Bata Case Study


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  • dayFrom its simple start over 118 years ago, Bata has grown into a trusted global company that offers fashionable and affordable footwear to every member of the family.As the 20th century came to a close, Bata had been building relationships with generations of families for over 100 years. Thomas G. Bata, the founder's grandson, remained committed to that tradition in the emerging global marketplace. In a bold move, he replaced large, centralized factories with regional production facilities guided by four "meaningful business units" (MBUs), each having the flexibility and independence to produce footwear that responds to the unique needs of its region. As a result, Bata is honored to be a local company in every country it serves.  We will grow through the 21st century by investing our resources in innovative comfort technology, remaining on the cutting edge of style, and ensuring quality and affordability. Now as then, we believe our success is a result of our commitment to our customers, and we'll continue to look to the future by reading our past.
  • today, after almost 120 years, Bata has remained true to its core principle: to know its customers and to create the best possible products to meet their needs.
  • Every legacy of success begins somewhere. For the Bata Shoe Company, that place was the small riverside town of Zlin, Czechoslovakia, where three Bata siblings gathered a small inheritance from their mother, and officially established the T. & A. Bata Shoe Company. It was the year 1894 and a remarkable tale of enterprise had begun.Founder Tomas Bata was a visionary dedicated to serving the needs of the people---------------Bata's reach is worldwide; its presence is local. Our novel international manufacturing structure allows Bata facilities around the globe to respond to the unique needs and wants of local customers. As a result, Bata is honored to be a local company in every country it serves. Bata continues to be guided by the same core principle it has followed for over one hundred years: to know its customers and to create the best possible products to meet their needs.-----We are the future of footwearFor over 13 decades, Bata has been on the leading edge of footwear design. Today, professionals in Bata's Shoe Innovation Centres around the world continue the tradition of innovation as they dedicate themselves to discovering new shoe materials, developing modern shoe technologies, and creating fresh footwear that marries style with comfort. Founder Tomas Bata was a visionary dedicated to serving the needs of the people. In 1904, Bata introduced mechanization and mass production to shoemaking and created the "Batovka" - a working class shoe remarkable in its simplicity and style, yet lightweight and affordable. The Bata name quickly became synonymous with quality and value, and in just over two decades Bata was selling 2 million pairs of shoes a year, and exports skyrocketed.
  • om Bata travels a lot in order to control production's quality and to establish diplomatic relationships with the governments of the countries where the company has subsidiaries. Although Bata has factories in more than 90 countries and a lot of economic operations in more than 100 countries, the company does not own 100% of these businesses. The company owns 100% of the business only in countries where this is possible, but in certain countries the government does not allow to a foreign company to have the majority control. For example, in India 60% of the local shares of Bata are listed on the stock exchange, meanwhile in Japan Bata Ltd. owns only 9.9% of the operations. In some cases, Bata also provides licences, consulting and technical assistance to its business partners. ------------Bata has a performing business strategy based on economies of scale. Some multinational companies try to diminish their costs by obtaining economies of scale in production, which means that these companies produce as much as possible by using standard production factors. Bata is able to obtain economies of scale very rapidly because of the large production in different countries. This could seem pretty hard to believe, especially if we consider that Bata has production facilities in certain African countries where the company's operations represent the only form of industrialization. In spite of this situation, Bata considers that economies of scale are very easy to obtain because it intensively uses the workforce production factor. Bata also tries to completely use the raw materials found locally, but in some cases this is not possible, especially in the underdeveloped countries. But the company still tries to maximize the value added in these countries.-------------Another policy of Bata Ltd. is about trying of not exporting; the local production is basically dedicated to the internal market. Obviously, this rule is not generally available since the company produces in 90 countries but distributes its products in more than 100 countries. Sometimes, when importing raw materials but not exporting its products, Bata's policies are in conflict with the ones of local governments. The company has to adapt to the local legislation. Bata generally avoids basing its operations excessively on exports, mainly due to the risks it implies. For example, if an importer country decides to diminish its commercial activities, Bata could lose market opportunities and could also lose in terms of market share. More than that, Mr. Bata noticed the advantage of a developed country that is not applying a protectionist policy.
  • Bata Case Study

    1. 1. INTERNATIONAL BUSINESS CASE STUDY Javed Kalangade (P1118) Ashish Khandare (P1124) Amit Kumar (P1129) Raul Pinto (P1148) Sonal Sherekar (P1155)
    2. 2. 1. Bata Company Overview History, Evolution and Positioning 2. Case Study Overview FLOW OF Bata’s Journey over the worldPRESENTAION 3. Foreign Political Systems Bata’s interaction with foreign systems 4. Road Ahead for Bata International Challenges for Bata Ahead
    3. 3. Facts about Bata • Founded by Tomas Bata in 1894, riverside town of Zlin , Czechoslovakia • Trusted global company that offers fashionable and affordable footwear to every member of the BATA familyCOMPANY • 5,000 international retail locations in over 70OVERVIEW countries • Services over one million customers per day
    4. 4. Facts about Bata • Core Principle – To know its customers and to create the best possible products to meet their needs BATA • MissionCOMPANY – Offering style, comfort and quality at the best priceOVERVIEW
    5. 5. Facts about Bata • Innovators and Leaders • International and Local • Future of footwear BATACOMPANY • “Our success is built onOVERVIEW our legacy of values and belief” - Thomas G. Bata
    6. 6. Policy at Bata • Managed in a decentralized way, which means that the company is able to adapt to the local environment • Bata has a performing business strategy BATA based on economies of scaleCOMPANY • Trying of not exporting; the localOVERVIEW production is basically dedicated to the internal market
    7. 7. FOREIGN • The company was founded in 1894 in Zlín POLITICAL (Czech Republic) by Tomas Bata SYSTEMS • A large order from the army, military shoesCzechoslovakia and rising demand for them, during World War I started rapid growth and small manufacture turned into modern industrial concern, one of the first mass producers of shoes
    8. 8. FOREIGN 1918 The Czechoslovak state was conceived POLITICAL as a parliamentary democracy SYSTEMS 1939 The Company relocates to Canada after the movement of GermanCzechoslovakia military forces into Eastern Europe 1945 Czechoslovakia business operations are nationalized by the new communist government following World War II
    9. 9. FOREIGN • Anticipating the Second WorldPOLITICAL War, Thomas J. Bata, the founders SYSTEMS son, together with over 100 families from Canada Czechoslovakia, moved to Canada in 1939 to develop the Bata Shoe Company of Canada, including a shoe factory and engineering plant, centred in a town that still bears his name, Batawa, Ontario
    10. 10. Business in Canada • Canada defines Small Businesses as those with fewer than 100 employees (in goods producing firms) and 50 employees (in service firms) FOREIGNPOLITICAL SYSTEMS Canada
    11. 11. Canadian Provincial Taxes FOREIGNPOLITICAL SYSTEMS Canada
    12. 12. FOREIGN • The local factories of Bata in UgandaPOLITICAL had been SYSTEMS – nationalized by Milton Obote, Uganda – de-nationalized by Idi Amin, – re-nationalized by Amin – and finally de-nationalized also by Amin • Meanwhile the company had worked as nothing had ever happened
    13. 13. 1962 Uganda gained independence from UK 1966 Following a power struggle between the Obote-led government and King Muteesa, the UPC-dominated Parliament changed the constitution and removed the FOREIGN ceremonial president and vice presidentPOLITICAL 1971 After a military coup in 1971, Obote was SYSTEMS deposed from power and the dictator Idi Uganda Amin seized control of the country 1979 Amins reign was ended after the Uganda Tanzania War 1986 Museveni has been in power since 1986
    14. 14. Economy of Uganda • For decades, Ugandas economy suffered from devastating economic policies and instability, leaving Uganda as one of the worlds poorest countries FOREIGN • Uganda has substantial naturalPOLITICAL resources, including fertile soils, regular SYSTEMS rainfall, and sizable mineral deposits of copper Uganda and cobalt • The country has largely untapped reserves of both crude oil and natural gas • Uganda is rated among countries perceived as very corrupt by Transparency International
    15. 15. • Bata had been also criticized for maintaining different types of relationships with totalitarian regimes, as the one of Chile FOREIGN • The company presented in itsPOLITICAL own defence the argument that SYSTEMS it had been activating in Chile Chile more than 40 years, meanwhile many political regimes had changed
    16. 16. Economy of Chile • Chile is one of South Americas most stable and prosperous nations • During the early 1990s, Chiles reputation as a role model for economic reform was FOREIGN strengthened when the democratic governmentPOLITICAL of Patricio Aylwin, who took over from the SYSTEMS military in 1990, deepened the economic reform Chile initiated by the military government • The 1973–90 military government sold many state-owned companies, and the three democratic governments since 1990 have continued privatization, though at a slower pace
    17. 17. FOREIGNPOLITICAL SYSTEMS Types ofGovernments
    18. 18. Under Communism, produ Under ction is managed by Socialism, the communities of government has workersUnderCapitalism, the the role ofgovernment has favoring thethe role of easing needs of societythe class strugglein favor of Capital
    19. 19. • The case of South Africa was a major challenge Bata in for BataSouth Africa • The GDP per capita in this country is the highest of all nations in the African continent • The main attraction of the country is represented by the incredible high profit rate, mainly generated by low labour costs and rich deposits of mineral resources • The relatively large South African market allows the companies to obtain economies of scale in production by using cheap labour force
    20. 20. • The general background deteriorated rapidly at the beginning of 1980s • For decades, South Africa had an apartheid regime that led to political, social and economic segregations between black and white people Bata in • The black Nationalists were fighting for theSouth Africa right to vote of each and every citizen, but the white Government was refusing them • The African National Congress, led by Nelson Mandela, was fighting against capitalism and was sustaining the idea of nationalizing the whole industry, no matter if the companies considered were national or owned by foreign entities
    21. 21. • The Canadian Government had imposed a very conservative legislation regarding the new investments in South Africa • As a result, Bata decided to leave South Africa in 1986, but the company did not admit that the apartheid had represented Bata in the cause of its decisionSouth Africa • The selling conditions were clearly stipulating that the name of the company and the production brand would not be used anymore in South Africa and all the connections with Canada would be broken off • The new buyer of the business operations and the production facilities had to keep the jobs of all workers, most of them black people
    22. 22. Bata inSouth Africa
    23. 23. Bata inSouth Africa
    24. 24. South African Economy • The economy of South Africa is the largest in Africa • About a quarter of the population is unemployed and about the same proportion lives on less than US $1.25 a Bata in daySouth Africa • South Africa has a comparative advantage in the production of agriculture, mining and manufacturing products relating to these sectors • The top income tax rate in South Africa is 40%, and the top corporate tax rate is 28%
    25. 25. Business in South Africa • South Africa suffers from relatively heavy overall regulation burden compared to developed countries Bata in • State ownership and interferenceSouth Africa impose high barriers to entry in many areas the top corporate tax rate is 28%
    26. 26. Bata inSouth Africa
    27. 27. Bata inSouth Africa
    28. 28. Bata inSouth Africa
    29. 29. Bata inSouth Africa
    30. 30. • Since South Africa has evolved into a more favourable investment destination, Bata should re-enter South Africa Bata in • Bata should continue with it’s strategySouth Africa of using local production to cater to domestic markets as
    31. 31. Bata’s re-entry Political scenario of the region in Czech & • After the collapse of Czechoslovakia, Czech Slovakia Republic and Slovakia, both were considered free politically • Czech Republic was considered mostly free economically • Czech started to encourage privatization of companies • But Slovakia encouraged nationalization of companies
    32. 32. Advantages for Bata for getting back operations in Republic of Slovakia • Bata will be able to return to the home country • Bata will gain access to large facilities and aBata’s re-entry huge market in Eastern Europe and the former Soviet Union in Czech & • Already an established company there Slovakia Disadvantages for Bata for getting back operations in Republic of Slovakia • Bata will have to face the not so free economic policy of Slovakia as its not promoter of free trade • Bata have to comply with the economic policies which are not desired by a company which has been operating freely around the globe
    33. 33. Advantages for Republic of Slovakia • Bata chooses local resources for the production so the local resources of the Slovakia will be explored and utilized in the proper manner • Bata gets its raw materials from diversified localBata’s re-entry suppliers, this will help create strong supply in Czech & base in the host land and it increase the Slovakia revenues of the raw material producers Disadvantages for Republic of Slovakia and the reason for not allowing Bata to reenter • The compensation which was promised has to be paid back to Bata • It has to handover the management to Bata itself • The relation with the Slovakian government will not be truly positive and the support from the government will be less to Bata causing mutual conflict
    34. 34. Why Czech Republic allowed Bata to re enter • The Czech Republic will gain access to Bata’s global design, production, and marketing expertise • The Czech Republic might be able to get Bata toBata’s re-entry invest significant capital into the plant to get it up in Czech & to world-class standards Slovakia • Bata will create new jobs for Czech workers and the purchasing power of the Czech will increase • The success in the host country comprises of the better knowledge of economic, political and cultural diversity knowledge • Bata having operated in almost 60 countries knows and have dealt with diverse conditions worldwide so, they are in great shape to deal with things there
    35. 35. Political System in Czech Republic • Parliamentary republic, democratic state • Power is divided into legislative (CzechBata’s re-entry Parliament), executive (Czech Government and in Czech & the President of the Republic) and judicial Slovakia • The President of the Republic and the Czech Government are representatives of executive power within the country
    36. 36. Political System in Slovakia • The National Council of The Slovak Republic Country’s sole constitutional and legislative bodyBata’s re-entry • It has 150 members elected for 4 year terms in in Czech & direct elections Slovakia • Courts and Judicial Power: Consists of general courts (district courts, regional courts and the supreme court) and military courts • The Constitutional Court is an independent judicial body and is not part of general courts system • Military courts handle disputes of military personnel
    37. 37. Why Tom Bata Sr. cant bear to lose grip on business he started • He is the one who took his ancestral business to a global levelBata’s Future • He did a lot of hard work to keep the Bata philosophies alive and also ensured that it grew into a global empire • His entrepreneurship method of keeping the company alive was a success in his time and perhaps he believes that the same tradition should be carried forward to the future
    38. 38. • Having grown a business, it is often hard to turn it over to others who may have different ideas about how the firm should be managedBata’s Future • Bata is huge, having operations in about 60 countries. Different countries have different political and cultural environment. Having seen and managed all this so effectively and for so long, its difficult to trust someone else
    39. 39. What is the risk, if Bata Sr. cant find a way to retire • Tom J. Bata led his firm through a period of great turbulence and growth but both the world and the company are now very different thanBata’s Future they were in • Doing business is changing rapidly and being dynamic to adapt to those changes is a necessity • So Tom Bata should formulate a retirement plan in such a way that the new CEO or a successor will be able to continue his inheritance in a new way
    40. 40. What is the risk, if Bata Sr. cant find a way to retire • The training under Tom J. Bata will prove more effectiveBata’s Future • Hiring and training the best candidate after he is gone, will be the challenge for the management • Hence, Bata should focus not only in its current strategies but also have a good succession strategy
    41. 41. Thank You