Management And Poor Communication Within New Management Essay

813 Words Apr 22nd, 2016 4 Pages
In the past year, the company GAP has seen a steady decrease in their stock prices which has been caused by a couple of different things. A change in management and poor communication within new management has caused sales to steadily decrease. One effect of this poor communication in management is that GAP’s inventory is not well organized, which hurts the net cash flow of the company. The old system used to order inventory was “by gauging the response [to the product], the management [was] able to forecast demand properly and release an appropriate production order to vendors and suppliers…” (“Gap Inc Left”). When the old manager left, “…it was expected that others would continue to build on his good work…” (“Gap Inc Left”). However, the reality of their inventory management is less than what the company would prefer. The company has also been closing a lot of stores lately which has led to a decline in their expected sales compared to previous years (“Why Did Gap”). Some useful tools to help get the company back on track would be a statement of cash flows for the operating activities and a sales budget. Since the change in management at GAP occurred, the inventory that they have been purchasing is far greater than what they are selling. Because of this the net cash provided to them from operating activities is lower than it could be if they let their inventory shrink a little. For example, let’s say that GAP’s net income for the year is around $200,000, and they have a…

Related Documents