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COMPANY:
BATA INDIA Ltd.
EXECUTIVE SUMMARY
This report discusses the detail of
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To summarise the above points we know that Bata is the fastest growing
footwear brand in the country with a presence across 400 cities. The
brand offers a wide range of comfortable, stylish and trendy footwear at
affordable prices, ensuring there is something in the collection for
everyone. The USP of the brand lies in the fact that they have successfully
made fashion and durability so affordable and accessible to all. This
explains why Bata India sells over 45 million pairs of footwear every year
and serves over 120,000 customers every day. Today, Bata India is the
largest retailer and leading manufacturer of footwear in India.
Batas main competitors are Mirza Intl, Liberty Shoes, Crew B.O.S;
Bhartiya Inter. In this report we have compared the Value chains of Bata
India Ltd and liberty Shoes Ltd which says that Bata has a competitive
advantage over Liberty shoes. Bata follows backward integration and are
not dependent on some third party for procurement of raw materials
which makes it cost effective. Apart from this Bata has a huge competitive
advantage over Liberty in the area of sales and distribution channel.
Bata follows Cost leadership strategy. The company enjoys the highest
market share in India and this is evident from the fact that the total retail
presence of the company currently is more than thrice that of its closest
competitor (Liberty: 381 stores). Bata has over 15% market share in
Organized Retail market and around 6.5% share in unorganized retail.
Bata is produces its own raw material to improve its profitability. Bata
reduces its cost by demand based production, setting up manufacturing
base in tax-free locations, using different mix for footwear production with
cheaper raw material. Also, they started cutting some cost through sales
and distribution network, which is really huge distribution network.
Sales and distributionBata operated through exclusive chain of executive own and franchise
stores located in prime location country wide. Bata owns network of 300
exclusive wholesalers who serviced 30,000 retail outlets throughout
country. Overall it has over 1,600 showrooms, 27 wholesale depots and 8
distribution centers across the country.
Technological resourcesIn 2004, Bata installed point of sale management information system
(POS), for providing sales and inventory information across the
companys stores. This provides company to plan production and
optimize inventory level.
LIBERTY SHOES LTD.:
Technology
It has introduced a new material called TPU (Thermo Plastic Urethane),
for high quality footwear, into the country. This material has better
properties than PVC or TPR (conventional materials used for footwear).
Liberty has also been instrumental in introducing EVA (Ethyl Vinyl
Acetate), which is a direct injection moulding used for making sole for
the first time in Asia. This technology uses very light material & the
footwear is made with the direct injection system.
Liberty also pioneered the PU (Poly Urethane) Technology in India for the
footwear industry.
Besides these Thermo Plastic Elastomer has been developed for the first
time in India at Liberty. A CAD/CAM design centre is in place at Liberty.
The Sympatex waterproof technology in footwear was pioneered by also
Liberty. Liberty is also the first company to market PPE products for
safety purpose.
OperationsGharaunda is the first plant of its kind in this part of Asia that is equipped
with Desma machines for PU Direct Injection Moulding. Using PUF
technology and Computer Aided Systems this vertically integrated plant
produces Industrial Safety Shoes that are made to European standards.
Sympatex TEX booties as well as ordinary booties are also made here.
Beside these Gharaunda has a design centre where an ambitious team of
young designers working in tandem with experienced technologists.
d. Which strategy do the companies follow? - Cost Leadership,
Differentiation or Focus?
Bata India Ltd. follows Cost Leadership strategy.
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. The Company has also been clearing old merchandize
through discount sales, write offs, etc. which will enable it to focus on
improving sales.
e. The reflections about the current costing systems of the
company?
Currently the company is mainly focusing mainly on cost reducing
strategies which are as follows:
1.
2.
3.
4.
Cost-cutting: Raw material used for used for 33% of total cost. Now
Bata identified this problem and started using different mix for footwear
production with cheaper raw material. Also, they started cutting some
RECOMMENDATIONS:
1) The main recommendation we can give Bata is to repositioning
itself. In India we still believe that Bata is just a company which
produces footwear for school goers, office goers and regular use
footwear like slippers and snickers. Bata is still trying to change
its image of production oriented company to affordable, market
driven, fashion conscious, lifestyle brand. Today they have a huge
shoe line with a huge range of new designs on offer. To name a
few they are Marie Claire, Weinbrenner, North Star, Power, Hush
Puppies, Dr. Scholls, Ambassador, Bubblegummer etc but only a
few segment of people know about this. So Bata must back their
campaign through TVCs, print media and word of mouth.
2) According to the survey conducted by Bata in African continent it
was observed that people were not wearing shoes at all. This
References:
www.bata.in
www.wikinvest.com
www.moneycontrol.com
www.inrnews.com
www.scribd.com