ASSIGNMENT ON BATA STRATEGIC

CHOICES

SUBMITTED TO: SIR FAISAL

SUBMITTED BY: Muhammad Umer

ROLL NO: MSBA-WF16-042

SUBJECT: STRATEGIC MARKETING

Learning Aspects:
This case describes the challenges faced by the Bata Management in the wake of changing
market trends in the form of increased competition from the local players as well as the
constantly increasing threat of Chinese imports. Bata had traditionally targeted the lower middle
and middle class segments of the society and was now considering changes in its strategy to be
able to survive in the market. The MD of Bata was considering the efforts necessary to realign
Bata Pakistan’s manufacturing, outsourcing, distribution and brand strategy in the light of
increased local competition and Chinese imports.

Bata Strengths:
1. Brand Image
2. Reasonable quality at low or reasonable price
3. Diversity with ranges in running, training, court, basketball, football and Outdoor
4. Footwear for the entire family
5. Financially Strong
6. Conveniently accessible outlets in various parts of the country
7. Targeting all income segments
8. Provide training for managers and employees
9. Nationwide retail network

Bata Weaknesses:
1. No continuity of leadership
2. In 2001, 5% decrease in net sales
3. No proper planning regarding Advertisement
4. No variety in Fashionable shoes

Bata Opportunities
1. E-Commerce
2. Acquired, Partnership with small players
3. Entering new segments of Markets
4. Capturing Market where no other potential competitor exists
5. Innovative Products
6. New mediums for advertisement
Bata Threats:
1. Customer Dissatisfaction
2. Price wars with competitors
3. Competitors
4. Political Instability
5. Economic Threat
6. Changing in consumer preferences

Evaluation of Three Strategic Options for Bata

Manufacturing:
Bata can use its regional expertise e.g. in Malaysia for rubber based shoes and in China for
artificial leather shoes and use their expertise and economies of scale to be able to meet the needs
of the product lines for which they had some sort of a cost disadvantage. Bata can also stay in its
International markets that are beneficial to compete with potential competitors.

Distribution:
Bata should give more importance to Company-owned stores. In which it can control and
manage its operations easily. It should arrange more training programs for employees to have
better quality according to consumer preferences. They can get profits from franchises but with
assurance that employees working there are also trained otherwise it can hurt the image of Bata.
For wholesale channel, they should come out of that and stop having their footwear at the
Wholesale shops, because having that can damage their chances of maintaining a proper image
for their brand.

Brands:
 Bata should target to middle and upper class, because lower class now prefer to purchase
Chinese and local shoes.
 Bata should continue to grow in upper middle class.
 They should provide better products in terms of quality as well as price.
 Bata should not focus on fashionable footwear because Bata is well known for its
functional footwear for its reliability.
 It should focus on their successful brands like Bubble gummers.
Respond of Bata on Competition:
According to my analysis Chinese imported shoes and other local shoes seller are not major
threats for Bata, because now a day’s people are more quality conscious instead of price
conscious. They know very well about the quality of Bata as compare to these Chinese and local
shoes. Bata should build a strong relationship with its customers so that they come with their
families for the best quality shoes. It would enhance its brand equity. People still does not have
an idea of quality difference of Chinese products as compare to Bata. They just prefer to buy
because of low price, Bata should aware those people.

Grand Strategy Matrix:

Potential strategies are:

 Market Development
 Market Penetration
 Product Development
 Backward Integration
 Forward Integration
 Horizontal Integration
 Related Diversification

Financial Analysis:

 Current ratio= Current assets/Current Liabilities

2001 = 1.17:1

2000 = 1.15:1

1999 = 1.23:1

 Debt to equity Ratio= Total debts/Shareholder Equity

2001 = 3.09:1

2000 = 3.44:1

1999 = 3.60:1

That means company is mostly relying on external resources, and the ratios of last three years are
continuously decreasing.
  Inventory Turnover= Cost of goods sold/Average Inventory

2001 = 3.52 Times

2000 = 3.31 Times

This ratio is increasing it means management is improving its strategies about the inventory and
stock

 Gross Profit Margin= Gross profit/Sales

2001 = 33%

2000 = 29.6%

1999 = 28.9%

Recommendations:
 The Company should focus on Product Development, Market Development and Market
penetration Strategies.
 They should exit from the lower end segment and focus more on the middle and upper
middleclass of the society, because of the growth in numbers of people belonging to these
segments and also because of the rising incomes of its target customers.
 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 because of Bata’s brand and hence the competition undercutting Bata on price
would no longer be that big a threat.
 It will need to focus on marketing itself as an outlet meeting all basic needs of the
families in its target market segment
 They should provide consistent quality service to its customers so that customers can
associate the same experience with whichever outlet they visit of Bata.
 Bata debt to equity ratio is 3.51, which means almost 75% are debts.
 Management should reduce its debts to reduce the financial charges.
 Reduce Selling and Administration expenses to get more Net income.
 Internet is a broad medium so they should also improve e-business.