Bata Shoe Company (Bangladesh) Limited

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 workshop was 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 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 and extensive 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.

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 & 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:

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 its founding

father and sheer commitment of its employee around the world. At first it only made and sold

good high quality shoes in and around Europe but as time goes by it crosses the boundary to

Europe and enter in many countries around the world. At the Pakistan 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 the elderly people still remember the “Naughty

Boy” shoe of Bata that was known for its durability among the kids of that time. But since

then Bata Bangladesh has changed a lot. Now they are not only providing durable shoes but

have brought new designs too according 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 the country. And undoubtedly it has the biggest shoe manufacturing and marketing

organization here in Bangladesh. There are hardly any places in the country where one will

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 the government

of Bangladesh. Though it has established in Czechoslovakia but at present Bata is a Canadian

company because of the migration and mergers of the family and now J. Bata who happens to

be the grandson of founder G. Bata has his operation and headquarter in Canada and operates

as a Canadian company. In Bangladesh it is operating 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 Company’s marketing network is consolidated through its

own retail outlets, distributors, franchises, agencies, wholesale depots and a large number of

registered distributors and dealers.

SWOT Analysis:

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 with

reasonable buying power. Many of them are women who are decision maker so the

city store concept of Bata can attract them as whole of the family footwear can be

available there.

 Consumer like differentiated products. They like to shop in a store where they serve

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

Threat:

 Political instability affects the supply of raw materials and distribution of finished

products.

 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 good quality

product. Have to keep up with them respect of quality.

 Smuggelling of shoes and many stores in the city like the one’s in elephant road are

the major market leaders. As they don’t have to pay for large amount of money for

establishment, production, quality and advertising so they can sell at a much lower

price than established brands like Bata.

 Rapid market expansion program by organized competitors like APEX.

Recommendations:

Key Facts:

From our FCF valuation model, we can see that the stock of Bata Shoe Company

(Bangladesh) Limited (ticker: BATASHOE) are undervalued. From our perspective this is

happening for some reasons:

 Market index is downward now

 Company is in the mature stage now. So growth rate is not so prominent

 Peoples are afraid-off to buy new stocks

 Only 5% shares are in the Public Markets (DSE & CSE), most of the shares

(more than 50%) are owned by the sponsors.

 Their dividend rate is high (more than 300%) but the public share percentage is

too low. So dividend rate is not a good indicator of the company.