THE BATA SHOE ORGANIZATION: This case talks about Bata Shoe Organization, the world’s largest manufacturer and retailer of Footwear Company and the challenges faced by the company while determining its future long-term strategy and in finding a top management team. The case deals with the problems that Bata might face due to the political and economic changes taking place worldwide while running the company around the globe, over 62 manufacturing units and 4458 company- stores owned worldwide. Based on the economic freedom scales, what kind of differences do you think Bata might face in the Czech Republic and Slovakia?
Czech Rebublic was economically free. So Bata achieved free market and freedom to own and run the factory. Itcan thus continue its operations in the country smoothly in the future. While Slovakia was considered economically unfree. The government regulates how a business run, how goods are produced and labor are used, priced or distributed in the market. As a result the slovakian government is unwilling to give the factory back to Bata, forbidding it to rebuild the factory with new resources. Hence as a result of huge government interventions, Bata will face difficulty in gaining market in the Slovakia.
What are the advantages and disadvantages to both Bata and the republic of Slovakia of having Bata take over his former operations? Why do you think the Czech Republic allowed Bata to reenter the market, but Slovakia did not? Bata tried to acquire economies of scales by making huge volume of sales at a lower price. The company’s strategy was to capture market share in the world. So acquiring back the business in Slovakia would help increase Bata’s sales and ultimately a source of revenue for the company.
However, controlled economy, communist country and lack of support from the government may cause great difficulty for Bata to run its operations smoothly in the country. It has to face lots of government pressure which might even harm its sales in the country. While in case of Slovakia, letting Bata take over its former operations would allow increasing employment and bringing economic growth for the nation. Industrial growth is always beneficial for a nation’s economy. But, being a foreign company, there are possibilities that the country does not entirely benefit from Bata’s profit.
Besides, domestic company may protests that arrival of a foreign company increase competition for them. Czech Republic was economically free and emphasized on free market and private ownership of property. The country realized the potential of Bata to earn revenue and bring economic growth for the nation. Bata had moved its operations from Czechoslovakia due to Nazi’s invasion in the country. Hence, it allowed Bata to run its factory in Czeck Republic. On the other side Slovakia was economically not free.
Government acted as a policy maker and its implementer and had huge control over the operations of the companies there. Besides, the country was highly influenced by communism at that time and did not favor international companies. They were more concerned about the growth of local shoe industry. As a result Slovakia did not allow Bata to enter the market. Given the countries that Bata is operating in, what challenges does Tom Bata face trying to establish an effective political strategy for the company? Bata has its operations in both industrial democratic countries and developing countries.
It requires different procedures to adjust to different environments and economies. Some challenges that Bata faces in establishing itself are: * Company operating under democratic country has liberal policies. It has the potential to discuss the change procedures, than a totalitarian situation which has strict policies and where remaining silent is considered wise. * It has been censured for operating in totalitarian regimes, such as that in Chile. * It has to be careful in countries like South Africa where it was once criticized of supporting the white minority. Frequent changes in political parties and decisions made by them may pose a problem to the company’s application of policies. * Some countries policies of avoiding import of raw material in order to preserve foreign exchange creates a challenge to the company to adjust as per the local laws. * Economic policies also differ between different nations. Accordingly policies of the company must be developed Why do you think Tom J. Bata, Sr. , has joined the list of entrepreneurs who cannot bear to loosen their grip on business they started? What is the risk to the Bata Shoe Organization if Thomas J.
Bata cannot find a way to retire? Tomas, the ninth generation of a family of Czechoslovakian shoemakers with their great effort in the business were able to take the company worldwide with network almost in 28 countries. After his father’s death it was the responsibility of Tom. J. Bata to expand that empire. Tom did not wasn’t to lose the grip on the business his ancestors started. The major challenge to the business at present is to determine its future, both in long-term strategy and in finding a top management team that will move the company into the twenty first century.
It is affected by the dramatic political and economic changes taking place worldwide. The company its own well labor focused and low cost strategy, if the new members moved the company toward capital focused then the Bata will lose its traditional identity. Similarly, handling the company to nonfamily members did not succeed in running well. There emotional attachment with the company would be lacking from outsiders. So, these could be the risk associated if Thomas J. Bata cannot find a way to retire.