Introduction

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.

Strengths1. Brand Image2. Reasonable quality at low or reasonable price

3. Diversity with ranges in running, training, court, basketball, football and Outdoor4. Footwear for the entire family5. Financialy Strong6. Conveniently accessible outlets in various parts of the country7. Targetting all income segments8. Provide training for managers and employees9. Nationwide retail network

Weaknesses1. No continuity of leadership2. In 2001, 5% decrease in net saless3. No proper planning regarding Advertisement4. No variety in Fashionable shoes

Opportunities

1. E-Commerce2. Acquired, Partnership with small players3. Entring new segments of Markets4. Capturing Market where no other potential competitor exists5. Innovative Products6. New mediums for advertisements

Threats

1. Customer Dissatisfaction2. Price wars with competitors3. Competitors4. Political Instability5. Economic Threat

6. Changing in consumer prefernces.SWOT Matrix

Strengths Weaknesses1. Brand Image2. 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. Financialy Strong6. Conveniently

accessible outlets in various parts of the country

7. Targetting all income segments

8. Provide training for managers and employees

9. Nationwide retail network

1. No continuity of leadership

2. In 2001, 5% decrease in net saless

3. No proper planning regarding Advertisement

4. No variety in Fashionable shoes

Opportunities SO Strategies WO Strategies1. E-Commerce2. Acquired,

Partnership with small players

3. Entring new segments of Markets

4. Capturing Market where no other potential competitor exists

5. Innovative Products

6. New mediums for advertisements

Acquisition, Joint Venture(S2, S5, O5)

Product Development(S2, S5, O5)

E-Market Development(S1, S5, O1)

Introduce new segments(W4,O3)

Market Penetration(W3, O6)

Threats ST Strategies WT Strategies

1. Customer Dissatisfaction

2. Price wars with competitors

3. Competitors4. Political Instability5. Economic Threat6. Changing in consumer

preferences

Increase Customization(S2, S8, T1)

Customers can be satisfied with Bata’s quality and reasonable prices.(S2, T1)

Related Diversification(W4, T1)

Innovative Products(W4, T6)

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 benefitial to compete with potential competitors.

Distribution:

Bata should give more importance to Company-owned stores. In which it can control and managae its operations easily. It should arrange more training programmes for employees to have better quality according to consumer preferences.They can get profits from franshises 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 uuper middle class. 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 to competition from Chinese imported shoes and other local shoes seller

According to my analysis Chinese imported shoes and other local shoes seller are not a major threat for Bata, because now a day’s people are more quality consious instead of price consious. 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.

Competitive Profile Matrix

Bata Service Shafi Group

Critical Success Factor

Weight Rating Score Rating Score Rating Score

Product Quality

0.10 3 0.3 3 0.3 3 0.3

Outlets 0.10 4 0.4 3 0.3 2 0.2Market Share

0.05 3 0.15 2 0.1 2 0.1

Price 0.10 4 0.4 3 0.3 2 0.2Financail Position

0.15 3 0.45 3 0.45 2 0.3

Customer Loyality

0.10 3 0.3 3 0.3 2 0.2

Global Expansion

0.20 3 0.6 2 0.4 1 0.2

Advertising 0.20 2 0.4 2 0.4 1 0.2Total 1.00 3 2.25 1.7

Grand Strategy Matrix

Potential strategies are:

Market Development Market Penetration Product Development Backward Integration

Forward Integration Horizontal Integration Related Diversification

Quantitative Strategic Planning Matrix

Product Development Market Development Market PenetrationKey Factors Weight AS TAS AS TAS AS TAS

Opportunities1. E-Commerce2. Acquired,

Partnership with small players

3. Entring new segments of Markets

4. Capturing Market where no other potential competitor exists

5. Innovative Products

6. New mediums for advertisements

2-

2

2

4

1

0.1-

0.2

0.2

0.4

0.05

2-

3

3

3

1

0.1-

0.3

0.3

0.3

0.05

3-

2

2

3

3

0.15-

0.2

0.2

0.3

0.15

0.050.05

0.10

0.10

0.10

0.05

Threats1. Customer

Dissatisfaction2. Price wars with

competitors3. Competitors4. Political Instability5. Economic Threat6. Changing in

consumer preferences

3

-

3--

3

0.15

-0.3

0.9

2

-

3--

2

0.1

-

0.3

0.6

3

-

3--

2

0.15

-

0.3

0.6

Strengths1. Brand Image2. 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. Financialy Strong

6. Conveniently accessible outlets in various parts of the country

7. Targetting all income segments

8. Provide training for managers and employees

9. Nationwide

33

3

-

4

2

-

-

1

0.30.3

0.3

-

0.4

0.1

-

-

0.10

33

2

-

4

3

-

-

3

0.30.3

0.2

-

0.4

0.15

-

-

0.3

33

2

-

4

1

-

-

2

0.30.3

0.2

-

0.4

0.5

-

-

0.2

0.05

0.10

0.100.050.050.3

0.100.10

0.10

0.05

0.10

0.05

0.05

0.05

0.10

retail network

Weaknesses1. No continuity of

leadership2. In 2001, 5%

decrease in net saless

3. No proper planning regarding Advertisement

4. No variety in Fashionable shoes

0.05

0.15

0.05

0.05

-

3

1

4

-

0.45

0.05

0.2

-

3

1

2

-

0.45

0.05

0.1

-

4

4

3

-

0.6

0.2

0.15

Total 1.00 4.5 4.3 4.9

According to QSPM Company should more focus on Market Penetration Strategy

Financial Analysis

Current ratio = Current assets/Curretn Liabilities

2001 = 1.17:12000 = 1.15:11999 = 1.23:1

Debt to equity Ratio = Total debts/Shareholder Equity

2001 = 3.09:12000 = 3.44:11999 = 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 Times2000 = 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

Company should focus on Product Development, Market Development and Market penetration Strategies

Should exit from the lower end segment and focus more on the middle and upper middle class 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

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.