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INTERNATIONAL BUSINESS CASE STUDY
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FLOW OF
PRESENTAION
1. Bata Company Overview
History, Evolution and Positioning
2. Case Study OverviewBatas Journey over the world
3. Foreign Political SystemsBatas interaction with foreign systems
4. Road Ahead for BataInternational Challenges for Bata Ahead
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BATA
COMPANY
OVERVIEW
Facts about Bata
Founded by Tomas Bata in 1894, riverside town
of Zlin , Czechoslovakia Trusted global company that offers fashionable
and affordable footwear to every member of the
family
5,000 international retail locations in over 70countries
Services over one million customers per day
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BATA
COMPANY
OVERVIEW
Facts about Bata
Core Principle
To know its customers and to create the bestpossible products to meet their needs
Mission
Offering style, comfort and quality at the
best price
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BATA
COMPANY
OVERVIEW
Facts about Bata
Innovators and Leaders
International and Local
Future of footwear
Our success is built on
our legacy of values and
belief
- Thomas G. Bata
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BATA
COMPANY
OVERVIEW
Policy at Bata
Managed in a decentralized way, which
means that the company is able to adapt tothe local environment
Bata has a performing business strategy
based on economies of scale
Trying of not exporting; the localproduction is basically dedicated to the
internal market
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FOREIGN
POLITICAL
SYSTEMS
The company was founded in 1894 in Zln
(Czech Republic) by Tomas Bata
A large order from the army, military shoes
and rising demand for them, during World
War I started rapid growth and small
manufacture turned into modern industrial
concern, one of the first mass producers of
shoes
Czechoslovakia
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FOREIGN
POLITICAL
SYSTEMS
1918 The Czechoslovak state was conceivedas a parliamentary democracy
1939 The Company relocates to Canadaafter the movement of Germanmilitary forces into Eastern Europe
1945 Czechoslovakia business operationsare nationalized by the newcommunist government followingWorld War II
Czechoslovakia
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FOREIGN
POLITICAL
SYSTEMS
Canada
Anticipating the Second World War,
Thomas J. Bata, the founder's son,
together with over 100 families from
Czechoslovakia, moved to Canada in 1939
to develop the Bata Shoe Company of
Canada, including a shoe factory and
engineering plant, centred in a town that
still bears his name, Batawa, Ontario
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FOREIGN
POLITICAL
SYSTEMS
Canada
Business in Canada Canada defines Small Businesses as those with
fewer than 100 employees (in goods producing
firms) and 50 employees (in service firms)
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FOREIGN
POLITICAL
SYSTEMS
Canada
Canadian Provincial Taxes
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FOREIGN
POLITICAL
SYSTEMS
The local factories of Bata in Ugandahad been
nationalized by Milton Obote,
de-nationalized by Idi Amin,
re-nationalized by Amin
and finally de-nationalized also by Amin
Meanwhile the company had workedas nothing had ever happened
Uganda
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FOREIGN
POLITICAL
SYSTEMS
Uganda
1962 Uganda gained independence from UK
1966 Following a power struggle between
the Obote-led government and KingMuteesa, the UPC-dominated Parliament
changed the constitution and removed the
ceremonial president and vice president
1971 After a military coup in 1971, Obote wasdeposed from power and the dictator Idi
Amin seized control of the country
1979 Amin's reign was ended after the Uganda
Tanzania War
1986 Museveni has been in power since 1986
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FOREIGN
POLITICAL
SYSTEMS
Uganda
Economy of Uganda
For decades, Uganda's economy suffered from
devastating economic policies and instability,leaving Uganda as one of the world's poorest
countries
Uganda has substantial natural resources,
including fertile soils, regular rainfall, and sizablemineral deposits of copper and cobalt
The country has largely untapped reserves of
both crude oil and natural gas
Uganda is rated among countries perceived asvery corrupt by Transparency International
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FOREIGN
POLITICAL
SYSTEMS
Bata had been also criticized for
maintaining different types ofrelationships with totalitarian
regimes, as the one of Chile
The company presented in its
own defence the argument that
it had been activating in Chile
more than 40 years, meanwhile
many political regimes had
changed
Chile
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FOREIGN
POLITICAL
SYSTEMS
Chile
Economy of Chile
Chile is one of South America's most stable and
prosperous nations During the early 1990s, Chile's reputation as a
role model for economic reform was
strengthened when the democratic government
of Patricio Aylwin, who took over from themilitary in 1990, deepened the economic reform
initiated by the military government
The 197390 military government sold many
state-owned companies, and the three
democratic governments since 1990 have
continued privatization, though at a slower pace
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FOREIGN
POLITICAL
SYSTEMS
Types of
Governments
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Under Capitalism,the governmenthas the role ofeasing the classstruggle in favorof Capital
Under Socialism,the governmenthas the role offavoring theneeds of society
Under Communism,production ismanaged bycommunities ofworkers
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Bata in
South Africa
The case of South Africa was a major challengefor Bata
The GDP per capita in this country is thehighest of all nations in the African continent
The main attraction of the country isrepresented by the incredible high profit rate,mainly generated by low labour costs and rich
deposits of mineral resources The relatively large South African market
allows the companies to obtain economies ofscale in production by using cheap labour force
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The general background deterioratedrapidly at the beginning of 1980s
For decades, South Africa had an apartheid
regime that led to political, social andeconomic segregations between black andwhite people
The black Nationalists were fighting for the
right to vote of each and every citizen, butthe white Government was refusing them
The African National Congress, led byNelson Mandela, was fighting againstcapitalism and was sustaining the idea of
nationalizing the whole industry, no matterif the companies considered were nationalor owned by foreign entities
Bata in
South Africa
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The Canadian Government had imposed avery conservative legislation regarding thenew investments in South Africa
As a result, Bata decided to leave SouthAfrica in 1986, but the company did notadmit that the apartheid had representedthe cause of its decision
The selling conditions were clearlystipulating that the name of the companyand the production brand would not beused anymore in South Africa and all theconnections with Canada would be broken
off The new buyer of the business operations
and the production facilities had to keepthe jobs of all workers, most of them blackpeople
Bata in
South Africa
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Bata in
South Africa
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Bata in
South Africa
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South African Economy The economy of South Africa is the largest
in Africa
About a quarter of the population isunemployed and about the sameproportion lives on less than US $1.25 aday
South Africa has a comparative advantagein the production of agriculture, miningand manufacturing products relating tothese sectors
The top income tax rate in South Africa is40%, and the top corporate tax rate is28%
Bata in
South Africa
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Business in South Africa
South Africa suffers from relatively
heavy overall regulation burdencompared to developed countries
State ownership and interference
impose high barriers to entry in manyareas the top corporate tax rate is 28%
Bata in
South Africa
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Bata in
South Africa
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Bata in
South Africa
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Bata in
South Africa
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Bata in
South Africa
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Since South Africa has evolved into a
more favourable investment destination,Bata should re-enter South Africa
Bata should continue with its strategy
of using local production to cater to
domestic markets as
Bata in
South Africa
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Batas re-entry
in Czech &
Slovakia
Political scenario of the region
After the collapse of Czechoslovakia, Czech
Republic and Slovakia, both were considered
free politically
Czech Republic was considered mostly free
economically
Czech started to encourage privatization of
companies
But Slovakia encouraged nationalization of
companies
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Batas re-entry
in Czech &
Slovakia
Advantages for Bata for getting back
operations in Republic of Slovakia
Bata will be able to return to the home country
Bata will gain access to large facilities and ahuge market in Eastern Europe and the former
Soviet Union
Already an established company there
Disadvantages for Bata for getting back
operations in Republic of Slovakia
Bata will have to face the not so free economic
policy of Slovakia as its not promoter of free
trade Bata have to comply with the economic policies
which are not desired by a company which has
been operating freely around the globe
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Batas re-entry
in Czech &
Slovakia
Advantages for Republic of Slovakia
Bata chooses local resources for the production
so the local resources of the Slovakia will be
explored and utilized in the proper manner
Bata gets its raw materials from diversified local
suppliers, this will help create strong supply
base in the host land and it increase the
revenues of the raw material producers
Disadvantages for Republic of Slovakia andthe reason for not allowing Bata to reenter
The compensation which was promised has to bepaid back to Bata
It has to handover the management to Bata itself
The relation with the Slovakian government willnot be truly positive and the support from thegovernment will be less to Bata causing mutualconflict
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Batas re-entry
in Czech &
Slovakia
Why Czech Republic allowed Bata to re enter
The Czech Republic will gain access to Batas
global design, production, and marketing expertise The Czech Republic might be able to get Bata to
invest significant capital into the plant to get it upto world-class standards
Bata will create new jobs for Czech workers and
the purchasing power of the Czech will increase The success in the host country comprises of the
better knowledge of economic, political andcultural diversity knowledge
Bata having operated in almost 60 countries knows
and have dealt with diverse conditions worldwideso, they are in great shape to deal with thingsthere
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Batas re-entry
in Czech &
Slovakia
Political System in Czech Republic
Parliamentary republic, democratic state
Power is divided into legislative (Czech
Parliament), executive (Czech Government and
the President of the Republic) and judicial
The President of the Republic and the Czech
Government are representatives of executive
power within the country
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Batas re-entry
in Czech &
Slovakia
Political System in Slovakia
The National Council of The Slovak Republic
Countrys sole constitutional and legislative body
It has 150 members elected for 4 year terms in
direct elections
Courts and Judicial Power: Consists of general
courts (district courts, regional courts and thesupreme court) and military courts
The Constitutional Court is an independent
judicial body and is not part of general courts
system
Military courts handle disputes of military
personnel
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Batas Future
Why Tom Bata Sr. cant bear to lose grip on
business he started
He is the one who took his ancestral business to
a global level
He did a lot of hard work to keep the
Bata philosophies alive and also ensured that it
grew into a global empire
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
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Batas Future
Having grown a business, it is often hard to turn
it over to others who may have different ideas
about how the firm should be managed
Bata is huge, having operations in about 60
countries. Different countries have different
political and cultural environment. Having seenand managed all this so effectively and for so
long, its difficult to trust someone else
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Batas Future
What is the risk, if Bata Sr. cant find a way
to retire
Tom J. Bata led his firm through a period ofgreat turbulence and growth but both the world
and the company are now very different than
they were in
Doing business is changing rapidly and being
dynamic to adapt to those changes is a
necessity
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 newway
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Batas Future
What is the risk, if Bata Sr. cant find a way
to retire
The training under Tom J. Bata will prove more
effective
Hiring and training the best candidate after he is
gone, will be the challenge for the management
Hence, Bata should focus not only in its current
strategies but also have a good succession
strategy
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Thank You