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The Strategies of Bata Shoes Bangladesh Ltd.

1.0 INTRODUCTION
The Bata Shoe Organization was founded in 1894 by Czech businessman Tomas Bata in the city of Zlin, what was then Czechoslovakia. Coming from a family of shoemakers with a long heritage of eight generations and over three hundred years, Tomas Bata capitalized on knowledge, expertise and skills to propel his newly founded company forward. The introduction of factory automation, long distance retailing and modernized shoe making ensured the profitability of the company from the very beginning. It is now the worlds largest manufacturer and marketer of footwear operating across the globe. Today the Bata Shoe Organization is a sprawling geo-centric company encompassing operations in more than 70 countries around the world and is managed by 4 regional commercial business units (CBUs) across five continents. It serves 1 million customers per day, employs more than 50,000 people, operates 5,000 retail outlets, manages a retail presence in over 70 countries and runs 27 production facilities across 20 countries.

2.0 COMPANY PROFILE


Bata Bangladesh is affiliated to the Bata Shoe Organization, the world's largest footwear manufacturing and marketing organization. It started operations in 1962 in Bangladesh. Bata incorporated in Bangladesh as a publicly traded company listed with Dhaka Stock Exchange. They have 60% of overseas shareholding and 40% local Bangladeshi Shareholders. Currently Bata Shoe Company (Bangladesh) Limited operates two manufacturing facilities one in Tongi and the other in Dhamrai. With a production capacity of 110,000 pairs of shoes daily, the company also has a modern tannery facility with an output of 5 million square feet of leather annually. Annual shoe sales currently stand at slightly more than 30 million pairs with a turnover for the year. It employs 3000 employees and more than 35,000 families are directly or indirectly depending on the company together with its 650 local suppliers and 72 Associates

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The Strategies of Bata Shoes Bangladesh Ltd.


Business Units. The associates are mostly Muslim and they contribute regularly towards the building of our national economy. The companys marketing network is consolidated through its own retail outlets, distributors, franchises, agencies, wholesale depots and large number of registered distributors and dealers. Today Bata is not only the household name in Bangladesh it is also a very popular brand name among all ages of customers in Bangladesh and a symbol of trust and confidence for providing good quality durable footwear for all segment of customer. Vision Should maintain our competitiveness and leadership in the shoe market with our aesthetic functional standard and cost effectiveness with increased market participation by ensuring regular return to our shareholders. Mission Introduction of a strong shoe line targeted to various market segments to maintain leadership through increased market share.

3.0 MANAGEMENT OVERVIEW


In Bata Shoe Bangladesh Companys working environments is maintained through Different Management Levels. These levels are as follows: Top Level Management These include Decision making and implementation of activities like Managing Director, Head of Accounts, Human Resources Management and Chief Finance Officer.

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The Strategies of Bata Shoes Bangladesh Ltd.


Mid level Management These include Inventory Management System, Retail Integrated Merchandising System, Online Sales System, Production department, Purchasing department activities and decisions. Low level Management All the departments employees and supervisors are includes in this level. They continuously monitor the wholesalers and retailers.

ORGANOGRAM OF BATA SHOES BANGLADESH

Managing Director

Head Of HR

Head Of Accounts

Chief Finance Officer

Head Of Retail Marketing

NRSD Manager

Production Manager

Purchasing Manager

Product development Manager

Merchendising Manager

Fig 3.1: Organogram of Bata Shoe Bangladesh Ltd.

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The Strategies of Bata Shoes Bangladesh Ltd.

4.0 PRODUCT LINE


Bata Bangladesh has various types of Men/Women Shoes, Men/Women Sandals, Bags, Belts, and Leather Accessories.

Bata shoes have been time tested to be the most reliable in durability and accessibility. They care for clients across the board with a wide range of styles at reasonable prices.

Sandles of Sandak brand of Bata serves that very segment of the market. It produces different types of very good quality plastic and Thongs for women. From my survey it has found that it is the most popular shoe of Bata. The pick seasons for Sandak shoes are rainy season when many prefer this shoe, which are washable and decent in looks.

The Bubblegummers brand of Bata serves the infant to children, according to them 0-13 years of age group. Bubblegummer brand has provided Varity of design and type of shoes for abovementioned age group of children.

The Mari Clare brand of Bata is for women. It has more than 100 designs and has different price range of shoes. The price range here starts from Taka 450. In recent times Bata has targeted the young working woman who wants reasonably priced, decent design and durable shoes for work and this brand in many cases serves this segment well.

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The Strategies of Bata Shoes Bangladesh Ltd.

This brand of Bata provides trendy, outdoor, rough use footwear for men. This is also a popular brand with the youth of the country. Though the brand is not that cheap but the quality of it is very good.

This is a reasonable priced good quality sports shoes and sandle shoes for young male and female. The target segment of Power is teenagers and some parts of the elderly people who need sneaker for walking purpose. The price range starts from 695/- and in many cases not exceed more than thousand taka. According to the buying power this price range is very popular with the general public as durability comes with every Bata footwear.

Bata first earn its name as the most durable shoe manufacturer for school going children. When it first comes to this country it has realized that there is a huge market opportunity for school shoes. Quickly they introduced the Naughty Boy shoes. Which quickly earn recognition among the parents of that time, as they need a durable shoe that really can last even after lots of rough treatment. From there on Bata gone on to make Canvas shoes, other black leather shoes, hard top white sneakers for school goers. The most popular brand of school shoes that are now in the market are North Star which provides hard and soft white sneakers and the leather black Bata school shoes which are of various designs.

Apart from these Bata has numbers of leather sandals of various designs, sandal-shoes under Bata brand name that serves different segment of the market. Bata also manufacture and market popular brands such as HushPuppy, Dr.Scholes and Nike in this region of south Asia. Bata also have quite new brands for male and female like Bata Comfit, Bata Flexible. According

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The Strategies of Bata Shoes Bangladesh Ltd.


to the Bata officials in Bangladesh Bata have more than 1000 lines of footwears here in Bangladesh at present. Bata also markets sportswear, readymade garments, hosiery, and other footwear accessories like socks, shoe polish, etc. The company also exports its products to countries like Germany, Australia, USA, UK, Holland, Denmark, New Zealand, France and Canada.

Distribution Process of Bata Bangladesh


Tongi Factory
Raw Materials Dhamrai Factory

CDC(Central Distribution Center)

Own Stores & Agencies

Depot

Dealers & Wholesalers

Fig 4.1: Distribution Process of Bata Shoes Bangladesh ltd.

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The Strategies of Bata Shoes Bangladesh Ltd.

5.0 STRATEGIES USED BY BATA BANGLADESH


Market-scope strategy choices 1. Single-Market Strategy 2. Multi-market Strategy 3. Total-market Strategy Among the three choices Bata has chosen and uses Total-Market strategys they serve all classes of people with their shoes ranging from 30/--2195/-. The specifics of the strategy is provided belowDefinition: Serving the overall market with one or some other kind of offerings. Objective: To diversify the risk of serving only one market. Requirements: Carefully selecting all the segments and providing offerings to all. Avoid confrontation with companies serving the entire market.

Expected Results: Higher Sales. Higher Market Share.

Market-Geography Strategy choices 1. Local-Market Strategy 2. Regional Market Strategy 3. National Market Strategy 4. International Market Strategy

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The Strategies of Bata Shoes Bangladesh Ltd.


Among the market-Geography Strategies Bata Bangladesh follows the 'National-Market Strategy in Bangladesh as they distribute their product to the whole of Bangladesh using their own and Danish's distribution channel. Though it is a MNC it operates quite freely here in Bangladesh and operates as National-Market Strategy.
Definition: Operating nationally. Objective: To seek growth. Requirements:

Top management commitment. Capital Resources. Willingness to take risks.


Expected Results:

Increased growth. Increased market share. Keep up with competitors Market-Entry Strategy choices 1. First-In Strategy 2. Early-Entry Strategy 3. Laggard-Entry Strategy Among the Market-Entry choices, Bata Bangladesh uses First-In strategy which is characterized by the following: Definition: Entering market during the introduction stage. Two modes of entry are feasible: Conventional marketing strategy Initiator- Entering market with unconventional marketing strategies

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The Strategies of Bata Shoes Bangladesh Ltd.


Objectives: To understand the market first and reap the profit at the beginning and waiting for the competitors and strike them with good lowering price and improved quality. At the same time it offers variety of products. Requirements: Market research ability. Production capability. Expected results: Putting market on a new growth path. Increased profits. Some growth opportunities. Market-Dilution Strategy 1. De-marketing Strategy 2. Pruning-of Marginal Markets Strategy 3. Key Markets Strategy 4. Harvesting Strategy Among the market-dilution strategies, Bata Bangladesh uses kind of harvesting strategy in many cases. They also come up with the key markets strategy. Definition: Focusing on overall market and take out the invested profit. Objective: To serve the market well where they are now. Requirements: Gain continuous knowledge of the local markets. Concentrate all energies on these markets. Develop unique strategies to serve the chosen markets.

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Expected results: Increased profits. Increased market share in the selected markets. Product Strategy choices 1. Product-Positioning Strategy 2. Product Repositioning Strategy 3. Product-Overlap Strategy 4. Product-Scope Strategy 5. Product-Design Strategy 6. Product-Elimination Strategy 7. New-Product Strategy 8. Diversification Strategy Among the product strategies Bata Bangladesh has used 'Product-Positioning Strategy' and 'Diversification Strategy' which is characterized by the following: Product-Positioning Strategy: Definition: Placing a brand in that part of the market where it will have a favorable reception compared with competing brands. Objectives: Position product in market so that it stands apart from competing brands. To position the product so that it tells customers what you stand for, what you are, how you would like customers to evaluate you.

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In the case of positioning multiple brands: To seek growth by offering varied products in differing segments of the market. To avoid competitive threats to a single brand. Requirements: Use of marketing mix variables (design and communication efforts). Successful management of a single brand requires positioning the brand in the market so that it can stand competition from the toughest rivals and maintaining its unique position by creating the aura of a distinctive product. Successful management of multiple brands requires careful positioning in the market so that multiple brands do not compete with nor cannibalize each other. Thus it is important to be careful in segmenting the market and to position an individual product as uniquely suited to a particular segment through design and promotion. Expected Results: Meet as much as possible the needs of specific segments of the market. Limit sudden change in sales. Make customers faithful to the brands. Distribution Strategy: Definition: Developing unfamiliar products and markets through Concentric diversification (products introduced are related to existing ones in term of marketing or technology), Horizontal diversification (new products are unrelated to existing ones but are sold to the same customers), and Conglomerate diversification (products are entirely new). Objectives: Diversification strategies response to the desire for-

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Growth when current products/markets have reached maturity, Stability by spreading the risks of fluctuations in earnings, Security when the company may fear backward integration from its major customers, and Credibility to have more weight in capital markets. Requirements: In order to reduce the risk inherent in a diversification strategy, a business unit shouldDiversify activities only if current product/market opportunities are limited, Have good knowledge of the area in which it diversifies, Provide the products introduced with adequate support, and Forecast the effects of diversification on existing lines of products . Expected results: Increase in sales. Greater profitability and flexibility. Pricing Strategy choices: For new products: Skimming Pricing Penetration Pricing At times Bata Shoe Company in Bangladesh used 'Penetration Strategy' which is characterized by the following: Definition: Setting a relatively low price during the initial stages of a products life. Objectives: To discourage competition from entering market by quickly taking large market share and by gaining cost advantage by realizing economies of scale.

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Requirements: Products must appeal to a market large enough to support the cost advantages. Demand must be highly elastic in order for firm to guard its cost advantage . Expected Results:
High sales volume and large market share.

Low margin on sales. Lower unit costs relative to competition due to economies of scale. For established products choices: 1. Maintaining the price 2. Reducing the price 3. Increasing the price When the products of Bata Bangladesh were established in the market they used 'Maintaining the price Strategy' which is characterized by the following: Objectives: To maintain position in the market place (i.e. market share, profitability, etc.). To enhance public image. Requirements: Firm's served market is not significantly affected by changes in the environment. Uncertainty exists concerning the need for or results of price change. Firm's public image could be enhanced by responding to government public opinion to maintain price. requests or

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Expected Results: Status quo for the firm's market position, Enhancement of the firm's public image.

Price-Flexible Strategy choices 1. One-Price Strategy 2. Flexible-pricing Strategy 3. Product-Line Pricing Strategy 4. Leasing Strategy 5. Bundle-Pricing Strategy 6. Price-Leadership Strategy 7. Pricing Strategy to build market Share Among the price-flexible strategies, Bata Bangladesh uses the 'One-Price Strategy' and the 'Pricing Strategy to build market Share' which are characterized by the following: One-Price Strategy: Definition: Charging the same price to all customers under similar conditions and for the same quantities. Objectives:
To simplify pricing decisions. To maintain goodwill among customers.

Requirements: Detailed analysis of the firm's position and cost structure as compared with the rest of the industry. Information concerning cost variability of offering same price to everyone. Knowledge of the economies of scale available to the firm.
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Information on competitive prices; information on the price that customers are ready to pay. Expected Results: Decreased administrative and selling costs. Constant profit margins. Favorable and fair image among customers. Stable market. Pricing Strategy to build market Share: Definition: Setting the lowest price possible for a new product . Objectives: To seek such a cost advantage that it cannot ever be profitably overcome by any competitor. Requirements: Enough resources to withstand initial operating losses that will be recovered later through economies of scale. Price-sensitive market. Large market. High elasticity of demand. Expected Results:
Start-up losses to build market share.

Creation of a barrier to entry to the industry. Ultimately cost leadership within the industry. Promotional Strategy choices

1. Promotion-Expenditure Strategy 2. Promotion Mix Strategy


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3. Media-Selection Strategy 4. Advertising Copy Strategy 5. Selling Strategy 6. Sales Motivation and supervision Strategy Of all the promotional strategies Bata Bangladesh as we observed followed the selling. At least their lack of advertising in the electronic and print media and their target of coming up with new stores reflect that. They try to be at the doorstep of people with their store rather than intense advertising. But they give some ads to the newspaper on their new arrivals sometimes. Key Elements of Marketing Strategic Formulation

Political and Legal Environment

Technological Environment

Customer

Marketing Strategy: Achieving maximum Positive differentiation

Corporation

Competition

Social Environment

Over competition in meeting Customer needs.

Economic Environment

Key Elements of Marketing Strategic Formulation


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6.0 LESSONS I LEARN FROM BATA SHOES BANGLADESH


Positive Output from Bata Shoes Bangladesh Image of the company Quality Product Differentiated line of products Competitive Pricing Strong distribution channel Modern manufacturing facilities Brand loyalty at mass level Negative Impact on Bata Shoes Bangladesh Insufficient promotional activities Bata at present conducts all the store management activity manually. Inability to catch the present trend in time Less competitive price due to high cost structure. VAT & tax barrier I also found the 5 forces of competition for Bata Shoe Bangladesh

NEW ENTRANTS Apex, Reebok, Puma, Jennys, Woodland


MAJOR

SUPPLIERS Rubber from local source, leather from local source. Some sole from other subsidiaries of Bata like India and China Bata

COMPETITORS:

BUYERS: Infant,
teen, young, old. Lower- middle to

Apex, Jennys, Reebok, Liberty Smuggled shoes

upper class

SUBSTITUTE Bare foot, low quality footwear

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7.0 RECOMMENDATIONS
Give sales discount and free samples to influence more sales in the growing shoe market. Reduce the price level. More advertisements should be aired. Should build awareness among the potential users of this type of footwear product. Bring more design, color, and design combination to be competitive. To merge with the local companies and to expand more segmentation.

8.0 CONCLUSION
From the analysis of Bata Shoe Company Bangladesh Ltd and the shoe industry i have identified that the shoe industry is growing and identified their main weakness is insufficient lack of development with the rapid changing market needs, insufficient promotional activities, and downward trend of quality. On the other hand, distribution system and vertical integration are the strengths of Bata From strategic marketing viewpoint; we see that Bata is taking corrective steps in almost all the way. In very few sides Bata has lacking. Based upon these facts recommended strategies would assist in more growth of Bata shoe company Bangladesh Ltd. in among the upcoming fierce competition in the shoe industry.

9.0 REFERENCES
www.batabd.com Annual Report 2010 Various Secondary Sources

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