The Bata Shoe Organization
Case Synopsis The Bata Shoe Organization, headquarter in Toronto, Canada, is the world¶s largest footwear manufacturer and retailer. It has built a worldwide shoe network in 28 countries, using machinery and mass production technology. Bata¶s activities are carried out in 60 countries on virtually every continent. Bata is originally a Czechoslovakian company but after war swept across Europe in 1939, it shifted it¶s headquarter to Canada. Currently, Bata executes all of its strategies through it¶s headquarter. The company¶s basic strategy is to provide footwear at affordable prices to the largest segment of the population. But the success story is not same in all countries. Bata was successful in Czech Republic but it was not able to sell one pair of shoes in Slovakia. Case Analysis During the World War II, the political risks forced Bata to move its operations from Europe to Canada. The Czech operations were subsequently taken over by the communists after World War II. When Bata started its operations in former Czechoslovakia had problems dealing with the newly formed governments. Bata actually tried to recover lost investments in the Czech Republic and Slovakia but it faced economic and political problems. In the Czech Republic, Bata might be able to get more economic freedom. In this country, the government has likely set its economic policies to be more liberalized. Bata might be able to operate independently and get a percentage of its previous assets back and gradually get back everything due to the low government intervention and economic freedom which is exercised here. This will encourage and enable Bata to begin its operations quickly and capture its once lost market. In an economically free country, there would be no constraints on the flow of investment capital. Individuals and firms would be allowed to move their resources. Trade freedom is another attraction of the economically free government. Bata could easily export its shoes to other parts where the risk is low. Since Bata avoids excessive reliance on exports due to the risks of restricted trade. In the politically free environment like Czech Republic the restricted trade can be overcome and take the advantage from exports. On the other hand, in Slovakia, Bata might face a lot of government intervention in its operations. It might not be able to operate freely and easily in this nation let alone getting back its assets from the government. There might be a lot of political risks which the company must bear. In addition to this, Bata must probably go through different legal procedures which will take a long time for it to establish itself in the country and start operations smoothly like in the Czech Republic. Innovations will be hard to be seen in Slovakia because companies will be state owned and thus individuals will be less inclined to find better ways to satisfy consumers¶ needs.
if it accepts Bata¶s operation in the country. Czech started to encourage privatization of companies but Slovakia encouraged nationalization of companies. The advantages are as follows: Advantages to Slovakia y Bata chooses local resources for the production so the local resources of tihe Slovakia will be explored and utilized in the proper manner. Some of the advantages for Bata are as follows: Advantages to Bata y y Bata will be able to return to the home country. This will enhance the economy of Slovakia itself.After the collapse of Czechoslovakia. The major disadvantages are discussed below: Disadvantages to Slovakia y Bata have to cope itself to the command and totalitarian control of Slovakia if it were to establish its operations in the country. Bata will have to face the not so free economic policy of Slovakia. this will help create strong supply base in the host land and it increase the revenues of the raw material producers. y Bata gets its raw materials from diversified local suppliers. Bata will get a lot of advantages as well as some disadvantages when it will enter the Republic of Slovakia. Bata will not able to enjoy much profit as it has to undergo certain legal issues as well and the rules are not flexible as in other countries around the globe. but Czech Republic was considered mostly free economically. Bata have to comply with the economic policies which are not desired by a company which has been operating freely around the globe. The ultimate benefit goes to Slovakia.
. The compensation which was promised has to be paid back to Bata and it have to handover the management to Bata itself. the country Slovakia will get a lot of benefits. Bata in Slovakia is nationalized and it is under the government of Slovakia so it may face some management problems as well. Talking more about Slovakia. y The operations of the multinational company in the Slovakia will attract other foreign investments in the similar kind of industry. y Since Bata is a multinational country so the technology transfer and management know how is obvious to be transferred to Slovakia. Czech Republic and Slovakia. But to attain some advantages from the Bata Slovakia may have to lose something. Similarly. It will have amended its rules and regulations as Slovakia is not promoters of free trade.
On the other hand there are some disadvantages and risks for Bata. both were considered free politically. Bata will gain access to large facilities and a huge market in Eastern Europe and the former Soviet Union.
The operations span the globe with over 62 manufacturing units and it has over 100. political and cultural diversity knowledge. production.
Bata has been operating in about 60 countries and the economical and political structures of these countries may vary from each other considerably.y y
If Bata were to operate in Slovakia. Bata¶s presence in dozens of countries complicates its political strategy. it may have to operate as a public company rathethan the private. In other to avoid the political risk Tom Bata seems to be clever enough by not relying excessively on exports. So the main challenge that Tom Bata has to face is to keep the
. and marketing expertise. The Czech Republic might be able to get Bata to invest significant capital into the plant to get it up to world-class standards. As such.000 independent retailers and franchisees. The Czech Republic is moving more quickly than Slovakia toward a free market system. The success in the host country comprises of the better knowledge of economic. Bata is able to decentralize control of its political strategy giving subsidiaries significant autonomy in managing relations with their respective government. Bata must allow subsidiaries to identify the appropriate issues themselves while formulating strategies. The reason behind is to avoid risk as well as it may lose market opportunity and market share.
But Czech Republic was clever enough and it allowed Bata to reenter the market easily. The relation with the Slovakian government will not be truly positive and the support from the government will be less to Bata. They will be able to design better. By and large Bata¶s operations are independent units established in each country where the firm does business. The same strategy may not work all over the globe so the political strategies have to be formulated in the clever way to match the political environment. If the country is politically sound at that country further investment can be made but if the country is not politically sound the home countries have to wait till the situation is sound. Since important issues will vary from country to country. more fashionable and more reasonably priced shoes. It did not take Bata long to operate in Czech Republic. The Czech Republic may have allowed Bata to reenter the market because of the following reason:
The Czech Republic will gain access to Bata¶s global design. Bata will create new jobs for Czech workers and the purchasing power of the Czech will increase. Slovakian has to amend some of its law and rules regarding the trade. Multinational companies have to understand political and cultural environment of the host countries. The strategies that are formulated to deal with those issues are likely to be subsidiary specific as well. Bata reentered the Czech Republic and not Slovakia because the two countries have very different economic environments.
So Tom J. Bata Sr. Hence. Bata Sr. the current chief officer must find a way to retire. Bata¶s departure would not be as important. Bata will prove more effective and hiring the best candidate will be the challenge for the management. Bata either retires or dies. The method of doing business is changing rapidly and being dynamic to adapt to those changes is a necessity. However. Tom J. philosophies and strategies intact while formulating effective political strategy for the company. He needs to be laying the framework to provide as smooth a transition to another chief executive as possible. it is often hard to turn it over to others who may have different ideas about how the firm should be managed. 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. If a successor were being groomed the timing of Tom J. The manager now needs to be very competitive and make strategies according to the situations. The biggest danger facing Bata Shoes is the lack of a clear succession plan for the time when Tom J. He did a lot of hard work to keep the Bata philosophies alive and also ensured that it grew into a global empire. The training under Tom J. his retirement will prove to turn down the company¶s performance which is a big risk to the shoe organization. If he fails to bring in a good succession plan. established business requires a different set of leadership and administrative skills than are needed by a young. Bata should focus not only in its current strategies but also have a good succession strategy. Having ³grown´ a business. a mature. since there would already be someone in place making increasingly important decisions and ready to step in effectively when the time came. has joined the list of entrepreneurs who cannot bear to loosen their grip on businesses they started. 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. Bata led his firm through a period of great turbulence and growth²but both the world and the company are now very different than they were in. He was faced with the responsibility of expanding his father¶s empire during a political turmoil around the world. He is the one who took his ancestral business to a global level. So in case of Bata.core values.
. The final issue in the case is the issue about Tom J. growing firm.