International Trade and Regulation (GAP Case Discussion)

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INTERNATIONAL TRADE AND REGULATION (GAP Case Discussion) 1

InternationalTrade and Regulation (GAP Case Discussion)

InstitutionAffiliation

InternationalTrade and Regulation (GAP Case Discussion)

Internationaltrade is the exchange of goods and services between countries. Thistype of trade gives rise to world economy in which prices or supplyand demand are affected by world events in the political, social andeconomic bracket (Moon, B. E. (2013). Political change in Asia forexample will result in an increase in the cost of labor thereforeaffecting the manufacturing cost of American sneakers in Malaysiahence making the prices to go up.

ExecutiveSummary

Themerchandising and marketing team at GAP believed in a uniform way ofrunning the affairs of the firm but that didn’t really work as thecompany recorded losses both locally and internationally. The uniformsystem of merchandising and marketing was found to be inflexible,slow and even not customer friendly like the case of Japan. GAPfailed to study the market in terms of logical strategic selectionstrategy and how those markets will be exploited for maximum returns.

BackgroundHistory

GAP,incorporated is an American clothing and accessories retailer, whowas founded by a couple of ordinary American people (Donald and DorisFisher) in San Francisco, California in 1969. The denomination of thecompany comes from the gap of generations, adults and teenagers,regarding different opinions on various aspects of everyday life. Thecompany markets clothing products for different types of customers(men, women and babies) under various specialized brands: Gap, bananarepublic, Old Navy, Forth and Towne and Piperlime (Stern, N. Z., &ampAnder, W. N. (2013).

GAPChallenges

GAPwas not doing well locally, they decided to open up more chain storesinternationally so that they can mitigate the losses they wereincurring. The GAP team had no idea on how the international marketworks hence they employed the same system of marketing andmerchandising internationally which impacted a negative show to theircustomers. They didn’t research on the market well like for thecase in Japan which is a non-English speaking country.

GAPfailed in product modification to suite the market. Their competitorssuch as Uniqlo sourced their fashions cheaply from china thusundercutting half the price on GAP products. The sale of GAP productsbecame a challenge too because of the system of marketing. All theirproducts were in English to even in non-English speaking nations thusa poor mode of customer relation. Being a family business GAP wasfaced with a problem of nepotism, the family ran the business whichin some cases the decisions which were reached at were purely basedon favor.

Solutions

ForGAP to address the underlying issues it should purely work on the 4psof marketing (Saurabh Sigh, Balraj Kumar Sikka, Kumar Sikka Balraj,2012).

  • Pricing: prices vary from market to market and that’s what companies which are planning to expand their businesses need to understand. For Gap to work on their losses they need to research on the specific market well and come up with an acceptable price tag. Like for the case of Japan the prices were too high and this worked to the advantage of their competitors whose prices were low and they sold the same products.

  • Promotion: the major objective of promotions is to create awareness of a particular product. It’s mostly done through advertising something which was poorly done by Gap. Advertising should be done in a language best understood by the local market. Price tags and the language of communication for Gap was done in English something that market as a challenge to non-English speaking countries.

  • Product: All exporters must accept the fact that most successful products are modified for sale in overseas markets. Product modification come hand in hand with the price and that is why Gap wasn’t able to penetrate the market abroad as compared to their rivals.

  • Place: the market will work to your advantage if you understand their political, social, and technological aspects. What may be obsolete in one market may be ‘state of the art’ in another. Gap should bring on board the locals who best understand their country to do sales.

Justification.

  • Product modification is a key aspect if the company wants to penetrate the international market. Like for the case of coca cola which is best known internationally the taste of its flavors vary from country to country. French women tend to have bigger feet than English women, whilst Japanese women have smaller feet. Gap faced those challenges because most of its products were American designed hence they failed their customers.

  • Due to the fact that GAP failed it didn’t have the idea of bringing the 4ps of marketing on board. These are the ingredients that combine to capture and promote a brand or product’s unique selling points. They answer questions such as what do consumers want from your product or service. How does your product meet those needs? What current interactions do you have with potential clients? And so on.

References

Mavroidis,P. C. (2016). TheWTO agreements on trade in goods.Cambridge, Mass: MIT Press.

Bethlehem,D. L. (2012). TheOxford handbook of international trade law.Oxford: OxfordUniversity Press.