Key risks
Gap Inc. is faced with demand risks, and this is because it does not address the significant changes that have happened in the fashion industry. There new entry in the fashion industry by foreign retailers like Zara and Aritzia. These new entrants are introducing new ways of doing business. If the company misses out on the consumer preference, they might end up losing their customers to their competitors. The company is faced with the supply risk, whereby there is a risk that things to do with trade might increase or even reduce the supply to the company. The control risk is also facing the company, whereby the company is faced with the risk that they might not be able to manage inventory effectively, or there may be a security breach which intern will raise the operating costs. The other risks facing the company are the environmental risks where a global expansion may be faced with the harsh economic conditions and even some the company’s vendors reluctant about to adhere to the set code of conduct.
Americans eagle outfitter are faced with the demand risk. They are afraid that they might not be able to respond to the changes in consumer preference in a quicker way, which will affect their profitability. The company believes that its market share will reduce due to high completion and price pressures from its competitors. The company is also faced with environmental risks. The economic factors such as disposable consumer income, the rate of employment, and even change in the foreign exchange rates and interest rates have an adverse effect on business.
Both Gap Inc. and American Eagle Outfitters are faced with the risk of losing the market share; this is due to the competitive nature of the business and new market entrance. The two companies need to be more aggressive so that they may be able to develop their products according to their consumer’s preferences. Due to changing economic conditions, the two companies are facing the risk of poor performance and low income.
10-K reports Item 1A.
According to 10- K report Item 1A. The risks recorded are similar to the ones identified and analyzed at American Eagle Outfitters. They feel they are unable to anticipate and change to their consumer’s preferences, and this could affect the company’s profitability. The company depends on the ability to know and act upon the fashion trends promptly for it to succeed. The company’s market share is profoundly affected by the increased competition and pricing pressures from its competitors. The company is faced with the challenge of knowing and responding fast to their consumer preferences better than its competitors.
At Gap Inc., the reported risks at their 10-K reports Item 1A. do compare with the risks that have been identified here. The company reported that it is faced with the risk of identifying clothing trends and consumer preferences. This would affect them since the industry is competitive in the United States and internationally. They are also faced with the risk of being unable to maintain and protect their company’s brand. The risk of not retaining their key personnel’s and even manage succession effectively was also reported