Bata Shoe Company..CITY

8/10/2019 Bata Shoe Company..CITY

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Bata Shoe Companys Operations

in

Bangladesh


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INTRODUCTION

Bata Shoe Company is one of the largest companies not only in Bangladesh but also in

many other countries. Bata Shoes is a large, family owned shoe company based in

Bermuda but currently headquartered inLausanne,Switzerland, and operates 4

business units worldwideBata Europe, Bata Emerging Markets, Bata BrandedBusiness and Bata North America. It has aretail presence in over 50 countries and

production facilities in 26 countries. In its history the company has sold more than 14

billion pairs of shoes. In 1985 Bata Shoe listed in Dhaka Stock Exchange. At this

moment, its shares are traded in our two stock exchanges (DSE& CSE)

OBJECTIVE OF THE STUDY :

Objectives of the study are given below

To know about Batas products.

To get idea about their current business condition.

To analyze its market position with its competitors.

To take an over view of their market strategies.

AN OVER VIEW OF THE COM PANY:

The business that became the Bata Shoe Organization was established on August 24,

1894 in Zlin, Czechoslovakia by Tomas Bata, and included his brother Antonin and

sister Anna. Although this business was new, the Bata name had been part of a

tradition of shoemaking for eight generations, spanning three hundred years. It was one

of the first modern-day shoe 'manufacturers', a team of stitchers and shoemakers

creating footwear not just for the local town, but also for distant retail merchants. This

departure from the centuries-old tradition of the one-man cobbler's workshopwas a

brand new concept, creating an entirely new industry. The Bata enterprise

revolutionized the treatment of employees and labor conditions. Tomas consistently

maintained a human focus, creating opportunities for development and advancement,

and added compensation for employees based on achievement. As the enterprise

prospered, so did the communities where it operated. Tomas believed that a focus on

people and public service was critical for business success. The enterprise built

housing, schools and a hospital near the shoemaking plant in Zlin. It provided food and
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inexpensive rent during very difficult times. Bata companies later provided rail services,

construction, insurance, publishing and a tannery in Zlin.

"The Bata System" devised by the Zlin team, and later applied in other Bata Shoe

Organization companies, organized operations into autonomous workshops and

departments ("profit centre"), allowing employees to contribute ideas and stimulate

production, and contributed significant breakthroughs in footwear technology. By 1938

Bata Shoe Organization had established a unique and widespread presence,

designing, producing and marketing footwear in more than 30 countries. The Bata Shoe

Organization regarded itself as a 'Multi-Domestic' rather than multinational enterprise,

making it a priority to contribute to the economy in any new markets it entered.

During the 50s, 60s and 70s the Organization redoubled its focus on retailing

excellence, international footwear branding, advanced manufacturing techniques andextensive employee training, another Bata tradition that dated back to the

Organization's earliest years. The Organization continued to expand its retail

operations, production facilities and moved into new countries of operation. Thomas J.

Bata, and son Thomas G. Bata, continued to lead the Organization with the traditional

philosophy ensuring that each operation focused on customer satisfaction. As the

world-manufacturing base for footwear shifted to developing countries. New business

strategies have been guided by the founding principles of focusing on customers,

marketing and employees. Branded products, innovative retail store concepts, lifestyle

merchandising, non-footwear products and participative retailing have been introduced.

In 1992, the Organization and family were invited to return to the Czech Republic,

where Bata had remained a symbol of national pride and achievement.


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BATA TODAY:

Serves 1 million customers per day

Employs more than 50,000 people

Operates 5000 retail stores

Manages a retail presence in over 70 countries

Runs 27 production facilities across 20 countries

Bata Internationalserves customers in much of Asia, the Pacific and Africa through its

3,000 stores and many dealers. It is supervised from Singapore. Bata International

operates shoe innovation centers in several countries as well as 30 factories to serve

individual markets.

Bata Europeis based in Paris and operates 500 stores offering fashionable footwear.

The world-class shoe innovation center just outside of Venice supplies many of the

exclusive lines found in Bata stores throughout Europe.

Bata Latin Americais based in Mexico City. Bata is the leading retailer of shoes in

Latin America and the leading marketer of children's branded footwear.

Bata Canadais based in Toronto from where 250 stores serve the Canadian market.

Its chain of Athletes Worlds and Nike Shops is the leading fashion source in Canada

for young urban customers.

Bata Shoe organization (B.S.O.) is the largest manufacturer and marketer of footwear

in the world. Its global business comprises of shoe factories, tanneries, engineering

plants, quality control laboratories, product development and research centers. Bata

distributes its products through approximately 6,300 retail outlets, 10,000 franchises

and thousands of wholesale depots and dealers. More than 50,000 people are

employed in producing and selling over 300 million pairs of shoes each year, primarily

for the domestic markets in which B.S.O companies operate.

Approximately 400,000 additional people and their families are engaged in the support

services required by B.S.O. operations. Bata International Centre is located in Toronto,


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Canada. Mr. Tomas Bata, the founder of Bata Shoe Organization, initiated this

worldwide operation in Zlin, Czechoslovakia, now known as the Czech Republic. The

year 1994 marked the 100th founding anniversary of BATA. Over the years B.S.O.s

operation expanded across the entire globe and established itself as the worlds largest

organization in footwear manufacturing and marketing Today Bata operates in 68

countries.

BATA LEAD ERSHIP POINTS:

Bata operates in many different economic and cultural environments around the world,

dictating very different types of operations. Although Bata does not sell the same shoes

nor does it have identical stores in each country, customers will recognize common

elements to the Bata experience everywhere in the world. These common elements are

the Bata Leadership Points.

The best product

Bata companies offer our customers fresh, fashionable footwear and accessories,

designed specifically for the needs of the local market. Our shoes are always well made

from quality materials.

The best service

Whether in India or Italy, our sales associates offer consistently first-class service. They

are well trained to ensure a proper fit, and we pledge customer satisfaction.

The best value and quality

Through the efficient sourcing and distribution of Bata products, we can control the cost

and quality at every step to ensure value to our customers.

The best locations

Bata stores are modern, attractive and located conveniently to our customers. Bata

companies utilize innovative promotions and displays to display our products in

attractive manner.

BATA BANGLADESH:


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Bata Shoe Company established by G. Bata in 1874 at Zing in former Czechoslovakia.From a very modest beginning it has come a long way since, mainly by the vision of itsfounding father and sheer commitment of its employee around the world. At first it onlymade and sold good high quality shoes in and around Europe but as time goes by itcrosses the boundary to Europe and enter in many countries around the world. At thePakistan period Bata was first came to this country. After independence Bata continue

their commitment to provide good quality shoes at an affordable price. Many of theelderly people still remember the Naughty Boy shoe of Bata that was known for itsdurability among the kids of that time. But since then Bata Bangladesh has changed alot. Now they are not only providing durable shoes but have brought new designs tooaccording to the taste of the people. Bata expands its operation all through the country.It has now huge number of stores, agencies, dealers and wholesalers around thecountry. And undoubtedly it has the biggest shoe manufacturing and marketingorganization here in Bangladesh. There are hardly any places in the country where onewill not found Bata store, which signals its expansion, success and popularity here.

Bata Bangladesh is a public limited company, which has 51- 49% share with thegovernment of Bangladesh. Though it has established in Czechoslovakia but at presentBata is a Canadian company because of the migration and mergers of the family andnow J. Bata who happens to be the grandson of founder G. Bata has his operation andheadquarter in Canada and operates as a Canadian company. In Bangladesh it isoperating as a Canada-Bangladesh company.

Bata has two factories in Bangladesh from where it produces all kinds of shoes. One of

which is at Tongi and other one at Dhamrai. The second factory at Dhamrai has state of

the art technology and facility with leather treatment to leather processing to waste

treatment plants, which is the only one of its kind in the country. Bata Bangladesh

produces daily around 80,000 pairs of shoes of various descriptions in its two

manufacturing units located at Tongi and Dhamrai. It has a modern Tannery with the

latest technological facilities to process approximately 19,000 square feet of leather

daily, which comprise a wide range of products and finishes. The Tannery is also

equipped with a modern effluent treatment plant to ensure a pollution free environment.

The Companys marketing network is consolidated through its own retail outlets,

distributors, franchises, agencies, wholesale depots and a large number of registered

distributors and dealers.

BATA BD. BASIC FACTS

YEAR OF ESTABLISMENT AS BRANCH OFFICE : 1962

YEAR OF INCORPORATION AS FULL FLEDGED COMPANY` : 1972

TOTAL MANPOWER : 4300

NUMBER OF BROAD CATEGORIES OF SHOES : 4

TOTAL NUMBER OF CATEGORIES OF SHOES :40


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BATAS ANNUAL SALE PAIRS(2009) :35 M PAIRS

BATAS ANNUAL TURNOVER IN 2009 :70M US $

AVERAGE RETAIL PRICE :4 US $

NO. OF BRAND :20

CHANNELS OF SALES:

RETAIL AREAS : 30

NUMBER OF RETAIL OUTLETS : 350

WHOLESALE DEPOTS : 20

TOTAL NUMBER OF DEALERS : 1200


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COMPANY PROFILE OF BATA SHOE COMPANY BD) LTD.

Mission:

Introduction of a strong shoe line targeted to various market segments to maintain

leadership through increased market share.

Vision:

To provide good quality shoes at an affordable price. By keeping in mind the comfort

that needs to be there and providing new designs with it.

Objectives:

Achievement of 100% estimated business in each category

Maintain a shoe line with 700 lines of which 200, 300, 150 & 50 lines for Men, Women

Children & Plastic respectively.

Introduction of a shoe line as per life style as well as fashion trend.

Achieve an average 55% margin in each category

Innovate ideas or system for better management of merchandise distribution by

maintaining 4 times stock turn.

Strategies:

Penetration to new & targeted market segments through introduction of shoe lines as

per life styles with supportive promotion activities

Defined number of lines, assortment & quantity for each store according to

merchandise classification & store profile in order to increase efficiency in distribution.

Identification of loopholes in cost structure to increase production efficiency.

Detail analysis of price points of entire shoe line in order to achieve maximum margin.

Detail analysis of departmental work flow & bringing necessary changes for efficiency

better coordination with other departments.


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BATA S BUSINESS:

Bata manufactures and sells a wide range of footwear made from leather, canvas,

plastic and rubber. The company sells over 59 mn pairs per year throughout the country

and in overseas markets such as USA, UK, Europe, Middle East, etc. The company

also markets a range of sports shoes, garments and accessories manufactured byothers.

Footwear sales account for more than 97% of the total revenue. Rubber and canvas

footwear contributes 48% of volumes, leather footwear contributes to 30% and plastic

footwear accounts for 22% of volumes. In value terms, leather footwear contributes to

58% to turnover, Rubber and canvas footwear contributes 27%, plastic footwear

accounts for 12% of total turnover. Accessories, garments, etc account for 3% of

turnover. Bata manufactures around 50% of its footwear in its own units, while the rest

is outsourced. from small-scale manufacturers. While all the plastic footwear is

outsourced, in leather company manufactures 63% of the footwear in-house and in

rubber and canvas footwear, 61% is manufactured in-house.

SOURCES OF PRODUCTION:

Bata Bangladesh has four different sources of production:

Own:

Bata Bangladesh has two factories in Tongi and Dhamrai. All the rubber and related

production has been done in Tongi factory. Every type of leather products are been

manufactured in the Dhamrai factory. About 92% of all Bata products are produced in

these two factories.

Satellite:

There are some satellite production factories which produces solely for Bata with the

production facility, which has been, step up by Bata Bangladesh. 4% of Bata production

is from satellite sources.

Outsourcing:

As related and supporting industries are growing in shades of the massive structure of

Bata Bangladesh. It also does outsourcing with different small shoe industries mainly

from the Dhaka region. The quality and the specification has been ensured by the Bata

people. The participation of outsourcing in the companies business is 4%.


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Import:

With high import duty it is hard for Bata to import a substantial amount from different

subsidiaries and other outside suppliers. It can be mentioned that the duty for importing

complete shoe here in Bangladesh is 101%. Even though Bata Bangladesh import

shoes to keep up with the market trend, which is around 1% in every year.

PRODUCTS:

School shoes of Bata:

Bata first earn its name as the most durable shoe manufacturer for school going

children. When it first comes to this country it has realized that there is a huge market

opportunity for school shoes. Quickly they introduced the Naughty Boy shoes. Whichquickly earn recognition among the parents of that time, as they need a durable shoe

that really can last even after lots of rough treatment. From there on Bata gone on to

make Canvas shoes, other black leather shoes, hard top white sneakers for school

goers. The most popular brand of school shoes that are now in the market are

NorthStar which provides hard and soft white sneakers and the leather black Bata

school shoes which are of various designs.

Bubblegummers:

The Bubblegummers brand of Bata serves the infant to children, according to them 0-

13 years of age group. Bubblegummer brand has provided Varity of design and type of

shoes for above-mentioned age group of children.

Marie Claire:

The Mari Clare brand of Bata is for women. It has more than 100 designs and hasdifferent price range of shoes. The price range here starts from Taka 450. In recent

times Bata has targeted the young working women who wants reasonably priced,

decent design and durable shoes for work and this brand in many cases serves this

segment well.


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Power:

This is a reasonable priced good quality sports shoes and sandle shoes for young male

and female. The target segment of Power is teenagers and some parts of the elderly

people who need sneaker for walking purpose. The price range starts from 695/- and in

many cases not exceed more than thousand taka. According to the buying power this

price range is very popular with the general public as durability comes with it as with

every Bata footwear.

KingsStreet:

The most famous dress shoes of Bata come under the brand name of KingsStreet. It

has been nice to know that this brand of shoes has been solely made in Bangladesh.

The Dhamrai factory of Bata has the machinery to make these shoes, which they

established in 1999 at a cost of 1 core taka. These shoes have different price range for

different segments of people.

Weinbrenner:

This brand of Bata provides trendy, outdoor, rough use footwear for men. This is also a

popular brand with the youth of the country. Though the brand is not that cheap but the

quality of it is very good. Apart from these Bata has numbers of leather sandles of

various designs, sandle-shoes under Bata brand name that serves different segment of

the market. Bata also manufacture and market popular brands such as HushPuppy,

Dr.Scholes in this region of south Asia. Bata also have quite new brands for mal e and

female like Bata Comfit, Bata Flexible. According to the Bata officials in Bangladesh

Bata have more than 1000 lines of footwears here in Bangladesh at present.

Thus Bata's well known brands include Power, Bubble-Gummers, Marie-Claire, Hawai,

Naughty boy, Sandak, North-Star etc. International brands such as Hush Puppies,

Nike, Lotto, and Dr Scholl are sold under manufacturing and licensing agreements. The

company has more than 1000 shoe designs and caters to all the segments. Over 60%

of sales come from the men's range, while children's and womens range account for

about 20% each. In women's segment the Sun-drop range of casual ladies wear in the

popular range has done well in the market and registered a strong growth of 500% in

F12/2000. The brand is being endorsed by filmstar Rani Mukherjee. Bata also markets

sports wear, readymade garments, hosiery, and other footwear accessories like socks,

shoe polish, etc. The company also exports its products to countries like Germany,

Australia, USA, UK, Holland, Denmark, New Zealand, France and Canada. It exports

about 4mn pairs of shoes in a year.


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Finance Department:

To maximize the interest of the shareholders of Bata Shoe Co. (BD) Ltd.

To allocate the fund in a proper way that minimizes its cost and maximizes itsprofit. To ensure conductive financial climate of the company. To ensure sound management of the administrative staff and financial matters of

administrative staff and selection grade employees.

Investigation: Conduct thorough review in any specific area of audit universe asdesired by the authority of the concerned audit entity.

Development of procedure manuals.

QQuuaalliittyyAAssssuurraannccee::

To ensure that the end users receive medicines those are safe, effective andquality consistent with leadership position in the health care industry throughoutthe country.

To apply the principles of customer-focused quality, service and excellence to allprocesses and system, from product design, development through production,distribution and marketing.

To maintain the standard of quality in order to protect the patients, prevent errorsand optimize value provided to the consumer and company.

MARKET A NALYSIS:

Within a given environment, marketing strategy deals with the interplay of three forces

known as the strategic three C's: the customer, the competition and the corporation.

Based on interplay of the strategic three Cs, formation of marketing strategy requires

the following three decisions:

Where to compete: It requires a definition of the market (e.g. competition across an

entire market or in one or more segments).

How to compete: It requires a means for competing (e.g. introducing a new product

to meet a customer need or establishing a new position for an existing product).

When to compete: It requires timing of market entry (e.g. being first in the market or

waiting until primary demand is established).

Thus Marketing strategy, in terms of these three key constituents, is defined as an

endeavor by a corporation to differentiate itself positively from its competitors, using its

relative strengths to better satisfy customer needs in a given environmental setting.


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ANALYSIS OF THE CORPORAT ION:

Figure: 2 Key elements of marketing strategic formulation

3.2 MARKET POSITION:

Bata Bangladesh is the largest player in the footwear industry with around 9-10%volume share and a 60% market-share in the organized segment. BB (BataBangladesh) has a market share of 70% in canvas shoes segment while it has a shareof 60% in leather shoes. BB manufactures about 10% of the total Hawaiis sold in thecountry. BB competes in manufacturing low priced Hawaiis with the unorganized sectorwith its price ranging from Taka35-Taka110 with unorganized sector's pricing in therange of Taka25-Taka50.

Leading competitor in the popular segment of the organized market Apex Shoes. Other

organized sector players are liberty shoes, Baly Shoes, Woodland, Pagasus. Most

Marketing Strategy:

Achieving maximum

Positive differentiation

Customer

Competitionorporation

Social

Environment

Political and Legal

Environment

Economic

Environment

Technological

Environment

Key Elements of Marketing Strategic Formulation


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global players like Adidas India, Reebok, Nike, etc are operating through theirBangladeshi subsidiaries with main focus on premium sports shoes segment, whichhas an insignificant volume share. Competition is hotting up in the domestic market dueto popular brands such as Gaitonde, Red Tape, Lotus Bawa in the illegal andsmuggling of these shoes. These brands are gaining market share especially in thepremium segment.

3.2.1 MARKETING MIX OF BATA SHOE COMPAY BD) LTD.

PRODUCT:

Bata shoe Bangladesh Ltd. has more than 900 lines of shoes in different categories.They distribute all of these lines of shoes in different parts of Bangladesh throughwholesalers, dealers and through their own stores. In the following chart some of theshoes, its average price, size and other dominating features are mentioned.

BATA Best Price Range TK)

Men's 995-1695

Women's 250-550

School 200-330

Children 130-195

Sport 695-995

Non Shoes 50-100

Dominating Color

Men's Black

Women's Black, Chocolate

School Black, White

Children Multicolor

Sport White, Gray


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Table 1: Different

Product Category

and Best Selling

Sizes

PROMOTION:

Promotion strategies are concerned with the planning, implementation, and control ofpersuasive communication with customers. Clear-cut objectives and a sharp focus ontarget customers are necessary for an effective promotional program. As Bata is aestablished brand here in Bangladesh they think that they should go on with more and

more retail outlets rather than intense advertising. So they limit their advertising intofollowing places:

Billboards Adds on local newspaper Some promotion together with other established brands

Non Shoes Black, Chocolate

Best selling sizes

Men's 41,42

Women's 4,5

School 4,5

Children 11,12

Sport 7,8

Non Shoes Depends on the product

Opening Days 6 days

Opening Hours (AM-PM) 9:00 am-8:00 pm

Implementation of new designs Weekly

Effective sales campaigns 15-20% discount


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Distribution process of Bata Bangladesh:

Figure: 3 Distribution process of Bata shoe Co. Bd.) Ltd.

3.3 FUTURE PLANS:

To improve the sales and profits, BB is planning to increase penetration by setting upmore retail outlets and taking space in shopping malls across the country. Existing retailstores would be upgraded even as wholesale depots would be set up in smaller townsand semi-urban areas. BB's main efforts will be to streamline the wholesale business.BB's thrust is on becoming marketing driven firm from a manufacturing orientedcompany. Steps are also being taken to reduce costs, improve distribution logistics andfocus on launch of new products in order to improve the performance of the company.

INDUSTRY ANALYSIS:

Products tend to go through different stages, each stage being affected by differentcompetitive conditions. These stages require different marketing strategies at differenttimes if sales and profits are to be efficiently realized. The length of a product life cycleis in no way a fixed period of time. It can last from weeks to years, depending on thetype of product. In case of shoe industry in Bangladesh it is presently going through thegrowth stages which are characterized by many new consumers entry in the market, byfall in price as experience and economies of scale have been attained, by developeddistribution channel and by increasing intensity of competition.

Raw

Materials

Tongi

Factory

Dhamrai

Factory

CDC

(CentralDistribution

Depot

Own Stores

&

Dealers

&


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Introduction Growth Maturity Decline

Figure: 4 Product Life Cycle of shoe industry in Bangladesh


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INTENSITY OF COMPETITION IN SHOE INDUSTRY:

Conceptual framework for industry analysis has been provided by Porter. He developeda five-factor model for industry analysis, as shown in the exhibit. The model identifiesfive key structural features that determine the strength of the competitive forces within

an industry and hence industry profitability. Analysis of shoe Industry of Bangladesh inrespect to Bata shoes with Porters Model of Industry Competition has beensummarized as followed.

Figure: 5 Five forces of competition for Bata Shoe C o. Bd. Ltd.

NEW ENTRANTS

Apex

Nike, Reebok, Woodland

Sun crest

MAJOR COMPETITORS

Apex, Independent

sellers,

SUPPLIERS

Rubber from local source,

leather from local source.

Some sole from other

BUYERS

Infant, teen, young, old.

Lower- middle to upper

class

SUBSTITUTE

Bare foot, low quality

footwear


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3.4.2 SW OT A NALYSIS:

Strengths:

Image of the company Quality Product Differentiated line of products Competitive Pricing Strong distribution channel Modern manufacturing facilities Brand loyalty at mass level

Weaknesses:

Insufficient promotional activities Bata at present conducts all the store management activity manually. This

results lots of lengthy paper works, errors & waste of time. Inability to catch the present trend in time Less competitive price due to high cost structure. VAT & tax barrier

Opportunities:

Despite political turbulence a segment of our middle-class is coming up withreasonable buying power. Many of them are women who are decision maker sothe city store concept of Bata can attract them as whole of the family footwearcan be available there.

Consumer like differentiated products. They like to shop in a store where theyserve the whole family.

More competition results in more campaign for products. Business Expansion in Shoe care products Utilize outsourcing especially the synergy sources to achieve competitive pricing Franchisee opportunity with global brands like Nike, Reebok, Hush Puppy Market expansion opportunity in high fashion & value for money footwear

market for all categories of shoes through Retail & WCSM channels


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Threat:

Political instability affects the supply of raw materials and distribution of finishedproducts.

Uncontrolled counterfeit of Bata products New companies like Apex, Homeland, Pagasus of Bangladesh and the foreign

companies like Nike, Reebok, Addidas are already in the market with goodquality product. Have to keep up with them respect of quality.

Smuggelling of shoes and many stores in the city like the onesin elephant roadare the major market leaders. As they dont have to pay for large amount ofmoney for establishment, production, quality and advertising so they can sell at amuch lower price than established brands like Bata.

Rapid market expansion program by organized competitors like APEX.

ETHICAL CONDUCT AND CORPO RATE RESPONSIBILITY:

Bata companies have a tradition of being good corporate citizens and seek tocontribute to the well being of the countries and communities where they operate. Batacompanies conduct themselves as positive and contributing members of anycommunity in which they operate, and seek to provide employees with a safe andhealthy working environment. Bata companies are committed to ensuring thatoperations are conducted ethically, and in compliance with applicable local laws andregulations. Bata Bangladesh is also concern about the environmental safety relatedissues. So it has established of its own an Effluent Treatment Plant (ETP) in itsorganization premise with a huge investment.

The Bata Environmental Mission Statement is: To protect our people, customersand communities and to protect our natural environment in order to help sustain humandevelopment globally.

CONCLUSION:

From the analysis of Bata Shoe Company Bangladesh Ltd and the shoe industry we

have identified that the shoe industry is growing and identified their main weakness is

insufficient lack of development with the rapid changing market needs, insufficient

promotional activities, and downward trend of quality. On the other hand, distribution

system and vertical integration are the strengths of Bata From strategic marketing

viewpoint; we see that Bata is taking corrective steps in almost all the way. In very few

sides Bata has lacking. Based upon these facts recommended strategies would assist


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in more growth of Bata shoe company Bangladesh Ltd. in among the upcoming fierce

competition in the shoe industry.

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Bata Shoe Company..CITY

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