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Industry : Foot Wear Industry

Company : Bata Shoes

Why we Selected Foot Wear Industry & Bata Shoes as Company?

Respected Sir, I (Muhammad Afzal) currently running my own Bata shoes Franchise

located at Sadder Cantt for the last 10 years. My family background is of shoe business.

Thats the reason I choose Footwear Industry & Bata as a company.

After my B.COM, I properly do all my shop operations myself, means opening & closing

the shop, marketing operations selling and buying etc

After completing my MBA, I shall apply all my concepts that I have studied and my

vision is to enhance my business throughout Lahore. Before MBA, I just simply runningmy shop, but now I should apply the strategies that relates to my mission & vision.

The other reason to choose Bata Shoes Lahore Pakistan because they are using some

techniques for finding opportunities and evaluation of new initiatives among their

competitors. They are also using a technique for testing its concept before development

and launch new product in the market. They are also using a technique for evaluate the

organization capabilities before developing product.

As the assignment proceeds to a complete project, we shall discuss all that

techniques/strategies which are used by Bata, discuss about the draw backs and give therecommendations on these techniques for improvement at the end.

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EXECUTIVE SUMMARY

Bata was originally established in Czechoslovakia by Thomas Bata in 1894. He was actually

engaged in no formal shoe making business. He decided to visit Michigan for observing howFord Motor Company was making auto mobiles in assembly line production. He observes and

took that idea and started applying all those same lines for production of shoes on large scale. As

he started doing so, a revolution came over there in shoe making industry. In 2002 Bata was thelargest organization in world of footwear industry with 14 billion pair of shoes produced and

sold. Company has 75 footwear factories and tanneries in 95 countries. In Pakistan, Bata had

started its business in 1942 near Lahore.

Bata Pakistan was established in 1942 when Pakistan came into being, it was ready to serve the

nation. It was incorporated in Pakistan as Bata Shoe Company (Pakistan) Limited in 1951 and

went public to become Bata Pakistan Limited in the year 1979. During the last year Bataproduced over 17.2 million pairs and sold 16.9 out of them with the help of their large

distribution network of 400 Retail Stores and Agencies, 13 Wholesale Depots, 23 Distributors

and about 400 Registered Wholesale Dealers who are selling goods as independent retailers. In2011 the company generated turnover of Rs.6.5, billon showed an increase of 26% against

previous year.

BATA TODAY

Serves 1 million customers per day Employs more than 40,000 people Operates 5000 retail stores Manages aretail presence in over 50 countries Runs 40 production facilities across 26 countries

BATAS BUSINESS UNITS

Bata Europe, Lausanne Bata Asia Pacific-Africa, Singapore

Bata Latin America, Mexico Bata North America, Toronto

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Batas Vision Mission StatementBata Vision

To grow as a dynamic, innovative and market driven domestic manufacturer and

distributor, with footwear as our core business, while maintaining a commitment tothe country, culture and environment in which we operate.

Bata MissionTo be successful as the most dynamic, flexible and market responsive organization,with footwear as its core business.

Analysis of Vision

I think the vision of Bata is long and include few things that must be included in

Mission, so I Purposed a one line Clear Vision of Bata

Our Proposed Vision

To become the front ranking multiple shoes company in the world

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Analysis of Mission Statement

According to my analysis, Batas current mission statement is too short and missing major

components.

Mission Statement must include 9 components. So I proposed a mission statement for Bata. I

have bold and underline the main components in my proposed mission statement.

Our Proposed Mission

To provide quality shoes at an affordable price to our valued customers and

maintain our competitiveness and leadership in the shoe market with our aesthetic

functional standard and cost effectiveness with increased market participation by

ensuring regular return to our shareholders through increased market share keeping in

line with the Nations interest

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Analysis of Mission Statement

Components of Mission Statement Addresses or Not

Customer Yes

Product or services Yes

Technology Yes

Concern for survival, growth, profitability Yes

Philosophy Yes

Self-Concept Yes

Market Yes

Concern for public image Yes

Concern for employees Yes

.

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STAGE 1

INPUT STAGE

External Factor Evaluation (EFE) Matrix

IFE Matrix

CPM Matrix

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External Factor Evaluation (EFE) Matrix

Key External Factors Weight Rating

Weighted

Score

Opportunities

Increasing Trends Towards Fashion Shoes 0.11 2 0.22

Sales of apparel & footwear on the Internet has been

growing at a double digit pace0.06 1 0.06

Increasing Sports Events in Pakistan 0.1 3 0.3

Increase in wedding seasons and festivals (average

wedding season of 8 months now)0.05 1 0.05

Awareness of Quality among customers 0.11 4 0.44

Increasing population by 10% 0.07 3 0.21

Availability of Untapped market segment 0.08 2 0.16

Threats 0

Stiff competition in the market from local and foreign

brands0.12 3 0.36

Electricity Shortage0.08 3 0.24

Increase in unemployment has impacted the household

income which may result in spending less on brand name0.07 3 0.21

Decrease in customers purchasing power ( Inflation) 0.09 2 0.18

Political Instability 0.06 3 0.18

Total 1 2.61

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Analysis of OPPORTUNITIES

With the rapid growth of middle class in the state, the purchasing power of the average

person has increased. The awareness for the quality footwear has created a rise in demand

for quality footwear affordable prices.

The fashion conscious customers always look for new styles and designs in favor. The

Pakistans footwear market is highly dynamic nature.

Increasing Trends towards Fashion ShoesBata has an opportunity to move into the casual footwear and apparel business. This area

is not totally new for Bata, but represents a very high fraction of their sales. Bata needs to

be in tune and quickly test this market with desirable and well built products.

Increasing population by 10%

Women represent a huge market. Stylo sells nearly 50% of it shoes to women after its

great success with Fancy shoes. Bata should begun to take notice of the female market

and started to market to it. We feel the female sector is strong opportunity in both fancy

& athletics.

Sales of apparel & footwear on the Internet has been growing at a double digit pace,

considerably faster than more traditional sales models such as retail stores

The Internet allows footwear companies to pursue a direct to consumer sales channel. Internetsales of apparel, accessories, and footwear could reach 18 percent of category sales by 2012

Companies that added a Web-based sales strategy are able to customize footwear and othermerchandise directly to the customer's needs and taste, are enable to achieve considerablybetter pricing as well as "deepening" the emotional bond consumers have with the brand

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IFE MATRIX

STRENGTHS

1. Largest retailer network of 1300 outlets, 4000 franchises and another 10000 dealers.

2. Brand awareness was established in the early 30s. People associated Bata for quality and real

value for money.

3. Brand loyalty: Bata has got its own brand of customers who swear by the name Bata from

medium class to premium class.

4. Bata is restructuring the retail operation whereby it is closing loss making stores and is

planning of opening new stores which are more viable.

5. Quality Product

6. Differentiated line of products

7. Competitive Low Pricing

8. Strong distribution channel

9. Modern manufacturing facilities

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WEAKNESSES

1. Lagging in innovation

Bata has not been able to keep pace with the latest changes taking place in the footwearmarket.

2. Cost structure

Cost structure is a big concern to Bata. Raw material cost has increased mainly due toincrease in price of natural rubber by 44%. This is something that the industry players are

not being able to control. However employee cost was as high as 26% of sales as

compared to 10% for the industry. Bata has not been able to control this cost.

3. Competition

With the entry of the big brands like NIKE, CHINA etc Bata found it very difficult tohold its market share.

4. Cash tied up in inventories

Bata invested a lot of money in the inventories and fixed assets in the form of unused

land extensive network of dealer showroom for which maintenance and up keeping is

paid out which in return reduces profitability.

5. Low motivations among retailers outlets and sloppy showrooms.

6. Female market penetration is weak

7. Low aspiration value in high income group

8. Insufficient promotional activities

9. Bata at present conducts all the store management activity manually. This results lots of

lengthy paper works, errors & waste of time.

10. Inability to catch the present trend in time

11. VAT & tax barrier

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Sr

#

Key Internal Factors Weight Rating W-

Score

Strengths

1 Largest retailer network of 1300 outlets, 4000 franchises

and another 10000 dealers. Extensive Distribution with

241 retail stores (Forward integration)

0.09 4 0.36

2 People associated Bata for quality and real value for

money. (Shoe Quality)

0.11 4 0.44

3 Brand loyalty 0.09 4 0.36

4 Financial Strength 0.11 4 0.44

5 Geographical coverage 0.09 4 0.36

6 Variety of products 0.07 3 0.21

7 Image of durable shoes 0.09 4 0.36

8 Largest footwear group in Pakistan 0.08 4 0.32

0

Weaknesses 0

1 Insufficient promotional activities 0.09 1 0.09

2 Bata at present conducts all the store management

activity manually. This results lots of lengthy paper

works, errors & waste of time.

0.04 1 0.04

3 Inability to catch the present trend in time (old Fashion &

Old Designs)

0.07 2 0.14

4 Bata does not present itself as a brand of corporate and

sports personalities.

0.03 2 0.06

6 Supply chain and Inventory management issues 0.04 2 0.08

0

Total 1 3.26

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Bata Major/Close Competitors are

1. Servis

2. Local Brands3. International Brands4. Shafi Group ( Urban Sole)5. Chinese Shoe

Competitive Profile Matrix

Bata Servis Local China

Critical

Success

Factors Weight Rating

W-

Score Rating

W-

Score Rating

W-

Score Rating

W-

Score

Advertising 0.2 3 0.6 3 0.6 1 0.2 1 0.2

Shoe Quality 0.3 4 1.2 3 0.9 2 0.6 1 0.3

Financial position 0.15 3 0.45 4 0.6 2 0.3 3 0.45Market Share 0.07 3 0.21 2 0.14 1 0.07 2 0.14

Price 0.06 3 0.18 3 0.18 4 0.24 4 0.24

Outlets 0.09 4 0.36 4 0.36 2 0.18 2 0.18

Customer Loyalty 0.08 3 0.24 3 0.24 2 0.16 2 0.16

R & D 0.05 3 0.15 2 0.1 1 0.05 3 0.15

0

Total 1 3.39 3.12 1.8 1.82

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STAGE 2

MATCHING STAGE

SWOT/TOWS MATRIX

SPACE MATRIX

IE MATRIX

BCG MATRIX

GRAND STRATEGY MATRIX

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SPACE MATRIX

Financial Strength (FS)

(+1 worst, +6 best)

Environmental Stability (ES)

(-6 worst, -1 best)

Return on Assets 6 Rate of inflation -5

Leverage 5 Technological changes -3

Net income 6 Price elasticity of

Demand

-3

Income/Employee 4 Taxation -3

Inventory Turnover 4 Barriers -2

FS Average 5.0 ES Average -3.2

Competitive Advantage (CA)

(-6 worst, -1 best)

Industry Strength (IS)

(+1 worst, +6 best)

Market Share -3 Growth Potential 5

Product Quality -2 Financial Stability 6

Customer Loyalty -2 Ease of Entry into market 5

Technical know-how -2 Resource Utilization 6

Control over Suppliers & Distributors -3 Profit Potential 4

CA Average -2.4 IS Average 5.2

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Aggressive Strategy

As Bata falls in aggressive, But still we have to see at which angel

it lies. If it lies in exactly 45 degree line, then all good strategies

will follow.

But Bata falls just below the 4f degree line, so we should select

these strategies

Forward, Horizontal Integration

Market Penetration, Market Development & Product Development

Related Diversification

Note: Unrelated Diversification and Backward Integration should not be followed

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Market shares of the marie clarie and weinbrenner shows that these SBUs lies in stars , power

and bubble gummers are in cash cows and sandak is in dog.