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Bata India Limited
Repositioned or Still Foot Weary?
Strategic Management II .
now called the Bata. In January 1934. Though the company was the leader in footwear. Bata India has established itself as India’s largest footwear retailer. The parent company BSO stepped into reposition Bata India as an affordable. The stores are present in good locations and can be found in all the metros. Bata India was part of the Bata Shoe Organization. market driven fashion conscious lifestyle brand and to streamline the whole business to improve the performance of the company. the overall site was doubled in area. mini-metros and towns Bata’s smart looking new stores supported by a range of better quality products are aimed at offering a superior shopping experience to its customers. The Company went public in 1973 when it changed its name to Bata India Limited. 95 lakhs within a year. Incorporated as Bata Shoe Company Private Limited in 1931. In the years that followed. This was attributed to environmental contingencies.20 crores to Rs. there were indications of decline as profit dropped from Rs. Its retail network of over 1200 stores gives it a reach / coverage that no other footwear company can match. by the end of 1994. This township is popularly known as Batanagar. as India’s largest manufacturer and marketer of footwear products in the organized sector over a period of 7 decades. It was also the first manufacturing facility in the Indian shoe industry to receive the ISO: 9001 certification. Today. the foundation stone for the first building of Bata’s operation . Bata India is the largest retailer and leading manufacturer of footwear in India and is a part of the Bata Shoe Organization. SUBMITTED BY: Nikhil Gupta 130/10 Section B Anil Deokar 168/10 Section B .Strategic Management II The case tracks the development of Bata India Ltd. Toronto. the company was set up initially as a small operation in Konnagar (near Calcutta) in 1932.
000 dealers.Strategic Management II The Company also operates a large non retail distribution network through its urban wholesale division and caters to millions of customers through over 30. .
such withdrawal may adversely affect the business. So profit affected due to increased input cost. 2000 with Bata Limited. 5. Sales and distribution cost is also very high because most of shops are owned by company itself and staffed employee. 3. 4. operations and profitability of the Company. The Company has entered into a Technical Collaboration Agreement dated December 29. cost has gone up by 68 crore. Canada (“Bata Canada”) for a period of 10 years. in case there is any withdrawal of the services.Strategic Management II Major problems at BIL 1. . 2. 6. Conflict of management with Mazdoor union is main weakness of BIL. Company does not anticipate any withdrawal of such services in future operations also. Due to increase in cost of raw material. Company has been in existence for more than seven decades and faces a challenge in switching to new product technology. The Company heavily depends on its Promoter group for its technology. 7. Bata was focusing on premium segment which account very less in footwear industry in India. So 2 million shoes were sold at a discount of 50 % at a loss of 41 crore. sale went up by 21 crore. High value added footwear did not find acceptance in the market and led to drop in sale volume.
Strategic Management II 8. . Unrelated diversification is also a major problem of BIL because consumer has such image of Bata in their mind that they connect Bata with shoes only.
Were the different types of strategic controls at Bata Inadequate? Ans: The different strategic controls at Bata: • Reduction in raw material cost – Replacing costly raw materials with cheaper substitute. Why did the profits of Bata decline in 1994? Ans: Increase in excise duty led to increase in cost of footwear.150 likes as compared to 11. Bata being a very old and promising brand didn’t require mass advertising to an extent. excise exemption was withdrawn from shoe costing below Rs. So targeting volume was an optimal choice at that time of crisis. textile . The middle class customers switched to other brands when the company started selling its medium and low ranged products at exboriant prices.Strategic Management II Q1. But this provided opportunity for other brands to advertise and make their product sell more than Bata and give customer a Top of Mind Recall for their brand. PVC compound and raw hide were also increasing. Nike and Puma are shoe brands and no one recalls Bata.276 . The Bata FB has only 56. 200 and hence price went up by 20% and it hit volumes as it became uncompetitive at lower end. In1993-94. Bata failed to connect with the present generation for whom Adidas. The cost of raw material mainly rubber. • Reduction in advertising – Advertising is an integral part of any marketing campaign. Q2.295. The idea was right to shift from premium product to a lower end product especially in a country like India where the major chunk of people belong to that category.
The Company has initiated strict control on costs in purchases and outsourcing and is looking at global sourcing for raw materials to improve the net realization. After 1994. which will enable it to focus on improving sales. etc. Thus the Company has been focusing on consumers and market demand which will reduce inventories and improve sales-to-stock turnover. what did Bata do to strengthen its control systems and foster continuous improvement? Ans: The Company’s management has evolved the strategy of the Company after considering the Company’s strengths and weaknesses. The Company has also been clearing old merchandize through discount sales.337 for Nike and 5. write offs. . The Company has closed five depots and converted them into C&F (carrying and forwarding) agents. Cost optimization and margin improvement The Company is focusing on margin improvement and cost effectiveness programs which have started yielding results. This solely shows the popularity of the brand • The idea of Freight cost reduction and waste reduction by stringent quality control were adequate.608 for Puma. Q3. Logistics and demand based production To optimize utilization of production facilities a new logistics team focuses on obtaining specific orders from the market for best selling designs and sizes and ensures that all raw materials are available in the factories well in time so that the Company can produce and place in shops the products that consumers want. 5.811.Strategic Management II for Adidas. It is also renegotiating transport costs to ensure a competitive transportation cost of the Company’s products to the sales outlets.371. The Company believes that this strategy will enable the Company to build on the opportunities in the market.
The Company is thus aiming to maximize its margin improvement program. The Company is adopting a dual policy to collect the old outstanding. opened twenty new stores and closed down sixty unviable stores. The Company has also undertaken a rural marketing thrust where the market is growing faster than the urban . processes and modernization the Company offered Voluntary Retirement Scheme (VRS) to its work force. sales tax and corporate tax. 1520 employees have accepted the VRS in year 2004. Rationalizing and re-engineering As part of the rationalization of work practices. The Company is also looking at and negotiating with third party manufacturing facilities in two other tax-free states of Assam and Jammu and Kashmir. The Company plans to introduce a new VRS in year 2005.Strategic Management II Tax-free zone manufacturing base A part of the outsourcing of manufacturing is now routed by the Company from contract manufacturers based in Himachal Pradesh and Uttaranchal which are both states offering concessions in excise. At the same time the Company is filing legal cases against those who are not willing to settle and pay. On one hand the Company is negotiating settlement with the wholesalers and offering discounts to those willing to pay the reduced amount. It has undertaken an intensive training programmed for its shop assistants and managers to ensure excellence in service to the customers. Focus on collecting old outstanding dues The Company’s sales team is fully focused on collecting old outstanding amounts from wholesalers thus reducing working capital. The VRS is expected to reduce the Company’s employee cost in the medium term. Training and restructuring the frontline sales force The Company has reorganized its front line sales force and has promoted its best performing shop managers as district managers. The Company has modernized seventeen stores.
by introducing an economy range of products that will encompass both style and quality. Also. Bubble gummers. Super Stride. Quo Vadis. It has been continuously introducing new designs in shoes for men. at the same time create a niche for its new brands like Azaleia. Now Bata identified this problem and started using different mix for footwear production with cheaper raw material. now production unit can lower down there inventory level and can produce the amount which is needed. The Company is endeavoring to break the myth of the price factor. Brands and designs The Company is consistently trying to leverage on its established brands like Mocassino. which is really huge distribution network. sale figure etc. Weinbrenner and Power International. Technology Installation of point of sale management information system keep BIL update about inventory level. Cost. ladies and children.Strategic Management II markets. The Company is bringing in young managers with fresh ideas to inspire and empower the workforce with the requisite skills. Jubilee etc. they started cutting some cost through sales and distribution network. .cutting Raw material used for production account for 33% of total cost. Toppers. The Company has been focusing on specialty value added products for better margins.
What does the Balance Score Card methodology indicate? (Analyze all functions) Ans: Strategies Priorities Financial • Objectives Financially Strong • • Measures Targets 216% Initiatives Replace Costly Material Raw F1:Profitability Profitability F2:Market Share Volume Growth 11% Open Stores Close New and Cash Drain store Customer • Delight Customer the • C1:Delighted the Share of 60 Mn.Strategic Management II Q4. Ensured the Targeted Segment pairs of Availability .
Strategic Management II Customer shoes sold of Material Time Raw on Internal • • • Research and Development Operational Expenses Quality • • I1:Product Development I2:Inventory Management I3:Quality Check New Product On-Line Information Sampling and Physical 99% Test Defects Free 140 Pont of Sales MIS • Learning and Growth • Motivated and Prepared Workforce • L1:Competanci Strategic es Competency Training Programme .
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