International Business Case study on Bata

1. INTERNATIONAL BUSINESS CASE STUDY
Javed Kalangade (P1118)
Ashish Khandare (P1124)
Amit Kumar (P1129)
Raul Pinto (P1148)
Sonal Sherekar (P1155)

2. 1. Bata Company Overview
History, Evolution and Positioning
2. Case Study Overview
FLOW OF Bata’s Journey over the world
PRESENTAION
3. Foreign Political Systems
Bata’s interaction with foreign systems
4. Road Ahead for Bata
International Challenges for Bata Ahead

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
family
COMPANY
• 5,000 international retail locations in over 70
OVERVIEW countries
• Services over one million customers per day

4. Facts about Bata
• Core Principle
– To know its customers and to create the best
possible products to meet their needs
BATA • Mission
COMPANY – Offering style, comfort and quality at the
best price
OVERVIEW

5. Facts about Bata
• Innovators and Leaders
• International and Local
• Future of footwear
BATA
COMPANY • “Our success is built on
OVERVIEW our legacy of values and
belief”
- Thomas G. Bata

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 scale
COMPANY
• Trying of not exporting; the local
OVERVIEW production is basically dedicated to the
internal market

7. FOREIGN • The company was founded in 1894 in Zlín
POLITICAL (Czech Republic) by Tomas Bata
SYSTEMS • A large order from the army, military shoes
Czechoslovakia 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. FOREIGN 1918 The Czechoslovak state was conceived
POLITICAL as a parliamentary democracy
SYSTEMS 1939 The Company relocates to Canada
after the movement of German
Czechoslovakia
military forces into Eastern Europe
1945 Czechoslovakia business operations
are nationalized by the new
communist government following
World War II

9. FOREIGN • Anticipating the Second World
POLITICAL War, Thomas J. Bata, the founder's
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. Business in Canada
• Canada defines Small Businesses as those with
fewer than 100 employees (in goods producing
firms) and 50 employees (in service firms)
FOREIGN
POLITICAL
SYSTEMS
Canada

11. Canadian Provincial Taxes
FOREIGN
POLITICAL
SYSTEMS
Canada

12. FOREIGN • The local factories of Bata in Uganda
POLITICAL 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. 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 president
POLITICAL 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 Amin's reign was ended after the Uganda
Tanzania War
1986 Museveni has been in power since 1986

14. 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
FOREIGN
• Uganda has substantial natural
POLITICAL 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. • Bata had been also criticized for
maintaining different types of
relationships with totalitarian
regimes, as the one of Chile
FOREIGN • The company presented in its
POLITICAL own defence the argument that
SYSTEMS it had been activating in Chile
Chile more than 40 years, meanwhile
many political regimes had
changed

16. 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
FOREIGN
strengthened when the democratic government
POLITICAL 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. FOREIGN
POLITICAL
SYSTEMS
Types of
Governments

18. Under
Communism, produ
Under ction is managed by
Socialism, the communities of
government has workers
Under
Capitalism, the the role of
government has favoring the
the role of easing needs of society
the class struggle
in favor of Capital

21. • The case of South Africa was a major challenge
Bata in for Bata
South 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

22. • 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 the
South 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

23. • 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 decision
South 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

24. Bata in
South Africa

25. Bata in
South Africa

26. 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 day
South 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%

27. Business in South Africa
• South Africa suffers from relatively
heavy overall regulation burden
compared to developed countries
Bata in • State ownership and interference
South Africa impose high barriers to entry in many
areas the top corporate tax rate is 28%

28. Bata in
South Africa

29. Bata in
South Africa

30. Bata in
South Africa

31. Bata in
South Africa

32. • 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 strategy
South Africa
of using local production to cater to
domestic markets as

33. 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

34. 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 a
Bata’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

35. 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
Bata’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

36. 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 to
Bata’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

37. Political System in Czech Republic
• Parliamentary republic, democratic state
• Power is divided into legislative (Czech
Bata’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

38. Political System in Slovakia
• The National Council of The Slovak Republic
Country’s sole constitutional and legislative body
Bata’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

39. 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
Bata’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

40. • 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’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

41. 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 than
Bata’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

42. What is the risk, if Bata Sr. cant find a way
to retire
• The training under Tom J. Bata will prove more
effective
Bata’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

43. Thank You