Introduction

BATA INDIA LIMITED Repositioned Or Still a Foot weary Presented by- Yugesh Kumar dubey (8279)
Vinay Singh (8272) Vinay gupta (8271) External environment We have analyze various external
environments from case as well as from outside source- Industry environment- Threat of new entrantsThere are many barriers to entry preventing new entrants from capturing significant market share. Large
footwear producer enjoy economy of scale that create cost advantage over any new rival. BIL
differentiated its product from rivals product like Comfort (using dynamic spring pad that acted as
cushion on the feet for womens footwear), Wind (in build air technology that allowed feet to breath
fresh air) etc. The capital requirements are a high entry barrier to a new firm to the industry. However, an
existing shoe manufacturer may enter the athletic shoe industry simply by re-tooling their manufacturing
plant. Switching cost is very low for footwear industry because shoes are relatively inexpensive personal
goods that are frequently replaced. Access to distribution channel is barrier to entry because it is really
difficult for a startup firm to get shelf space at major shoe retailer. But existing firm may use their
existing connections to easily access shoe distribution channel. Bargaining power of buyer- Bata was
largest player in industry with 9-10%volume share and 60% market share in organized segment. It had a
market share of 70% in canvas shoe segment and 60% in leather shoe segment. Their dominant market
share give them power over buyer. Bata is a big buyer of raw material who buys significant part of
suppliers revenue. This in a way provides good bargaining power over suppliers. As a part of its
strategic decision Bata set up a rubber/canvas factory in Faridabad, Haryana in 1951. So it can threaten
its supplier to integrate backward. Bargaining power of supplier- Shoes are made of leather, rubber,
nylon etc. These materials could be classified as commodities, where the manufacturing process adds
the value. ...read more.

Middle
Thats why Bata wanted to reposition itself. Major problems at BIL 1. Company has been in existence for
more than seven decades and faces a challenge in switching to new product technology. 2. Due to
increase in cost of raw material, sale went up by 21 crore, cost has gone up by 68 crore. So profit
affected due to increased input cost. 3. Sales and distribution cost is also very high because most of
shops are owned by company itself and staffed employee. 4. High value added footwear did not find
acceptance in the market and led to drop in sale volume. So 2 million shoes were sold at a discount of 50
% at a loss of 41 crore. 5. Bata was focusing on premium segment which account very less in footwear
industry in India. 6. Conflict of management with Mazdoor union is main weakness of BIL. 7. The
Company heavily depends on its Promoter group for its technology. The Company has entered into a
Technical Collaboration Agreement dated December 29, 2000 with Bata Limited, Canada (Bata
Canada) for a period of 10 years. Company does not anticipate any withdrawal of such services in
future operations also, in case there is any withdrawal of the services, such withdrawal may adversely
affect the business, operations and profitability of the Company. 8. Unrelated diversification is also a
major problem of BIL because consumer has such image of Bata in their mind that they connect Bata
with shoes only. Strategy of the Company The Companys management has evolved the strategy of the
Company after considering the Companys strengths and weaknesses. The Company believes that this
strategy will enable the Company to build on the opportunities in the market. Cost optimization and
margin improvement The Company is focusing on margin improvement and cost effectiveness programs
which have started yielding results. The Company has initiated strict control on costs in purchases and

outsourcing and is looking at global sourcing for raw materials to improve the net realization. ...read
more.

Conclusion
They havent got any wage hike for four years, Subir Chakraborty, president of the Bata Mazdoor
Union, said here. But the management said a hike is not possible keeping in view the rising competition
in the market. Instead, it has asked some contract labourers to take voluntary retirement, he said. A day
after threatening to suspend operations at its strike-hit Batanagar unit in West Bengal, Bata India
Thursday held talks with union leaders and asked them to exhort the striking contract labourers to end
the four-day-old agitation.The management has told us today (Thursday) that they are willing to listen
to the demand of the contract workers, but they have to first withdraw their strike, Bata Mazdoor Union
president Subir Chakraborty said. A company notice Wednesday said the management might declare
suspension of work in Batanagar at any time if the strike was not withdrawn. Chakraborty said the
contract workers were also preventing permanent workers from entering the factory.There is a fear in
the mind of the permanent workers that the factory may shut operations because of the attitude of the
contract staff which we dont support, he said.The Bata Mazdoor Union is affiliated to the All India Trade
Union Congress (AITUC). Conclusion- Over a period of time Bata has improved its distribution network,
generated skilled manpower, integrated itself backward as well as forward, resolved problem with trade
unions, lower down the input cost, create good physical infrastructure and technological advancement. It
is continuously increasing its distribution network and cutting cost through manpower reduction. Looking
net sale/volume and profit before tax increases significantly from 2008 to 2009. Now, Bata has no more
considered as only a production company which produces footwear. They now created an image of
fashion driving, market oriented manufacturer. Positioning has been done in very passionate way to
change a stable image of company over a period of time. They back their campaign through several
TVCs, print media and word of mouth. Collaboration with several big players is giving an edge to Bata
India Limited. Bata successfully changes its image and repositioned itself. Kohinoor business school,
khandala ...read more.