In February, Cap Inc. announced that it would split into two independent publicly traded companies: one...

80.2K

Verified Solution

Question

Finance

In February, Cap Inc. announced that it would split into twoindependent publicly traded companies: one comprised of its OldNavy brand, and the second a yet-to-be-named company that includesits other brands like Banana Republic and Athleta. The plannedbreakup is an acknowledgment of the two chains' diverging fortunesand how much Gap has lost its once-powerful grip on Americanconsumers. For several years, Old Navy has outperformed its sisterbrands Gap and Banana Republic with its lower price-points andcatchy marketing. Old Navy now exceeds the original brand in sales,making up nearly half of Gap Inc.'s $16.6 billion of sales in2018.
In your opinion, what are the benefits and downsides tosplitting Gap into two firms? How did Gap's stock react to the newsin after-market trading? How would you explain this reaction? Willthe separation save the company in the long run? Please elaborateon your answers.

Answer & Explanation Solved by verified expert

4.2 Ratings (863 Votes)

Focused management When organizations become large and diversified it becomes extremely complicated to manage them as a single unit Also some business which are relatively new and are in growth phase in a company would need more focus while mature business need to be just managed to ensure continuity of business and profits Hence approach to management will be See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member