No two words can scare a company or business more than "child labor." It's a hot-buttoned issue that brings controversy and emotions around whenever it is uncovered. Recently, a British news source broke the story of international retailer GAP using child labor in one of its Indian factories to produce clothes and accessories that would have hit the stores just in time for Christmas shopping. It should be clear that the GAP isn't
directly responsible but an independent subcontractor is to blame for the hiring (most children weren’t paid) of children to do the work.
Nonetheless, GAP faces a crisis just weeks before its most important time of year.
Going back to Guth and Marsh, this case can be evaluated using the RPCE formula.
Research- GAP did its research. They “launched an immediate investigation” as soon as the story about child labor violations within their company broke. They determined that one of their vendors that is responsible for a small portion of their orders was indeed using children as its main means of labor.
Planning- They have dealt with this situation before, so they seem to have been relatively prepared for the situation if it happened again. According to the press release published on GAP's website, they had a few tactics already planned. First, they cancelled the work order from that specific vendor. They also ensured that none of the clothes that came from that vendor would ever sell in stores. Finally, they called a meeting with all the suppliers in that region to go over and reinforce their child labor policy. This economic times article goes on to say that GAP also called a meeting with their domestic vendors. GAP has 90 people working for them to enforce their labor laws and last year alone stopped doing business with 23 companies for violating the rules they set forth.
Communication- As said, the GAP issued a press release on its website discussing the recent news. This is a good way to reach some of its publics. I was unable to find whether or not GAP was issuing a statement or release using any other means (postal mail, email, etc) to reach even more of its constituents. My guess is that they will.
Evaluation- Overall, I think the GAP did a pretty good job with the handling of this case. Their number one advantage was that this had happened before, and they were prepared for it. They stopped the shipments, called meetings to reinforce their policies, and got right to the problem as soon as it occurred.
Recommendation- I have a few recommendations for this case with GAP. First, they should put a link to the press release on their gap.com site so that public can be made aware of what happened. Second, they should launch investigations into other factories to make sure they don’t get hit with another bombshell in the coming weeks (reporters will be looking for a story). Last, since GAP owns Banana Republic and Old Navy, they should have a plan in case one of those stores comes under scrutiny.
No two words can scare a company or business more than "child labor." It's a hot-buttoned issue that brings controversy and emotions around whenever it is uncovered. Recently, a British news source broke the story of international retailer GAP using child labor in one of its Indian factories to produce clothes and accessories that would have hit the stores just in time for Christmas shopping. It should be clear that the GAP isn't directly responsible but an independent subcontractor is to blame for the hiring (most children weren’t paid) of children to do the work. Nonetheless, GAP faces a crisis just weeks before its most important time of year. 
5 comments:
Yo B-rye,
First and foremost, excellent Halloween costume on Wednesday. Who helped you put that together?
Second, and most important, good analysis of the case. After reading the press release that you hyper linked, I was agreed that GAP addressed this issue very well. At first, I was going to say that GAP should have taken some action to commit to reducing child labor overseas. But, before I could make that recommendation, I saw that the president of North America had included a quote in the release (toward the end) that already addressed this. He said that GAP already has a very comprehensive program in place to fight child labor and employee oppression overseas. Saying you're sorry is one thing, but actually taking action is another. Taking action improves credibility.
Solid work. Have a good weekend.
Thanks, Bryan. I agree that few things are as compelling as a case that involves child labor.
We blogged about the Gap case in our other case study section, too. I'll draw from some of my comments on that post and address your analysis.
It appears that Gap followed the standard crisis communication text book in terms of communicating swiftly, taking responsibility for carrying out remedial action, showing the actions they were taking to investigate and correct the problem, etc.
Personally, I think Gap made a mistake by waiting for the first media reports to respond to this problem. Gap should have gotten out ahead of the media coverage and made the initial announcement. Waiting for the first media queries and then responding with a press release makes them look like they were hiding something. Even worse, check out the first line of the press release that you linked for us in your post: "In response to media reports issued today, Gap Inc. (NYSE: GPS) issued a statement clarifying information surrounding a UK media report on the use of child labor in an unauthorized facility that produced a single product for Gap." Give me a break ... why would a public relations professional lead with a statement that suggests the only reason they are responding is because of media reports. This makes Gap look even more inept.
I'm also not convinced that Gap did such a great job anticipating this problem. Do you mean to tell me that the Gap leadership hadn't thought to send SOMEONE in the company to factories overseas to periodically check on conditions in its factories? Especially with recent cases like this, right? Come on, sounds to me like Gap wanted to remain blissfully ignorant of these abuses ... until someone called them to Gap's attention.
In defense of companies like Gap, Mattel, etc. that do so much business overseas, though, I know it's hard to track products through layers and layers of contractors and subcontractors, especially in countries that have questionable laws and controls to prevent such abuse. Your analysis also pointed out that it's hard for companies like Gap to track illegal subcontracting. Furthermore, to stay profitable, companies like this have to move a lot of their business outside U.S. borders, because of our high taxes, wage scales, etc. Still, you can't have issues like this going undetected in your company.
Thanks, Bryan.
Mark
Who are we kidding here? Anyone that's followed the child labor news within the past decade knows about GAP's major contribution in the realm of child laboring. How many times have they "launched an immediate investigation" about their child labor violations? Of course they've done their research. I'm sure they've been planning for this for quite some time.. like clockwork (no offense, Bryan). It's disgusting that they were prepared for this case, and would have had a few tactics already planned out incase it were to happen yet again. I understand that an independent subcontractor is to blame, and GAP isn't directly responsible, but come on. GAP isn't stupid. They knew what was going on. Heck, even I knew what was going on. That's pretty much all I have to say about this case. Again, nothing personal Bryan =)
Maybe it is just me, but this is the first time that I can remember hearing anything in the news about child labor and the GAP. Have I been asleep or is anyone else with me?
Hello BryAn,
First of all, I think you did a fantastic job on this blog post. I also think it's good that GAP had a contingency plan in place in case something like this happened....again. With that said, I also think it's terrible that the GAP WAS so prepared for this problem. Child labor is a serious issue and I feel like they are only pretended to care because they got caught.
Good analysis of the case and I agree with your recommendations.
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