Strategic Management

Assignment # 3 (Till QSPM)

Sec - A

Submitted To:

Prof. Amjad Hussain

Submitted By: Group ID B (Rocks)

1) 2) 3) 4)

Muhammad Afzal Nasir Iqbal Sheikh Mustafa Abdul Qayum

L1F09MBAM2009 (Group Leader) L1S09MBAM0147 L1S10MBAM0116

Industry Company

: :

Foot Wear Industry 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 running my 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 the recommendations on these techniques for improvement at the end.

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Batas Vision & Mission Statement

Bata Vision
To grow as a dynamic, innovative and market driven domestic manufacturer and distributor, with footwear as our core business, while maintaining a commitment to the country, culture and environment in which we operate.

Bata Mission
To 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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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 Opportunities

Increasing Trends Towards Fashion Shoes Sales of apparel & footwear on the Internet has been growing at a double digit pace Increasing Sports Events in Pakistan Increase in wedding seasons and festivals (average wedding season of 8 months now) Awareness of Quality among customers Increasing population by 10%

Weighted Weight Rating Score

0.13 0.06 0.11 0.08 0.11 0.09

2 1 3 1 4 3

0.26 0.06 0.33 0.08 0.44 0.27

Threats
Stiff competition in the market from local and foreign brands Electricity Shortage Increase in unemployment has impacted the household income which may result in spending less on brand name Decrease in customers purchasing power ( Inflation) Political Instability 0.12 0.08 0.07 0.09 0.06 1 3 3 3 2 3

0 0.36 0.24 0.21 0.18 0.18 2.61

Total

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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 Shoes Bata 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. Internet sales 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 other merchandise directly to the customer's needs and taste, are enable to achieve considerably better pricing as well as "deepening" the emotional bond consumers have with the brand

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IFE MATRIX
Sr # Key Internal Factors Weight Rating WScore

Strengths
1 Largest retailer network of 1300 outlets, 4000 franchises and another 10000 dealers. Extensive Distribution with 241 retail stores (Forward integration) People associated Bata for quality and real value for money. (Shoe Quality) Brand loyalty Financial Strength Geographical coverage Variety of products Image of durable shoes Largest footwear group in Pakistan 0.09 4 0.36

2 3 4 5 6 7 8

0.11 0.09 0.11 0.09 0.07 0.09 0.08

4 4 4 4 3 4 4

0.44 0.36 0.44 0.36 0.21 0.36 0.32 0

Weaknesses
1 2 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 (old Fashion & Old Designs) Bata does not present itself as a brand of corporate and sports personalities. Supply chain and Inventory management issues 0.09 0.04 1 1

0 0.09 0.04

3 4 6

0.07 0.03 0.04

2 2 2

0.14 0.06 0.08 0

Total
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3.26
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Competitive Profile Matrix

Bata Major/Close Competitors are

1. 2. 3. 4. 5.

Servis Local Brands International Brands Shafi Group ( Urban Sole) Chinese Shoe

Bata
Critical Success Factors
Shoe Quality Customer Loyalty Financial position Price Outlets Market Share Advertising R&D

Servis
3 3 4 3 4 2 3 2 0.75 0.27 0.84 0.27 0.36 0.14 0.45 0.1 3.18

Local
2 2 2 4 2 1 1 1 0.5 0.18 0.42 0.36 0.18 0.07 0.15 0.05 1.91

China
1 2 3 4 2 2 1 3 0.25 0.18 0.63 0.36 0.18 0.14 0.15 0.15 2.04

Wei ght
0.25 0.09 0.21 0.09 0.09 0.07 0.15 0.05 1

Rati W- Rati W- Rati WRati Wng Score ng Score ng Score ng Score

4 4 4 3 4 3 3 3 1 0.36 0.84 0.27 0.36 0.21 0.45 0.15 0 3.64

Total

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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) Return on Assets Leverage Net income 6 5 6

Environmental Stability (ES) (-6 worst, -1 best) Rate of inflation Technological changes Price elasticity of Demand Taxation Barriers -5 -3 -3

Income/Employee Inventory Turnover

4 4

-3 -2

FS Average

5.0

ES Average

-3.2

Competitive Advantage (CA) (-6 worst, -1 best) Market Share Product Quality Customer Loyalty Technical know-how -3 -2 -2 -2

Industry Strength (IS) (+1 worst, +6 best) Growth Potential Financial Stability 5 6

Ease of Entry into market 5 Resource Utilization Profit Potential 6 4

Control over Suppliers & Distributors -3

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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1. SWOT/TOWS MATRIX

STRENGTHS
1. Distribution Network 2. Shoe Quality

WEAKNESSES
1. Insufficient promotional activities 2. Bata at present conducts all the store management activity manually. 3. Inability to catch the present trend in time (Old fashion and old designs) 4. Bata does not present itself as a brand of corporate and sports personalities. 5. Supply chain and Inventory management issues.

TOWS Matrix for Bata Shoes

3. Brand loyalty 4. Financial Strength 5. Geographical coverage 6. Variety of products 7. Image of durable shoes 8. Largest footwear group in Pakistan

OPPORTUNITIES
1. Increasing Trends Towards Fashion Shoes 2. Sales of apparel & footwear on the Internet has been growing at a double digit pace 3. Increasing Sports Events in Pakistan 4. Increase in wedding seasons and festivals (average wedding

SO Strategies
1. Can get national and international contracts of Sports manufacture (S4, O3). 2. Can diversify the nature of business (S3, O4). 3. Increase promotion of Bata not only as comfort but also a fashion brand shoes 4. Market development

WO Strategies
1. Can transform itself or develop an SBU to reflect an image of fashion and innovation (O1, W4). 2. Offer more products other than just focusing on footwear

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season of 8 months now) 5. Awareness of Quality among customers 6. Increasing population by 10%

5. Market Development

THREATS
1. Stiff competition in the market from local and foreign brands 2. Electricity Shortage 3. Increase in unemployment has impacted the household income which may result in spending less on brand name 4. Decrease in customers purchasing power (Inflation) 5. Political Instability

ST Strategies
1. Product development for local taste and requirements (S4, T4). 2. Right sizing and cost minimization to cater inflation and retailing problems (T4, T3, S3). 3. Promote Bata Shoes more aggressively through more high profile stars

WT Strategies
1. Improvement in distribution channels and retail management to combat the penetration of competitors (W5, T1,). 2. Project and target based assignments to development teams in efficient resource utilization environment. (T2, T3, W4).

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Bata lies in the quadrant 1 and in that quadrant we can apply the following strategies: Market Penetration Market Development Product Development Backward Integration Forward Integration Horizontal Integration

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Data Regarding BCG MATRIX & IE MATRIX

Brands/Divisions of Bata are:

This data is collected on my assumptions & past sales of my Bata Shop.
Weinbrenner Power Bubble Gummers Plaza B-first School Shoes Sandak

Bata Divisions/ Brands

Revenues

%
Revenue

Profi ts

% Profits

IFE

EFE RMSP

IG Rate % 0-10

In Millions
1 Weinbrenner 2 Power Bubble 3 Gummers 4 Plaza B-first School 5 Shoes 6 Sandak 4930 4100 3500 2300 1500 900 29 24 20 13 9 5 800 678 613 548 512 250 24 20 18 16 15 7 3.5 3.2 3.6 2.9 3.1 2.4 3.7 2.94 2.8 2.6 3.8 2.1 0.8 0.2 0.4 0.3 0.5 0.1

6 -2 5 3 7 2

Total

17230

100

3401

100

Note: These 2 matrices are drawn separately on Page and attached to the assignment

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STAGE 3 DECISION STAGE

QSPM

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Matrix Analysis
Before making QSPM, We first analyze all matrices and pin point that common strategies in all matrices and then makes sets to make choices among resulting strategies from these sets.

Strategies
1 2 3 4 5 6 Market Penetration Market Development Product Development Forward Integration Backward Integration Horizontal Integration Related Diversification Unrelated Diversification Retrenchment Divestiture Liquidation

SPACE BCG IE
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Grand Strategy Matrix

1 1 1 1 1 1

Total Count
4 4 4 4 4 4

7 8 9 10 11

0 0

0 0 0 0 0

2 0

0 0 0

0 0 0

0 0 0

0 0 0

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QSPM
In QSPM, We have not found any alternative strategy. But we have a choice of 2 same set strategies out of which we decide which we implement 1st.

The two strategies are:

1. Promotional Companes 2. Product Development

Results:
Promotional companes got a total attractive score of 4.14 and Product Development got 3.33 So we shall adopt Promotional Companes first

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Recommendations

Company should focus on Product Development, Market Development and Market penetration Strategies! Should exit from the lower end segment and focus more on the middle and upper middle class of the society! Renewed brand image will enable Bata to earn premium at the upper middle end of the market will aid the achievement of the financial goals! Footwear industry is highly fashionable industry; hence Bata must improve the efficiency of product development in order to bring new design and style. The service standards should be strictly monitored and hence an experience fit will be provided to the customers and these customers for this will be willing to pay a bit of premium! It will need to focus on marketing itself as an outlet meeting all basic needs of the families in its target market segment! Should provide consistent quality service to its customers so that customers can associate the same experience with whichever outlet they visit of Bata! Internet is a broad medium so they should also improve E-BUSINESS.

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