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.

Strengths
1. Brand Image
2. 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 retail network

Weaknesses
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

1. E-Commerce
2. 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
Threats

1. Customer Dissatisfaction
2. Price wars with competitors
3. Competitors
4. Political Instability
5. Economic Threat
6. Changing in consumer prefernces.
SWOT Matrix
Strengths Weaknesses
1. Brand Image 1. No continuity of
2. Reasonable quality leadership
at low or 2. In 2001, 5% decrease
reasonable price in net saless
3. Diversity with 3. No proper planning
ranges in running, regarding
training, court, Advertisement
basketball, football 4. No variety in
and Outdoor Fashionable shoes
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 retail
network

Opportunities SO Strategies WO Strategies

1. E-Commerce Acquisition, Joint Venture Introduce new segments
2. Acquired, (S2, S5, O5) (W4,O3)
Partnership with
small players Product Development Market Penetration
(S2, S5, O5) (W3, O6)
3. Entring new
segments of
 Markets E-Market Development
4. Capturing Market (S1, S5, O1)
where no other
potential
competitor exists
5. Innovative
Products
6. New mediums for
advertisements

Threats ST Strategies WT Strategies

1. Customer Increase Customization Related Diversification
Dissatisfaction (S2, S8, T1) (W4, T1)
2. Price wars with
competitors Customers can be satisfied Innovative Products
with Bata’s quality and (W4, T6)
3. Competitors reasonable prices.
4. Political Instability (S2, T1)
5. Economic Threat
6. Changing in consumer
preferences

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 Weight Rating Score Rating Score Rating Score
Success
Factor
Product 0.10 3 0.3 3 0.3 3 0.3
Quality
Outlets 0.10 4 0.4 3 0.3 2 0.2
Market 0.05 3 0.15 2 0.1 2 0.1
Share
Price 0.10 4 0.4 3 0.3 2 0.2
Financail 0.15 3 0.45 3 0.45 2 0.3
Position
Customer 0.10 3 0.3 3 0.3 2 0.2
Loyality
Global 0.20 3 0.6 2 0.4 1 0.2
Expansion
Advertisin 0.20 2 0.4 2 0.4 1 0.2
g
Total 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 Penetration

Key Factors Weight AS TAS AS TAS AS TAS
Opportunities
0.05 2 0.1 2 0.1 3 0.15
1. E-Commerce 0.05 - - - - - -
2. Acquired,
Partnership
with small 0.10 2 0.2 3 0.3 2 0.2
players
3. Entring new 0.10 2 0.2 3 0.3 2 0.2
segments of
Markets
4. Capturing
Market where
no other 0.10
potential 4 0.4 3 0.3 3 0.3
0.05
competitor
1 0.05 1 0.05 3 0.15
exists
5. Innovative
Products
6. New mediums
for
advertisements
Threats
0.05 0.15 0.1 0.15
1. Customer 3 2 3
Dissatisfaction 0.10 - -
2. Price wars with - - - -
competitors 0.10 0.3 0.3 0.3
3. Competitors 0.05 3 3 3
0.05 - - -
4. Political Instability - - -
0.3
5. Economic Threat 0.9 0.6 0.6
6. Changing in 3 2 2
consumer
preferences

Strengths
0.10 3 0.3 3 0.3 3 0.3
1. Brand Image 0.10 3 0.3 3 0.3 3 0.3
2. Reasonable
quality at low
or reasonable 0.10 3 0.3 2 0.2 2 0.2
price
3. Diversity with
ranges in
running,
training, court,
basketball, - - - - - -
football and
4 0.4 4 0.4 4 0.4
Outdoor
4. Footwear0.05for
the entire 2 0.1 3 0.15 1 0.5
0.10
family
5. Financialy0.05
Strong
6. Conveniently - - - - - -
accessible
outlets in - - - - - -
0.05
various parts
of the country
0.05 1 0.10 3 0.3 2 0.2
7. Targetting all
income
segments 0.10
8. Provide
 training for
managers and
employees
9. Nationwide
retail network

Weaknesses
- - - - - -
1. No continuity of 0.05
leadership 3 0.45 3 0.45 4 0.6
2. In 2001, 5%
decrease in net 0.15
saless
1 0.05 1 0.05 4 0.2
3. No proper
planning regarding 4 0.2 2 0.1 3 0.15
Advertisement
4. No variety in 0.05
Fashionable shoes

0.05

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 = 1.17:1
2000 = 1.15:1
1999 = 1.23:1

Debt to equity Ratio = Total debts/Shareholder Equity

2001 = 3.09:1
2000 = 3.44:1
1999 = 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 Times

2000 = 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.