Bata: Strategic Choices

BATA: STRATEGIC CHOICES

Written Case Analysis

Group Members:
Hurmat Aziz
Rabbia Shahid
Tania Tahir
Waqas Tahir

Business Policy
Section A MBA II
Lahore School of Economics
18th June 2015

18th June 2015

Bata: Strategic Choices

INTRODUCTION

The Bata Shoe Organization was originally established by Thomas Bata in 1894 in
Czechoslovakia. In 2002 the company expanded with setting up its headquarters in Canada and
became the largest footwear manufacturing and marketing organization in the world. In Pakistan,
Bata started with the establishment of a plant in Batapur in 1942.
The managing director (MD), Doug Hearns of Bata Pakistan was considering the efforts needed
to realign the companys manufacturing outsourcing, distribution and brand strategy due to
intense competition. Initially, Bata was meant to cater to the lower middle and middle class
within the Pakistani market. However later on Bata now decided to enter the higher class market
through subsidiaries of the company such as Marie Claire and licensing global brands such as
Hush Puppies and Slazenger. This decision increased the companys outsourcing function from
17% to 70% including a vast retail network including mega stores. Moreover, the company had
to hire competent management to run the business.

18th June 2015

Bata: Strategic Choices

EXHIBITS ANALYSIS
Men Leather Shoes

Required strict quality assurance for perfect quality.

Due to cheaper costs it was said to import upper from China.

Women Fashion Shoes

Due to variability in seasonal fashion the lot size per SKU was small

This made outsourcing a better option.

Canvas Shoes

A sophisticated process of vulcanization was being used.

It was introduced in 1950.

PVC Slippers

Specialized expertise was needed in handling

Low cost production was being used as a source of leading

Hawaii Slippers

In House production was being employed here.

Expensive equipment worth 2 million was needed.

Bata: Strategic Choices

18th June 2015

Less strict quality requirement need as compared to PVS slippers.

Sports Joggers

Different technology required.

Copy rights knowledge

18th June 2015

Bata: Strategic Choices

RECOMMENDATIONS
They should go for outsourcing, some pros of outsourcing are :
- Internal production involves longer lead times.
- Suitable for trendy shoes which are small in demand.
- Increase in competition was leading to demand for more variety. Thus it was increasing cost
and defects rate. Outsourcing seemed a viable option.
- Range of Products can be expanded.
Some cons of outsourcing are :
- Dependency over supplier.
- May have to compromise on quality.
- Reduce Control.
- Lack of synergies.
-Distribution through company owned retail outlets.
-Focus on Premium Brands.

18th June 2015

Bata: Strategic Choices

IMPLEMENTATION

Market premium brands through company owned retail outlets.

Company owned outlet gave more control and better margins.

They should divest womans fashion shoe and joggers brand. They weren't efficiently
meeting intense competition from other brands.

Joggers and Women fashion shoe contribution to revenue was declining.

In order to meet competition by lower cost and high variety of products they should
outsource internationally.