like banana republic.
With our growing base of loyal customers in our various different locations, both in our stores and online, we’re confident that shoppers in France will have a strong appetite for banana republic’s proposition of affordable luxury, as we open yet another location. Introducing something new and slightly different would most definitely be a challenge but would also attract and build a new customer relation experience. Identifying Global Business Opportunities Siddha Param of Worldwide Business Connection online magazine begins one of his articles with the quote “Opportunity is very often found in solving existing inefficiencies in a market”.
I believe this statement as true because identifying global markets; making a proper assessment the inefficiencies affecting that particular market; and making a strategic move to fill that need, is the formula for creating successful business. For instance, a local water purification company may be looking to expand their markets. They may see where a particular region has been affected with a natural ditsier, economic straits or any number of situations; but where left with the need of fresh water.
A smart opportunity would see the needs of that community and began to supply their goods to fulfill the demands that region. This would be an example of solving existing inefficiencies by identifying business opportunities. In most cases of supply and demand with in the global community has practically fulfilled the wants and need of all consumers. Leaving no room existing inefficiencies to be resolved. In the case of introducing GAP Inc. to France, an already established fashion haven, I would have to ask where the opportunity to succeed in this market is.
A possible opportunity would be establishing GAP as an affordable alternative for clothing competitors. In doing so, you would have created an inefficiency to be filled thus opening the door successful operations in a new global market. Analyzing International Competitors Potential Competitors: Gap Inc. competes with local, national, and global department stores, specialty and discount store chains, independent retail stores, and online businesses that market similar lines of merchandise, probably too many to mention.
But to name a few of these companies, we feel are similar to ours include brands like Zara (owned by a Spanish company Inditex) and H&M (from Sweden). This designer brands cater to the same target market as GAP Inc. they offer high quality clothes at an expensive price and the crowd is willing to pay that much to look good. Competitive Advantage: Gap’s style will be rooted in simple, easy to wear pieces that form the foundation of any wardrobe – the jean, the khaki, and the pocket tee. It will epitomize casual cool which transcends trend making it easy for people to express their personal style.
Our company offers a range of great versatile wardrobe solutions, delivering elevated design and luxurious fabrications at approachable prices while combining contemporary and traditional elements to evoke the brand’s essence of affordable modern. Assessment of the Geographic and Economic Environment of France Geographical Influences: France is located in Western Europe, bordering Belgium, Luxembourg, Germany, Switzerland, Italy, Monaco, Andorra, and Spain. The total area covered by France is 419,328 square miles.
This number includes France’s other territories located throughout the world including French Guiana (South America), Guadeloupe (Central America and the Caribbean), Martinique (Central America and the Caribbean), Mayotte (Africa), and Reunion (World). Metropolitan France covers an area of 342,807 square miles. France is the 43rd largest country of the world. In comparison, France is slightly smaller than the state of Texas (World Fact book, 2012). France lies between the Atlantic Ocean and the English Channel on the west and northwest, and the Mediterranean Sea on the south giving France access to numerous waterways.
Metropolitan France is mostly flat plains and gently rolling hills in the north and west, and the remainder is mountainous, especially the Alps in east and the Pyrenees in the south. France’s geographical location allows for a great business opportunity with access to many other European nations. The climate in France is also welcoming with generally cool winters and mild summers, but mild winters and hot summers along the Mediterranean. Major Products and Industries: France is a significant producer of uranium, bauxite, nickel, iron ore, crude steel, aluminum, and coal.
According to French Customs, France is the world’s second largest agricultural producer after the United States (Department of State, 2012). France’s agricultural productions include grain, dairy, pork, poultry, apples, beef, fruits, vegetables, and wine. Current Economic Conditions: The current economic conditions in France are looking good. France is currently transitioning from an economy that was mostly controlled by the government to one that relies more on a market driven system. Being able to operate under this new economic system will allow us to control more aspects within our company.
This is definitely something to consider in regards to our foreign direct investment (FDI). France’s current leaders remain committed to capitalism by looking to maintain social equity by means of tax policies, laws, and social spending (Department of State, 2012). France’s GDP is $2. 214 trillion dollars, which is 10th in comparison to the rest of the world (World Fact book, 2012). The French government expects GDP growth of 1. 0% for 2012 (Department of State, 2012). This is a great time for us to open a GAP in France knowing that the economic forecast is looking bright.
France is one of the founding members of the European Union (EU) and well respected by other members. The currency used in France as well as other countries within the EU is the euro. One euro is currently equaled to 1. 32705 USD. This is one negative aspect of our business proposal that we will have to deal with. The French government’s current economic policy aims to promote domestic growth and investments. Reducing the high unemployment rate and creating jobs has been a top priority (global EDGE, 2012). Infrastructure of France:
This will be a welcoming approach to help solve unemployment issues in France. Cultural Analysis: The ethnic groups within France include Celtic, Latin, Teutonic, Slavic, North African, Sub-Saharan African, Indochinese, and Basque minorities (World Factbook, 2012). Religions in France include Roman Catholic (Majority), Muslim, Protestant, and Jewish. France is home to the largest number of Muslims and Jews in all of Europe. The language spoken in France is French. Throughout history, French has been the international language of commerce and diplomacy (Department of State, 2012).
Some of France’s biggest cultural accomplishments include those made to fashion, cinema, and cuisine. Noteworthy, Paris, France is considered one of the fashion capitals of the world and is home to successful fashion brands such as Jean-Paul Gaultier Celine, Chanel, Balenciaga, Chloe, Dior, Givenchy, and Vuitton (ParisDigest, 2012). France’s love for fashion will open great opportunities for our business and help us to establish the GAP brand throughout Europe. The reputable fashion industry in France will can be beneficial for us in the development of our operation guidelines.
Social Institutions: France is made up of different ethnicities, religious backgrounds, and cultures which we must consider when executing business activities such as marketing. I would suggest that all employees heading to France to conduct business participate in a cultural awareness program. Informal Trade Barriers: Being a member of the EU has helped France and other European nations maintain healthy trade relations. However, there are some informal trade barriers that may hinder these trade relations. Communication failure is one of the biggest informal trade barriers that exist.
A current goal of the French government is to reduce budget deficits to help ensure sustainable growth. In 2008, in order to become more competitive, the National Assembly passed four bills to modernize the economy and reform the labor market (Department of State, 2012). President Sarkozy is credited with increasing the tax credit for investments in small and medium enterprises, as well as eliminating the annual flat business tax. These are definite signs that France is moving in the right direction in regards to their economy, and a great sign that this is the perfect time to establish our business.
Formal Trade Barriers: There are two factors that seem to motivate the trend toward globalization. These two factors include declining trade barriers and changes in communication, transportation technologies, and information (Hill, 2011). Regional economic integration has stimulated France’s economy by lowering trade barriers and emplacing fewer restrictions to help increase trade among members of the EU. However, if the EU decides to erect trade barriers on non-EU members, France will have to abide by them.
This could cause a negative impact on trade relations with other countries outside of the EU. Trade and investments between France and the United States are extremely strong. France currently ranks as the U. S’s eighth largest trading partner for total goods (Department of State, 2012). Promoting Global Business: Promoting global business is a priority among all EU members, especially France. France has worked to strengthen political and economic influences of the EU throughout the world. France’s drive to promote global business will aid us in the establishment of our business.
Tax Implications: Recently, France has been pursuing a policy to reduce corporate tax. Currently the nominal rate of corporate tax is 33. 33% higher than the European average. However, according to international comparative studies, France had the lowest business setup and operating costs in the EU (Invest in France, 2012). These costs include labor, facility costs, transport, utility costs and corporate tax. Selecting a Global Company Structure Strategic Planning In an attempt to broaden our customer base GAP Inc. looks to expand its market into France.
Today, Paris, along with London, Milan, and New York City, is considered one of the world’s fashion capitals, and the city is home or headquarters to many of the premier fashion houses, including Chanel, Dior, Vuitton, and many more. Fashion has been an important industry and cultural export of France since the seventeenth century. It is our desire to maintain a permanent presence in the region to capitalize on the long-term growth opportunities of that country. Entry Mode Entry will be gained by establishing facilities in the new market.
With the help of independent representatives and agents who reside in the new market, we look to construct and capitalize on the market available to us. Organizational Structure Due to the difficulty of working globally with a centralized functional structure, and the communication gaps that come from working in divisional silos, most modern companies employ a hybrid structure that combines elements of each. We look to do the same thing. There is no single “hybrid” structure, but rather a range from mostly-functional to mostly-divisional, which varies between companies.
We will have a central headquarters that sets strategy and high-level policy, combined with geographic divisions that determine their operational methods, and may have internal functional departments within the division. The Action Plan Our business operations will simply be an extension of what has already been established in the U. S. We look to provide France with its very own unique selection based on the trends of each market and region. Our objectives are to establish a long-term presence in the region through participating in one of the country’s most valued areas and also capitalize on the opportunities available within France.
One facility will be used as the starting point of this expansion. We will begin by uniquely designing and advertising clothing that fits the new region of France. With a reputation as one the worlds fashion capitals, we will have to adapt to a higher class of fashion and consistently keep on pace with the latest trends and styles. Specifically we will consult some independent designers residing in the new region and work with them alongside our own designers to collectively create new clothing and designs crafted just for this market.
This will be and ongoing process for the beginning of the entry into France. Once a solid customer base has been established we will look to expand and establish more facilities within France including Paris. Product and Target Market Planning Product Concept We have a unique opportunity here to expand the knowledge of our multifaceted company. Although GAP, Inc. is our parent company, Banana Republic, Piperlime, Athleta, and Old Navy are well recognized brands we are proud to provide affordable, classic American style clothing. Product Life Cycle
There is a previous history of opening locations within this country and we will continue with these vendors and contractors. Expansion projects in France for the entire brand have been on schedule, on budget, and well established within the community. Branding and Packaging With Stephen Sunnucks as President of Gap Inc. ’s International, we have the talent developed in fashion and local icons at New Look, which topped 700 locations throughout Europe. Colin Funnell runs Gap, Inc. Global Supply and has a record of dependable logistics.
Our brand has worldwide recognition for our leadership and for its reliable supply of goods. Target Market The primary target for the GAP stores, which are known as iconic, inventive, and classic American, is the original vision for the founder, Don Fisher, and that is the “Generation Gap” of the 1960’s, and thus the name “Gap”. This would be middle aged shoppers of both genders. The clothes in the Gap stores have a more timeless and properness about them. The style is not suggestive or skimpy at all. Banana Republic appeals to a more luxurious taste, fashion forward and youthful shoppers.
The shoppers here are more confident, mature, and sophisticated when choosing accessories and fragrance as well. Men and women in their twenties and up will enjoy the finer side of casual dressing. These stores even smell wonderful. Old Navy offers more whimsical and friendly side to affordable fashion for all ages of family members. Colorful and durable make it a working class family’s problem solver. Piperlime is where hot trends, fashion news, and boutique styling all meet. Our shopper here is getting a diverse and creative collection of ladies day and evening dressing.
Courageous and adventurous style is common and prices vary by item, so anyone can enjoy this eclectic boutique. Athleta is a line of ladies performance and exercise garments. Strong sponsorship in tournaments and health promotion make ladies seek this store out. From newborn pajamas to prom night accessories to a matriarch’s distinguished garments, we have many bases covered in this family of Gap, Inc. We grow with our clients, literally. We have an extensive presence in the region including national and international advertising, promotion, and logistics ensured by proven leadership and secure contracts.
Designing a Global Distribution Strategy Promotional Goals: As we continue to expand our presence internationally, we’re more aware than ever how our decisions affect the communities in which we do business. And our philosophy will be to seek to make a positive, lasting impact on the people in France. We plan to listen to our customers, and share their expectations. For us, that means looking deeper into our supply chain to ensure that we take a responsible path throughout the product lifecycle, from the source to our stores. Promotional Strategy:
We will intensify the presentation of denim and sweats, both of which we feel has been under merchandised, and merchandise additional categories such as accessories, outerwear and swimwear, and finally, create more of a departmental distinction between the men’s and women’s business, particularly the latter which requires more fixturing for hanging garments as the fashion component increases. Media Plan: Advertising is a way of promoting a business, product or service. Advertising introduces consumers to new products and services.
It provides exposure and legitimacy, so the more a business spends on advertising, the more consumers are aware a business exists. Here are some different methods of advertising that we would use; magazines- which will give us a way to target a variety of consumers, television-which will give viewers visual representations of our products, the internet- through the internet we will reach out to more households and business enterprises than any available medium, and lastly, another method of advertising that we would use is word of mouth. We would accomplish this by providing a satisfactory service and product to every customer.
Planning a Global Promotion Strategy Distribution Channel: Well-chosen channels constitute a significant competitive advantage, so our products will move directly from us to our consumers. Distribution Barriers: Opening a new location in France will be a good strategic plan for the company but the company will be exposed to social, political and economic risks in France. Import restrictions, including the alterations in tariffs and quotas could influence the importation of our products and add to the company’s cost or diminishes supplies.