case study- Bata

7/27/2019 case study- Bata

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INTERNATIONAL BUSINESS CASE STUDY

Javed Kalangade (P1118)Ashish Khandare (P1124)

Amit Kumar (P1129)

Raul Pinto (P1148)

Sonal Sherekar (P1155)


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FLOW OF

PRESENTAION

1. Bata Company Overview

History, Evolution and Positioning

2. Case Study OverviewBatas Journey over the world

3. Foreign Political SystemsBatas interaction with foreign systems

4. Road Ahead for BataInternational Challenges for Bata Ahead


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BATA

COMPANY

OVERVIEW

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

family

5,000 international retail locations in over 70countries

Services over one million customers per day


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BATA

COMPANY

OVERVIEW

Facts about Bata

Core Principle

To know its customers and to create the bestpossible products to meet their needs

Mission

Offering style, comfort and quality at the

best price


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BATA

COMPANY

OVERVIEW

Facts about Bata

Innovators and Leaders

International and Local

Future of footwear

Our success is built on

our legacy of values and

belief

- Thomas G. Bata


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BATA

COMPANY

OVERVIEW

Policy at Bata

Managed in a decentralized way, which

means that the company is able to adapt tothe local environment

Bata has a performing business strategy

based on economies of scale

Trying of not exporting; the localproduction is basically dedicated to the

internal market


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FOREIGN

POLITICAL

SYSTEMS

The company was founded in 1894 in Zln

(Czech Republic) by Tomas Bata

A large order from the army, military shoes

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

Czechoslovakia


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FOREIGN

POLITICAL

SYSTEMS

1918 The Czechoslovak state was conceivedas a parliamentary democracy

1939 The Company relocates to Canadaafter the movement of Germanmilitary forces into Eastern Europe

1945 Czechoslovakia business operationsare nationalized by the newcommunist government followingWorld War II

Czechoslovakia


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FOREIGN

POLITICAL

SYSTEMS

Canada

Anticipating the Second World War,

Thomas J. Bata, the founder's son,

together with over 100 families from

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


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FOREIGN

POLITICAL

SYSTEMS

Canada

Business in Canada Canada defines Small Businesses as those with

fewer than 100 employees (in goods producing

firms) and 50 employees (in service firms)


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FOREIGN

POLITICAL

SYSTEMS

Canada

Canadian Provincial Taxes


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FOREIGN

POLITICAL

SYSTEMS

The local factories of Bata in Ugandahad been

nationalized by Milton Obote,

de-nationalized by Idi Amin,

re-nationalized by Amin

and finally de-nationalized also by Amin

Meanwhile the company had workedas nothing had ever happened

Uganda


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FOREIGN

POLITICAL

SYSTEMS

Uganda

1962 Uganda gained independence from UK

1966 Following a power struggle between

the Obote-led government and KingMuteesa, the UPC-dominated Parliament

changed the constitution and removed the

ceremonial president and vice president

1971 After a military coup in 1971, Obote wasdeposed from power and the dictator Idi

Amin seized control of the country

1979 Amin's reign was ended after the Uganda

Tanzania War

1986 Museveni has been in power since 1986


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FOREIGN

POLITICAL

SYSTEMS

Uganda

Economy of Uganda

For decades, Uganda's economy suffered from

devastating economic policies and instability,leaving Uganda as one of the world's poorest

countries

Uganda has substantial natural resources,

including fertile soils, regular rainfall, and sizablemineral deposits of copper and cobalt

The country has largely untapped reserves of

both crude oil and natural gas

Uganda is rated among countries perceived asvery corrupt by Transparency International


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FOREIGN

POLITICAL

SYSTEMS

Bata had been also criticized for

maintaining different types ofrelationships with totalitarian

regimes, as the one of Chile

The company presented in its

own defence the argument that

it had been activating in Chile

more than 40 years, meanwhile

many political regimes had

changed

Chile


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FOREIGN

POLITICAL

SYSTEMS

Chile

Economy of Chile

Chile is one of South America's most stable and

prosperous nations During the early 1990s, Chile's reputation as a

role model for economic reform was

strengthened when the democratic government

of Patricio Aylwin, who took over from themilitary in 1990, deepened the economic reform

initiated by the military government

The 197390 military government sold many

state-owned companies, and the three

democratic governments since 1990 have

continued privatization, though at a slower pace


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FOREIGN

POLITICAL

SYSTEMS

Types of

Governments


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Under Capitalism,the governmenthas the role ofeasing the classstruggle in favorof Capital

Under Socialism,the governmenthas the role offavoring theneeds of society

Under Communism,production ismanaged bycommunities ofworkers


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Bata in

South Africa

The case of South Africa was a major challengefor Bata

The GDP per capita in this country is thehighest of all nations in the African continent

The main attraction of the country isrepresented 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 ofscale in production by using cheap labour force


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The general background deterioratedrapidly at the beginning of 1980s

For decades, South Africa had an apartheid

regime that led to political, social andeconomic segregations between black andwhite people

The black Nationalists were fighting for the

right to vote of each and every citizen, butthe white Government was refusing them

The African National Congress, led byNelson Mandela, was fighting againstcapitalism and was sustaining the idea of

nationalizing the whole industry, no matterif the companies considered were nationalor owned by foreign entities

Bata in

South Africa


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The Canadian Government had imposed avery conservative legislation regarding thenew investments in South Africa

As a result, Bata decided to leave SouthAfrica in 1986, but the company did notadmit that the apartheid had representedthe cause of its decision

The selling conditions were clearlystipulating that the name of the companyand the production brand would not beused anymore in South Africa and all theconnections with Canada would be broken

off The new buyer of the business operations

and the production facilities had to keepthe jobs of all workers, most of them blackpeople

Bata in

South Africa


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Bata in

South Africa


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Bata in

South Africa


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South African Economy The economy of South Africa is the largest

in Africa

About a quarter of the population isunemployed and about the sameproportion lives on less than US $1.25 aday

South Africa has a comparative advantagein the production of agriculture, miningand manufacturing products relating tothese sectors

The top income tax rate in South Africa is40%, and the top corporate tax rate is28%

Bata in

South Africa


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Business in South Africa

South Africa suffers from relatively

heavy overall regulation burdencompared to developed countries

State ownership and interference

impose high barriers to entry in manyareas the top corporate tax rate is 28%

Bata in

South Africa


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Bata in

South Africa


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Bata in

South Africa


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Bata in

South Africa


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Bata in

South Africa


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Since South Africa has evolved into a

more favourable investment destination,Bata should re-enter South Africa

Bata should continue with its strategy

of using local production to cater to

domestic markets as

Bata in

South Africa


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Batas re-entry

in Czech &

Slovakia

Political scenario of the region

After the collapse of Czechoslovakia, Czech

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


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Batas re-entry

in Czech &

Slovakia

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 ahuge market in Eastern Europe and the former

Soviet Union

Already an established company there

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


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Batas re-entry

in Czech &

Slovakia

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 local

suppliers, this will help create strong supply

base in the host land and it increase the

revenues of the raw material producers

Disadvantages for Republic of Slovakia andthe reason for not allowing Bata to reenter

The compensation which was promised has to bepaid back to Bata

It has to handover the management to Bata itself

The relation with the Slovakian government willnot be truly positive and the support from thegovernment will be less to Bata causing mutualconflict


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Batas re-entry

in Czech &

Slovakia

Why Czech Republic allowed Bata to re enter

The Czech Republic will gain access to Batas

global design, production, and marketing expertise The Czech Republic might be able to get Bata to

invest significant capital into the plant to get it upto world-class standards

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 andcultural diversity knowledge

Bata having operated in almost 60 countries knows

and have dealt with diverse conditions worldwideso, they are in great shape to deal with thingsthere


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Batas re-entry

in Czech &

Slovakia

Political System in Czech Republic

Parliamentary republic, democratic state

Power is divided into legislative (Czech

Parliament), executive (Czech Government and

the President of the Republic) and judicial

The President of the Republic and the Czech

Government are representatives of executive

power within the country


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Batas re-entry

in Czech &

Slovakia

Political System in Slovakia

The National Council of The Slovak Republic

Countrys sole constitutional and legislative body

It has 150 members elected for 4 year terms in

direct elections

Courts and Judicial Power: Consists of general

courts (district courts, regional courts and thesupreme 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


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Batas Future

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 level

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


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Batas Future

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 managed

Bata is huge, having operations in about 60

countries. Different countries have different

political and cultural environment. Having seenand managed all this so effectively and for so

long, its difficult to trust someone else


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Batas Future

What is the risk, if Bata Sr. cant find a way

to retire

Tom J. Bata led his firm through a period ofgreat turbulence and growth but both the world

and the company are now very different than

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 newway


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Batas Future

What is the risk, if Bata Sr. cant find a way

to retire

The training under Tom J. Bata will prove more

effective

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


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Thank You

case study- Bata

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