Bata Indonesia Strategic Management Analysis

Strategic Management
PT Sepatu Bata Tbk
Annisa Anjani/ 1206230353
Harrtyan Muhammad/1306452335
Mohd Rifdi Safwan/1606971501
Yohannes Ekaputra/1306408220
Faculty of Economics and Business
Strategic Management
Final Term Paper
PT Sepatu Bata Tbk
Annisa Anjani/ 1206230353
Harrtyan Muhammad/1306452335
Mohd Rifdi Safwan/1606971501
Yohannes Ekaputra/1306408220
Faculty of Economics and Business
Universitas Indonesia
Depok
2017

Abstract
Indonesia is among the biggest potential economies in the world. With one of the largest
growing middle class in their 260 million population, Indonesia is a very promising market for
every consumer goods products. Womenswear, menswear, and childrenswear are all expected to
record strong growth over the forecast period. Meanwhile, sports footwear benefited from the
fitness and urban lifestyle, which led to a significant increase in sportswear. The robust growth in
sales was also due to the popularity of football, with Indonesian spectators collecting jerseys and
footwear similar to those of their favourite players, as well as club merchandise.
International brands, such as Levi’s, Zara, Forever 21 and adidas are among the leading
international brands with significant shares in the apparel and footwear market. Domestic brands,
such as Triset, Yongki Komaladi and GT Man, also enjoy strong positions, especially in the
urban outskirts. It is expected that these brands will continue to witness demand from Indonesian
consumers and they are likely to continue to compete intensively for sales with their international
counterparts. Bata, which has already gripped enormous market share in ASEAN countries,
seems to be still wondering on how to conquer Indonesian market, as their brand seems to not
getting enough attention from Indonesians.
In 2016, there are a fast growing marketing channel in internet retailing.
Mataharimall.com offered the first click and collect option for consumers to shop. There are also
mapemall, owned by Mitra Adi Perkasa, that focusing more on high-end products. Many brands
also developing their own online stores such as adidas.co.id to sell products. E-commerce could
be a huge opportunity for the footwear companies, but also can be tricky, because it allows
newcomers that capitalizing low marketing costs through the platforms.

Introduction
Background
T&A Bata Shoe Company or popularly named Bata was registered in Zlin, Czechoslovakia in
1894 by three siblings of Bata family called Tomas, Anna, and Antonin Bata. In 1897, Bata was
produced their first shoes in the form of mass production named Batovka. Bata operates
domestic and international. There has been in more than 30 countries by 1938. International
operations were differentiated by six regions: Africa, Asia-Pacific, China, Latam, Europe, and
South Asia. Bata Indonesia or PT Sepatu Bata, Tbk included in Asia-Pacific region. PT Sepatu
Bata, Tbk is an associate company of the Bata Shoe Organization established since 1931 in
Indonesia as shoes importer for the first time before they could sell their shoes directly to
customers. Bata Indonesia has one huge factory located in Purwakarta, West Java since 2008. All
stages of manufacturing process from raw materials until finished goods will be done in
Purwakarta factory. Bata Indonesia operates domestically while they exports the shoes to several
neighborhood countries such as Thailand, Singapore, and Malaysia. For some prosperous years
in the past, Purwakarta factory could produce up to seven million pairs of shoes. “North Star”,
“Marie Claire”, and “Weinbrenner” are several licensed brands under Bata Indonesia. Up to
2015 there were 536 of Bata stores located spread all over Indonesia. In 2009, Bata opened the
largest and flagship store in Artha Gading Mall, North Jakarta as one of the business
achievements of Bata Indonesia that has been accomplished throughout the years.
The presence of Bata in Indonesia has been 86 years as a legend of a shoe brand. Related to their
vision they wanted to produce high quality shoes with an affordable prices that is accessible for
everyone. To be known, their target market are people in middle class income. In Indonesia, Bata
has been on top of mind on kids and parents since Bata identic with “Back to School” slogan and
always being referred by parents to buy school shoes for their children. Bata Indonesia are
consistent with their positioning as school shoes for students and therefore they could earn high
profit more than 50% or equal to 1.7 to 2 million pairs of shoes (Darmawan, 2011). As time goes
by, Bata Indonesia added several new licensed brands to make the Bata brand remain up to date
and could catch different target segments. Those licensed brands such as North Star and
Weinbrenner targeting young people, Power targeting for young and adult who loves sports, and
Marie Claire targeting for women. However, nowadays young people in Indonesia are not really

well known with the Bata brand. They only heard or read the brand name but never buy one of
the products.
Bata realized that to grab the attention of young people they could not rely on just added several
new licensed brands, they have to broaden the marketing communication as part of their strategy.
Bata admitted that they were lack of promotion, both on conventional and online media. It was
the biggest challenge when Bata Indonesia have to compete with FMCG (Fast Moving
Consumer Goods) brands through conventional media such as television. Moreover, FMCG
brands have bigger investments on marketing communication. While in 2014 and 2015 Indonesia
faced unstable economic condition that affects Bata’s financial. This makes Bata reconsidered
when they want to choose the media to promote their products. In 2014, the investment of
marketing communication only Rp 14 million that makes Bata chose to spend about 70% for
Below The Line (BTL) such as trade promo or consumer promo by giving discounts and only
30% was spent for radio and television advertisement (Wulandari, 2015).
Promoting the products through online media will give significant results to the company. Yet, it
will boost company’s sales and brand recognition towards the products. Nowadays online media
plays an important role in daily activities. Particularly, young people were surrounded and
remain using the social media every day. Based on data from CNN Indonesia, there were 22.3
million of young people age ranging from 20 – 24 years old or equal to 82 percent of their
population that are internet or social media users (Agung, 2016). By looking at this fact it will be
beneficial for Bata to do online promotion in order to reach the Indonesian youth instead of
through television or radio.
Another obstacle was the fast growing of e-commerce business or online shop in Indonesia for
recent years. Based on BPS, the number of e-commerce business in 2016 was around 26.2
million, has increased 17 percent within 10 years (Deny, 2016). This is because Indonesia is one
of the world’s largest internet users. At the end of 2016, the total number of internet users whom
shopping online was reached 24.74 million peoples and average spend around three million
Rupiah a year (Hadi, 2017). This obstacle could not be avoided by Bata Indonesia. In fact, the
sales of Bata had declined for some years. Several advantages of online shop are they tend to

offer lower price than the brick and mortar prices; consumers found that online shopping are
more convenient and they could easily found many information related to the products that they
want to buy.
By referring to those problems that could arise in the company, developing proper strategies
become one of the important thing for the company to be successful in the years ahead. A proper
strategy should align with clear vision and mission of the company. Developing a proper strategy
have to considering many aspects such as company’s internal strengths and weaknesses; external
strategic management audit; competitive advantage of the company; organizational design;
analyzing business and corporate strategy that fit to company’s objectives. Thus, our group are
attempt to analyze the strategic management of Bata Indonesia and creating a few of new
strategies that the company should implement.
Methodology
The methodology used for this paper is desk research or secondary research which we use the
already existing data to be collated to enhance the effectiveness of the study. The data were taken
from annual report 2015, company’s websites, Bata Life Sustainability Review 2015, several of
e-book, and many other supportive websites (i.e. Euromonitor and CNN Indonesia). The period
of taking the data were from April 15, 2017 to May 26, 2017.

Industry Life Cycle Bata
Industry life cycle has five different stages
decline—that occur in the evolution of an industry over time (Rothaermel, 2015).
Introduction
Introduction stage starts when an individual inventor or company launches a successful
innovation. (Rothaermel, 2015). In the summer of 1895, Tomáš found him
difficulties, and debts abounded. To overcome these serious setbacks, Tomáš decided to sew
shoes from canvas instead of leather. This type of shoe became very popular and helped the
Analysis
Industry life cycle has five different stages—introduction, growth, shakeout, maturity, and
the evolution of an industry over time (Rothaermel, 2015).
Source: Rothaermel, 2015
innovation. (Rothaermel, 2015). In the summer of 1895, Tomáš found himself facing financial
introduction, growth, shakeout, maturity, and
the evolution of an industry over time (Rothaermel, 2015).
self facing financial

company grow to 50 employees (Bata.com, 2017). That is the begining of Bata and its
introduction stage.
Growth
Market growth accelerates in the growth stage of the industry life cycle (Rothaermel, 2015).
After the initial innovation has gained some market acceptance, demand increases rapidly as
first-time buyers rush to enter the market, convinced by the proof-of-concept demonstrated in the
introductory stage (Rothaermel, 2015). The basis of competition tends to move away from
product innovations toward process innovations (Rothaermel, 2015).Process innovations are new
ways to produce existing products or to deliver existing services (Rothaermel, 2015). In 1904,
Tomáš read a newspaper article about some machines being made in America. Therefore, he
took three workers and journeyed to Lynn, a shoemaking city outside Boston, in order to study
and understand the American system of mass production. After six months Tomáš returned to
Zlin and he introduced mechanized production techniques that allowed the Bata Shoe Company
to become one of the first mass producers of shoes in Europe. In the introductory stage, the level
of product innovation is at a maximum because new features increasing perceived consumer
value are critical to gaining traction in the market. In contrast, process innovation is at a
minimum in the introductory stage because companies only produce a small number of products,
often just prototypes or beta versions. The main concern is to commercialize the invention—that
is, to demonstrate that the product works and that a market exists (Rothaermel, 2015).The
introduction of mechanized production techniques, including the first steam-driven shoemaking
machines, initiated a period of rapid modernization that allowed the company to become one of
Europe's first mass producers of shoes.
● Strategy Analysis Bata in Growth Stage
In growth stage, Bata starts to export their product. Bata’s initial export sales and the first
ever sales agencies began in Germany in 1909, followed by the Balkans and the Middle
East. Bata shoes were considered to be excellent quality, and were available in more
styles than had ever been offered before. By 1912, Bata was employing 600 full-time
workers, plus another several hundred who worked out of their homes in neighbouring
villages (Bata.com, 2017).
Why Start Export? By starts exporting, Bata want to achieve economic of scale by:

Spreading Fixed Costs Over Larger Output
By increasing the output, the cost per unit can be reduced. This is due as dividing the fix
cost allocated to each unit by the larger amount of product. As the divisor increases, the
allocation of fix costs to each unit becomes smaller and reduces the total unit cost. Bata
increased its production capacity by purchasing mass production machine shoes and
loading in to its production process. By the increase in production capacity, the market
needed to absorb the product is getting bigger, so it is needed to expand the market which
one of them is to export.
Employing Specialized Systems And Equipment
By increasing the amount of production, the company can also gain experience curve on
its employee. The more accustomed they use the tool of production then the production
capacity of each employee will increase. Resulting in efficiency of production time that
will lead to cost reduction.
Expand the market
Firms that operate internationally expand the market for their products, realize location
economies by locating value creation activities where they can be performed most
efficiently, realize greater cost economies from experience effects, and earn a greater
return by leveraging skills developed in foreign markets by transferring them to other
parts of the organization (Charles, 2012). By expand the market, beside they can make
production larger so they can achieve economic of scale in production, they also can
reduce cost of production itself by selecting the most efficient factor prouction from
around the world.
Shakeout
Rapid industry growth and expansion cannot go on indefinitely. As the industry moves into the
next stage of the industry life cycle, the rate of growth declines. Demand was largely satisfied in
the prior growth stage. Given the large market size achieved from the growth stage, any
additional market demand in the next stage is limited.
At this stage Bata experiencing the domestic market that getting narrow due to the fulfillment of
needs by its product and the market abroad that increase in competition. The business strategy

that used by Bata is to build production facilities abroad, especially in the country that has a
developed market.
● Strategy Analysis Bata in Shakeout Stage
By 1931 Bata built factories in Germany, England, the Netherlands, Poland and in other
countries. Why Built Facilities in Other Country?
Domestic market limited
The first reason is because of the increasingly limited market in the country. By building
production facilities abroad, Bata can get a wider market to enter.
Market start to grow in other country
Overseas markets that previously reached by export strategy can not keep pace with
market developments that occur overseas. By building facilities in competing countries,
Bata can increase the capacity of foreign market demand fulfillment more than export
strategy.
Other competitor start to produce
In addition, the growing market began to emerge competitors who starts to produce in
their respective countries.
Reducing transportation cost
By build production facilities in competing countries, Bata can also reduce the
transportation costs that incurred when using export strategies. As the market grows, the
demand for the country will also grow. If you continue to fulfill the request by way of
export, there will be increased in transportation costs due to the large amount of
shipments.
Local Responsiveness
As the competition in foreign countries increased, the key to competition is the demand
responsiveness. By building production facilities in the competing countries Bata will be
able to increase responsiveness of demand that can improve competitiveness in the
competing country.
New Product Innovation
At this stage, Bata is also initiating new product innovations. That thing done by Bata to
increase competitive advantage in the form of product diversification. In addition, with
new product innovation, Bata can also get or start a new life cycle product. The

Movement of Bata is in line with the theory in Rothaermel (2015) books which says that
the importance of developing new products in order to diversify the products to achieve
new life cycle products. The purpose of starting a life cycle product is to achieve stage
growth to mature again where it can generate the most profit.
Mature
In this stage, Bata starts to expand to developing country and closed facilities on developed
country. In mature stage, key strategy to compete in the market is cost leadership strategy. For
that reason, we conclude the reason why Bata started expansion into developing countries and
closed production facilities in developed countries. This is due to the increasingly rise on
production costs in developed countries due to high labor costs. To reduce cost for competing,
Bata began to build production facilities in developing countries due to the cost of workers and
other cheaper production factors.
Export to developed country
Goods that have been produced in developing countries are marketed in domestic market, and
will be exported to developed countries. By that way, Bata can compete in developed countries
with competitive cost.
● Strategy Analysis in Growth Stage
In this stage, its seen that Bata seems changed its strategy from Global Standard Strategy
to Multidomestic Strategy. Global Standard Strategy is strategy that attempting to reap
significant economies of scale and location economies by pursuing a global division of
labor based on wherever best-of-class capabilities reside at the lowest cost (Rothaermel,
2015). Multidomestic Strategy is strategy that pursued by MNEs that attempts to
maximize local responsiveness, with the intent that local consumers will perceive them to
be domestic companies; the strategy arises out of the combination of high pressure for
local responsiveness and low pressure for cost reductions (Rothaermel, 2015).
From its new base in Canada, the company gradually rebuilt itself, expanding into new
markets throughout Asia, the Middle East, Africa and Latin America. Rather than
organizing these new operations in a highly centralized structure, Bata established a

confederation of autonomous units that could be more responsive to new markets in
developing countries.
As the table shown, in Global Standardization
that Localization or Multidomestic Strategy. So does Bata changed the centralized
structure into decentralized one. Bata change from Global standard to Multidomestic to
maximize local responsiveness by their pro
many developing country that has different market condition, it’s better to manage each
by decentralize decision maker. So it can be more responsive to the market and it will not
be generalized by one perspective.
Bata Indonesia Now
Bata now in the maturity stage. Because the growth of industry is low (around 7%) and the
market share is High in Indonesia (Euro Monitor, 2017). Last year company decided to dispose a
non-operational assets to fund and focus on core bu
distribution. Proceed from the sale of asset was used to strengthening working capital position
and further capacity negotiation with suppliers for cost optimization. The industry still growing
(even its not as high as growth stage), but the amount of competitor rising, makes Bata more
aware about the competition. In addition, Bata also moves into the online sector to marketing its
products. The number of competitors is increasing as the market opens up for ne
Source: Charles (2012)
As the table shown, in Global Standardization vertical differentiation is more centralized
maximize local responsiveness by their production facilities. As the market grown in
be generalized by one perspective.
operational assets to fund and focus on core business initiatives related to manufacturing and
as high as growth stage), but the amount of competitor rising, makes Bata more
products. The number of competitors is increasing as the market opens up for ne
vertical differentiation is more centralized
duction facilities. As the market grown in
siness initiatives related to manufacturing and
as high as growth stage), but the amount of competitor rising, makes Bata more
products. The number of competitors is increasing as the market opens up for newcomers due to

an evolving online platform that reduces the barrier to entry of every businessperson.New
Comer, New Product
Analysis
Indication of Decline Stage (BCG Matrix)
Total net cash used for operating activities amounted to Rp19 billion. Net cash pr
investing activities is Rp92 billion as the result of the sale of fixed assets. Net cash used in
financing activities is Rp44 billion. At the end of 2015, the Company was able to record an
increase in cash and cash equivalents amounted to Rp28
and cash equivalents amounted to Rp748 million (Bata
Annual Report, 2015).
Why Selling Asset?
Through the BCG Matrix approach, Bata has been in
the cash cow position and moving slowly toward the
dog. This can be seen from the managerial decision
taken by Bata to sell its assets to put the improvement
process in its business. Such a thing can be called the
harvest strategy (Rothermel, 2015). A harvest strategy
is a business plan for reducing or altogether
eliminating investment in a particular product, brand or
line of business due to a company's management determining the required expense to attempt to
boost sales any further would not be justified by likely future revenues from the product or brand
line (Investopedia, 2017). By implementing this strategy, they believe that company will be able
to face high competition and continue to be one of the best companies in footwear industry.
Why Process Innovation Important?
Why do Bata starts paying attention to the process i
and decline stages, the competition will move to cost and also quality (Rothaermel, 2015).
Paying attention to process Innovation will be important because companies can eliminate or
reduce inefficient processes. By that way the company can reduce waste that will impact on the
reduction of cost from the production process.
Indication of Decline Stage (BCG Matrix)
Total net cash used for operating activities amounted to Rp19 billion. Net cash pr
increase in cash and cash equivalents amounted to Rp28 billion, compared to last year in cash
and cash equivalents amounted to Rp748 million (Bata
Through the BCG Matrix approach, Bata has been in
the cash cow position and moving slowly toward the
from the managerial decision
taken by Bata to sell its assets to put the improvement
process in its business. Such a thing can be called the
harvest strategy (Rothermel, 2015). A harvest strategy
is a business plan for reducing or altogether
nvestment in a particular product, brand or
2017). By implementing this strategy, they believe that company will be able
Why Process Innovation Important?
Why do Bata starts paying attention to the process innovation of their business? In the mature
By that way the company can reduce waste that will impact on the
reduction of cost from the production process.
Total net cash used for operating activities amounted to Rp19 billion. Net cash provided from
billion, compared to last year in cash
2017). By implementing this strategy, they believe that company will be able
nnovation of their business? In the mature
By that way the company can reduce waste that will impact on the

According to Heizer and Render (2014) at mature and decline stage, cost reduce and control will
be critical in competition.Cost reduce and control can be done in various ways such as:
Cutting Intermediary cost: This can be done by cutting the distribution step from the
manufacturer to the hands of the consumer (Heizer & Render, 2014).
Control Inventory: Inventory cost can be reduced by managing it in accordance with the needs
of markets. Inventory cost can reach 80% of the total expense of a business (Heizer & Render,
2014). The accumulated inventory is considered as stuck money and it is the waste. It will be
very important to be well managed. One of the system for managing inventory is the Just in
Time (JIT) concept. In JIT concept goods or products will be held or produce in accordance with
the amount and time when it’s needed, so it can minimize the amount of in
Why Online?
Why do Bata starts move into online platforms? Today the Internet has become a growing as
buying and selling platform around the world. By 2016, the total population of Indonesia has
reached 259 million. The condition of internet usage
number of active users has reached 30% more than the total population of 88 millions (UN & US
Cencus Berau, 2016).
The technological changes have changed the way people communicate or connect to each others.
People can access any kind of information that has been uploaded to the internet, whenever and
wherever. It is used by various business people to increase its existence among the public or
consumers. The development of the Internet platform opens up a new opportu
online buying activity called e-commerce. In addition, internet platform also has an impact on
reducing barrier to entry for newcomers, as they can easily enter the market by using the internet.
Source: Heizer & Render, 2014
competition.Cost reduce and control can be done in various ways such as:
: This can be done by cutting the distribution step from the
manufacturer to the hands of the consumer (Heizer & Render, 2014).
ost can be reduced by managing it in accordance with the needs
important to be well managed. One of the system for managing inventory is the Just in
the amount and time when it’s needed, so it can minimize the amount of inventory.
reached 259 million. The condition of internet usage in Indonesia itself as shown below, the
can access any kind of information that has been uploaded to the internet, whenever and
consumers. The development of the Internet platform opens up a new opportunity to conduct an
commerce. In addition, internet platform also has an impact on
competition.Cost reduce and control can be done in various ways such as:
: This can be done by cutting the distribution step from the
ost can be reduced by managing it in accordance with the needs
important to be well managed. One of the system for managing inventory is the Just in
ventory.
in Indonesia itself as shown below, the
can access any kind of information that has been uploaded to the internet, whenever and
nity to conduct an
commerce. In addition, internet platform also has an impact on

By using the Internet platform in conducti
efficiency impacts can be generated as follows:
Source: UN & US Cencus Berau, 2016
E-commerce Impact on Business Efficiency
Information free to multiplied:
reprinting such as traditional marketing mode (magazines, pamphlets and more) (Petras, et al,
2007).
Broadway advertising: Broad advertising mode because the internet can be accessed by anyone
wherever that makes the range is wider (Petras,
Transaction and execution: E-
other execution in the purchase such as payments using mobile banking or credit card through
the online platform (Petras, et al, 2007).
Lower final price: E-commerce also has an impact on lower the final prices, as there are
intermediary fees or costs associated with traditional distribution that have been eliminated. Such
as the cost of maintaining physical stores when using traditional distribution chan
al, 2007).
In conclusion, online platform will reduce the cost of business activities, especially in
intermediary cost and also could reach customer widely. With the reasons already described, we
conclude that Bata’s decision in making int
in facing the market conditions and the competition that in accordance with maturity stage to the
decline.
By using the Internet platform in conducting buying and selling activities, or e-
efficiency impacts can be generated as follows:
Source: UN & US Cencus Berau, 2016
commerce Impact on Business Efficiency
Information free to multiplied: Uploaded information can be multiplied with
Broad advertising mode because the internet can be accessed by anyone
wherever that makes the range is wider (Petras, et al, 2007).
-commerce can also facilitate easier payment method and also
the online platform (Petras, et al, 2007).
commerce also has an impact on lower the final prices, as there are
as the cost of maintaining physical stores when using traditional distribution chan
conclude that Bata’s decision in making integration strategy to the digital platform is appropriate
-commerce, some
Uploaded information can be multiplied without the cost of
Broad advertising mode because the internet can be accessed by anyone
commerce can also facilitate easier payment method and also
commerce also has an impact on lower the final prices, as there are
as the cost of maintaining physical stores when using traditional distribution channels (Petras, et
egration strategy to the digital platform is appropriate

Corporate Strategy
For the business level strategy that used by PT Sepatu Bata is cost
PT Sepatu Bata is the expert shoemaker and PT Sepatu Bata offers a complete range of formal
and casual footwear with distinct design, high quality and competitive fit and comfort, while
maintaining an affordable price.
Low Cost Strategy (cost leadership) accentuation on creating standard items (comparable in all
regards) the cost per unit is low. PT Sepatu Bata offer items that are shoddy and for the most part
gone for customers who are generally effortlessly affected by mo
utilizing cost as the deciding element comes about. Regarding buyer conduct, a procedure of this
kind for PT Sepatu Bata is appropriate to the necessities of clients who are arranged conduct of
low-inclusion, when shoppers a
(relative) does not require item separation, or if there are a substantial number of buyers have a
bargaining power essentially.
Particularly in product advertises, this technique not just makes
withstand the value rivalry going on additionally can be the market pioneer (market leader) in
deciding the cost and guarantee an abnormal state of market increases (129.5B Idr) and balanced
For the business level strategy that used by PT Sepatu Bata is cost leadership strategy which are
Cost Strategy (cost leadership) accentuation on creating standard items (comparable in all
gone for customers who are generally effortlessly affected by movements in (value delicate), or
inclusion, when shoppers are not too think about the contrasts between various brands,
Particularly in product advertises, this technique not just makes the PT Sepatu Bata ready to
leadership strategy which are
Cost Strategy (cost leadership) accentuation on creating standard items (comparable in all
vements in (value delicate), or
re not too think about the contrasts between various brands,
the PT Sepatu Bata ready to

out by method for forceful path in productivity and cost adequacy. Wellsprings of cost viability
(cost effectiveness) is differed. These incorporate the usage of economies of scale (economies of
scale), interest in the best innovation, sharing expenses and information in inward association,
the effect of the expectation to absorb information and experience (learning and experience
curve), streamlining of limit use, and great access to crude materials or dispersion channel. On a
basic level, the principle reason of Bata Shoe actualize combination methodologies to the
upstream (backward integration), downstream (forward integration), or to the side (horizontal
integration) is to get the advantages of this minimal effort technique.
PT Sepatu Bata is eco—efficient operations which is all their production facilities are equipped
with transparent roofs to optimise natural light during daylight hours, and adopt various other
eco-measures, such as energy efficient machinery and bio-mass boilers. To support their eco-
efficient operation, PT Sepatu Bata also develop an effective waste management and recycling.
The company reduce their overhead costs by recycling materials and end-of-life shoes,
minimizing factory waste, and reducing waste to landfill in all our facilities. In effort to make
their product closer to the costumer, PT Sepatu Bata chooses local distributor to do e-retailing,
direct sell, and to the deployment of direct selling programmes in Latin America, Zimbabwe and
Rural Sales Program in Bangladesh and they want to bring their shoes closer to their customer.
Cost Drivers: Economies of Scale
Economies of scale is the cost advantage that emerges with expanded yield of an item.
Economies of scale emerge on account of the reverse connection between the amount delivered
and per-unit settled expenses; i.e. the more noteworthy the amount of a decent delivered, the
lower the per-unit settled cost on the grounds that these expenses are spread out over a bigger
number of products. Economies of scale may likewise lessen variable expenses per unit in view
of operational efficiencies and cooperative energies. Economies of scale can be arranged into
two principles sorts: Internal – emerging from inside the organization; and External – emerging
from superfluous variables, for example, industry size.

In PT Sepatu Bata, the cost drivers through employ specialized in equipment. In 2012, PT Sepatu
Bata done with the installation of a new rotary machine for pre
finishing lines to produce medium to high quality moccasin shoes of international standard for
both domestic and export markets in their company. Then in 2013, new machinery and
technologies were introduced into the PT Sepatu bata to standardize production and m
manufacturing process more efficient, guaranteeing higher yields, better quality at lower
production costs and productivity increased by 20
The one of advantage for PT Sepatu Bata is the huge factory. all manufacturing activities for the
shoes were streamlined to Purwakarta into four main areas which are Cemented closed,
Cemented Sandal, DIP and Injected plastic. Its also not only meeting all Indonesian market
requirements but also producing product lines for other BSO companies such as Sin
Malaysia, Thailand and Kenya.With one renovate manufacturing unit, the factory will manage to
successfully maintain the same annual production of 7 million pairs of shoes or more than that.
installation of a new rotary machine for pre-forming uppers and separate
ing lines to produce medium to high quality moccasin shoes of international standard for
technologies were introduced into the PT Sepatu bata to standardize production and m
production costs and productivity increased by 20 – 30%.
hoes were streamlined to Purwakarta into four main areas which are Cemented closed,
requirements but also producing product lines for other BSO companies such as Sin
forming uppers and separate
ing lines to produce medium to high quality moccasin shoes of international standard for
technologies were introduced into the PT Sepatu bata to standardize production and make the
hoes were streamlined to Purwakarta into four main areas which are Cemented closed,
requirements but also producing product lines for other BSO companies such as Singapore,

Gross Profit Rate = Gross Profit / Net Sales
= 450 499 586 / 1008 727 515
= 0.447
Return on Sales = Net Income / Net Sales
= 69 755 185 / 1 008 727 515
=0.102
Return on Assets = Net Income / Total Assets
= 69 755 185 / 680 685 060
= 0.102
Current Ratio = Current Assets / Current Liabilities
Gross Profit Rate = Gross Profit / Net Sales
= 450 499 586 / 1008 727 515
Return on Sales = Net Income / Net Sales
= 69 755 185 / 1 008 727 515
Return on Assets = Net Income / Total Assets
= 69 755 185 / 680 685 060
Assets / Current Liabilities

= 435 578 754 / 257 337 714
=1.693
Debt Ratio = Total Liabilities / Total Assets
= 266 323 649 / 680 685 060
=0.391
Equity Ratio = Total Equity / Total Assets
= 394 361 411 / 680 685 060
=0.579
Debt-Equity Ratio = Total Liabilities / Total Equity
= 266 323 649 / 394 361 411
=0.675
Core Competencies
According to Hamel and Prahalad (1990), core competencies are a bundle of skills and
technologies that possessed by the company or organization that are very difficult or impossible
to match. Although many other factors that very important for companies working in current
complex environment, core competencies is still recognized as one of all factors that can be a
difference in winning competition.
In order to attract younger potential customers, which have many different preferences on
fashion products and marketing approach, Bata already done several actions to adapt their
marketing campaign for the younger people. Indonesian internet and social media penetration is
growing very quickly, and large part of the growth is moved by younger generations. Bata
should realize and capitalize this change and opportunity. They also should realize that the
marketing style for younger people is different to those for other generations. According to
eMarketer, women and men ages 18 to 34 are more likely than 35 to 64 year olds to engage in
nearly every online shopping activity, with 40% of males and 33% of females in the younger age
group saying they would buy everything online if they could. Previously, Bata still only put old

style in their social media campaign, such as putting pictures of their stores, etc. But, now Bata
should innovate such as putting stories on the production of their shoes, where did they get the
materials, or even stories of famous celebrities wearing their shoes. Websites and online
marketing is very vital as Bazaarvoice revealed that 51% of millennials say consumer opinions
found on a company’s website have a greater impact on purchase decisions than
recommendations from family and friends.
Although Bata is doing a massive expansion on internet and social media campaign, it is
still making a lot of effort to retain the regular customers through expansions and maintenance of
physical stores all over Indonesia. In 2014 alone, Bata has opened 66 stores in commercial
centres or main business districts. Beside that, Bata also expand their networking with online
retailers such as Lazada, OLX, and Tokopedia, to ease the process of buying and paying for
online customers. On online retailers, Bata doesn’t own any subsidiaries, but limited only to
partnerships.
The quality of Bata raw material history can be traced to the year 1892. When Albert
Weinbrenner, founded the Weinbrenner Company in Wisconsin, USA, which now become one
of the Bata’s product line. Since the establishment, Weinbrenner has fulfilled the demand of
shoes for mine workers and railroad workers, as well for the United States army in the Second
World War, which are demanding a very high endurance from high quality materials. Even when
first started out, Weinbrenner is producing shoes for the needs of woodcutting, which must be
both comfortable and weather resistant, and can be wore in a long hours in a hill climbing
activities. These high quality materials experiences are still part of Bata culture until today,
which force them to strive for excellent raw materials.
Advanced production technologies are also supporting Bata’s shoes performance. Boa
closing system is a prove of Bata research department, and has ended the usage of traditional
shoelace systems. Bata factories are certified by SATRA, which is one of the centre of research
and technology in the world. Strong partnership and compliance on SATRA procedures has
supported Bata productions, and monitoring system by SATRA also help on maintaining Bata
products quality.

Consumer are now more emphasize on price and image of the brand rather than quality of
raw material, which is the advantage of Bata. Fort Mill Times revealed that millennial parents
buy significantly more based on price than they do on quality. Before being parents, millennial
buying decisions were 57% on quality, with children it drops to 50%. The era is different with
the baby boomers era, when people perceive quality of material as very important. The
marketing style and communication might also play a significant role in determining the buying
preferences of customers.
Other concern is lack of awareness of employees at the production of the quality of
products produced as a result of the pursuit of the target production. As the cost pressure gets
increasing in a more competitive environment, the company needs to balance its objectives on
minimizing cost, reaching the target of productions, and keeping the material and quality high.
Bata might needs to emphasize more on its high quality material culture, while adapt to the
demand of customers on style and design. The production with high quality materials might also
challenged by the increasing price of high quality rubbers in Indonesia, which also a huge tasks
for Indonesian government.
According to BPS, Indonesian population growth between 2000 until 2010 is around 1.49
% per year. Highest growth is in Papua province (5.46%), while the lowest growth is in Central
Java province (0.37%). The growth shows slowing down each year, while Indonesia has a large
number of working age population. The data indicate that many Indonesian parents are have
from 1 to 2 children, much lower than previous generations. This means that there will be a lot of
new middle class in Indonesia, that ready to fulfill their secondary needs, including fashion.
The middle class is still growing for a long time. United Nations projects that Indonesia
will has more than 270 million people in 2025, more than 285 million people in 2035, and more
than 290 million people in 2045. The population will start decreasing on 2050. Investing on
Indonesian market is going to be a long term investment.
Indonesia is one of the biggest opportunity for e-commerce among other Asian countries,
currently analysts project this country as the third largest e-market in Asia behind China and
India with $130billion by 2020. These projections are supported by estimated annual growth rate
of 50% and strong mobile-first initiatives. Indonesia’s e-commerce market has similarities to

China’s online marketplace beginnings, with the characteristics of high influence of social media
to purchasing decisions. It is also has similarity with US e-market, which characterized by the
high level of online payments and retailers. The hybrid of US and China e-commerce economies
creating unique marketplace in Indonesia that has potential to go to the global stage.
Indonesia is also one of the biggest emerging Asian mobile-first nations, with
StatCounter reports that in 2015, more than 70% of Indonesian internet traffic is originated from
mobile phones. This phenomenon is supported by high penetration of social media in Indonesia,
with Indonesians having the highest mobile Facebook usage rate worldwide, with 63 million
users in 2015. Further projections put Indonesians’ future Facebook access via mobile being
almost 99 percent by 2018, showing a true dominance over desktop platforms. The mobile-first
path that Indonesia has taken also allows retailers to focus on creating truly mobile functionality,
presenting unique opportunities to dominate in the retail space.
Key Success Factors
1. Image of the company
Corporate image, or reputation, describes the manner in which a company, its activities,
and its products or services are perceived by outsiders. In businesses of all sizes, it is vital that
managers recognize the importance of creating and maintaining a strong image, and that they
also make employees aware of it. A corporate image will affect the stakeholders
Action towards the company. Good company image could build positive perspective of the
products so the company will get loyal customers.
2. Quality of the product
By choosing good materials, shoe company could produce high quality product to build
trust of the consumers. The quality of the product is one way to get consumers to appreciate and
believe in what our company has offer. The higher quality product a company has to offer, the
better chance they’ll have at driving positive reviews, recommendations, and shares between
consumers.
3. Innovation

Whether you sell a tangible product or a service, if you do not keep up with the changes
in your marketplace as dictated by your customers, you cannot survive. Being first to market and
staying ahead of the competition is always ideal in trying to maintain your market share, but it is
not always achievable. At minimum, you need to make sure you are keeping up with the
demands of your industry and are consistently recognized as a company that stays on top of
product changes.
4. Marketing consistency
Many firms make the mistake of not carefully overseeing their marketing message. They
have different messages going out to the same audience at the same time which confuses
potential and current prospects. Companies with a consistent message across all media platforms,
such as websites, paid media and other forms of marketing collateral, are the more successful
marketers. Marketing consistency is a success factor that any company should not overlook.
Conclusion
Doing promotion to purchasers about the benefits for PT Sepatu Bata as far as quality. For this
situation, a merchant must guarantee purchasers that the item has a decent quality blocks. Along
these lines customers can rest guaranteed and be sure with the quality. Advancing a practical, for
the example for an item to show the power block utilized shoes for games occasions are much
sought after by clients. For instance (Basketball, badminton or volleyball).

References
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167570/pengguna-internet-di-indonesia-didominasi-anak-muda/
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http://www.marketing.co.id/ingat-ke-sekolah-ingat-bata/
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http://bisnis.liputan6.com/read/2602680/bps-jumlah-e-commerce-di-indonesia-capai-262-juta
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https://id.techinasia.com/pertumbuhan-pengguna-internet-di-indonesia-tahun-2016
Prahalad, C. K. and Hamel, Gary, The Core Competence of the Corporation (1990). Harvard
Business Review, Vol. 68, Issue 3, p. 79-91 1990.
Rothaermel, F. T. (2015). Strategic Management. USA: Mc Graw-Hill Education.
Wulandari, D. (2015, May 28). Headline MIX. Retrieved from MIX Marketing Communication
Web Site: http://mix.co.id/headline/dipersepsi-kurang-stylish-inilah-alasan-bata
History of Bata, https://www.bata.com/heritage/
Charless, W.L. (2012). International Business, USA: Mc Graw-Hill Education.
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