About the saga business

1. SAGA BUSINESS
BATA INDIA LTD;EXECUTING A BUSINESS
TURNAROUND
PRESENT BY:-
PRINCE RAJ 22GSOB2010394
NITESH SINGH 22GSOB2010311
PRERNA PANDEY 22GSOB2010044
NIKHIL KUMAR 22GSOB2010368
PRASHANT RAI 22GSOB2010667
PIYUSH SHAKYA 22GSOB2010487

2. INTRODUCTION AND CHALLENGES FACED
BYTHE COMPANY IN EARLY 2000S
• Bata India Ltd is a footwear manufacturer and retailer that faced significant challenges in
the early 2000s.At that time, the company had enjoyed decades of success but had
encountered a series of difficulties, including financial losses, declining market share, and
changing customer preferences in the Indian retail environment. MarceloVillagran became
the CEO of Bata India Ltd in 2005 and was tasked with revitalizing the company and
making it profitable once again.These challenges were rooted in a changing market
landscape and internal issues within the organization.

3. CHALLENGES
1. Financial Losses: Between 2002 and 2004, Bata India Ltd incurred cumulative losses of $19.2 million.
These losses were a significant financial challenge for the company, threatening its sustainability.
2. Market Competition: Bata India was facing intensified competition from both domestic and
international footwear brands.The arrival of multinational corporations (MNCs) and the growth of
homegrown brands posed a serious threat to Bata's market share.
3. Changing Customer Preferences: The company's product offerings were perceived as outdated
and out of touch with changing consumer preferences, especially among the youth segment. Bata
struggled to adapt to evolving customer needs and trends.
4. Union Issues: Bata faced challenges related to labor unions, which hindered efforts to improve
business operations. Unions resisted changes in store hours, store location decisions, and workforce
flexibility, impacting sales and customer service.

4. CHALLENGES FACED BY NEW CEO
• MarceloVillagran took on the role of CEO at Bata India Ltd in early 2005. His appointment
was significant due to his track record of successfully revitalizing underperforming businesses,
which he had accomplished in various locations, including Latin America and Canada.
• Upon assuming the role of CEO at Bata India, Marcelo faced the formidable challenge of
reversing the company's financial downturn. Bata India had suffered three consecutive years of
losses starting in 2002.These losses raised serious concerns about the company's viability and
necessitated a strategic turnaround to restore profitability.
• Marcelo's experience and leadership were instrumental in tackling these challenges and
initiating a series of strategic measures aimed at revitalizing Bata India. His efforts would
ultimately lead to a significant transformation in the company's performance and fortunes.

5. TURNAROUND STRATEGY
MarceloVillagran's three-pronged turnaround strategy for Bata India Ltd focused on:
1.Better Products with Fatter Margins: Bata aimed to improve its product offerings by doubling the design team to
ensure that their footwear collections were in sync with the preferences of the younger generation.They also refreshed
the existing range and outsourced certain parts to enhance profit margins.This involved discontinuing the manufacturing
of low-end products with low margins and concentrating on higher-margin products.
2. Business Expansion:Bata used the cash generated from higher-margin products to expand its business, primarily
through large-format stores.They also initiated home delivery of store orders and ventured into e-commerce-based
sales to reach a wider customer base.
3.Quality Improvement: Bata introduced specialization in its factories to enhance product quality and reduce costs.
Different factories were assigned to produce specific types of footwear, optimizing production efficiency.
This strategy aimed to revamp Bata's product line, improve profitability, and adapt to changing customer preferences in
the Indian footwear market.

6. POSITIVE OUTCOME OFTHETURNAROUND
• Financial Improvement:
• Operating turnaround in the very first year (2005) under Marcelo's leadership.
• Reduction in cumulative losses from $19.2 million to profitability.
• Operating margins increased to 14.4% by mid-2011.
• Profit before tax to sales improved from -8.76% in 2004 to 11.20%.
• Return on equity (ROE) increased from -25.41% to 23.94%.
• Earnings per share (EPS) improved from -$0.24 to $0.30.
• Dividend paid increased from 0% to 40%.
• Stock Performance:
• Bata India's stock price climbed from $0.62 in 2002 to $14.82 in October 2011 on the Bombay Stock Exchange.
• Sales Growth:
• Sales grew by 3.2% between 2007 and 2010.Cost Reduction:Staff costs were significantly reduced from 20.6% in 2006 to 13.9% in 2010

7. CONCLUSION
• Bata India Ltd, under MarceloVillagran's leadership, successfully executed a business
turnaround by refocusing on quality, innovation, and efficiency. However, ongoing
challenges in a dynamic market necessitated further strategic adjustments and the
continued pursuit of growth opportunities.

8. QUES-1.EXAMINETHE CAUSES OF BATA INDIA'S
DECLINE.
• Bata India, a prominent footwear company, has experienced a decline in recent years. Several factors can be
attributed to this decline:
• 1. Competition: The footwear industry has become highly competitive, with the entry of numerous local and
international brands. Bata India has faced intense competition from both established players and new entrants,
leading to a loss of market share.
• 2. Changing Consumer Preferences: Consumer preferences and trends in the footwear industry have
been evolving rapidly. Bata India may have struggled to keep up with changing fashion preferences, leading to a
decline in demand for their products.
• 3. Lack of Innovation: Bata India's product portfolio may have lacked innovation, resulting in a failure to
attract customers. Consumers are constantly seeking new and unique designs, technologies, and materials in
footwear. Bata India's inability to offer innovative products may have contributed to their decline.

9. QUES-2,ANALYZE THE STEPSTAKEN BYTHE
MANAGEMENTTO REVIVETHE FORTUNES OFTHE
COMPANY.
• 1. Product Diversification: The management has focused on diversifying the product portfolio to cater to
changing consumer preferences. Bata India has introduced new designs, styles, and materials to attract a wider
customer base.They have also expanded their product range to include accessories and sports footwear.
• 2. Brand Revitalization: The management has worked on revitalizing the Bata brand by repositioning it to appeal
to a younger and fashion-conscious audience.They have collaborated with popular designers and celebrities to
create limited edition collections and increase brand visibility.
• 3. Store Modernization: Bata India has undertaken store modernization initiatives to enhance the shopping
experience for customers.They have revamped store layouts, introduced interactive displays, and improved customer
service to create a more engaging and customer-friendly environment.
• 4. E-commerce Expansion: Recognizing the growing importance of online retail, Bata India has invested in
expanding its e-commerce presence.They have launched their own online store and partnered with leading e-
commerce platforms to reach a wider customer base and improve accessibility.

10. QUES-3,SHOULD BATA IGNORE THE HIGH
VOLUME,LOW PROFIT SEGMENT?
• 1. Profitability: Bata should evaluate the profitability of the high-volume, low-profit segment. If the segment
consistently generates low profits or operates at a loss, it may not be financially viable for the company to
continue investing resources in it.
• 2. Competitive Advantage: Bata should assess whether it has a competitive advantage in the high-volume,
low-profit segment. If the company can differentiate itself from competitors and capture a significant market
share, it may be worth continuing to serve this segment.
• 3. Brand Image: Bata should consider the impact of the high-volume, low-profit segment on its brand image. If
serving this segment aligns with the brand's positioning and does not dilute its perceived value, it may be
beneficial to continue catering to these customers.
• 4. Opportunity Cost: Bata should evaluate the opportunity cost of focusing on the high-volume, low-profit
segment. If the company's resources and efforts invested in this segment could be better utilized in other areas
with higher potential for growth and profitability, it may be more prudent to reallocate those resources.

11. QUES-4,WILLTHE BRAND LOSE ITS BRAND EQUITY AND POSITIONING BY
CATERINGTO THE LOW-PROFIT SEGMENT? HOW SHOULD
THE COMPANY REACH OUTTO ALL CUSTOMER SEGMENTS,WITHOUT DILUTING
THE BATA BRAND INTHE PROCESS?
• Catering to a low-profit segment does not necessarily mean that a brand will lose its brand equity and positioning.
However, it requires careful consideration and strategic implementation to ensure that the brand remains strong and
relevant across customer segments.
• To reach out to all customer segments without diluting the Bata brand, the company can follow these strategies:
• 1. Market Segmentation: Conduct thorough market research to identify the different customer segments and
their specific needs.This will help in understanding the low-profit segment and establishing effective targeting
strategies.
• 2. Product Differentiation:Develop a separate product line or range specifically designed for the low-profit
segment.These products should offer value and affordability while still maintaining the quality and style associated
with the Bata brand.
• .

12. • 3. Pricing and Promotions: Create pricing structures that are attractive to the low-
profit segment, such as offering lower-priced options or introducing affordable payment
plans. However, it is essential to ensure that these pricing strategies do not undermine
the perceived value and quality of the Bata brand.
• 4. Marketing Communication: Develop targeted marketing campaigns that specifically
address the needs and aspirations of the low-profit segment. Emphasize the value and
benefits of the products, rather than solely focusing on the price.This will help in
maintaining the brand's equity and positioning while resonating with the target audience.