Performance Dynamics of Bata Shoe Bangladesh

1. Historical Background The business that became the Bata app arl Organization was established on August 24, 1894 in Zlin, Czechoslovakia by Tomas Bata, and include his br new(prenominal) Antonin and sister Anna. Although this business was new, the Bata name had been part of a usance of habilitatemaking for eight generations, spanning three hundred years. It was one of the first contemporaneous habilitate manufacturers, a team of stitchers and apparel nobles creating footgear not just for the local town, but also for distant retail merchants.This departure from the centuries-old customs of the one-man(prenominal) cobblers workshop was a brand new concept, creating an immaculately new pains. Tomas agreementatically principal(prenominal)tained a human focus, creating opportunities for development and advancement, and added compensation for employees base on achievement. As the enterprise prospered, so did the communities where it operated. Bata companies later reard ra il runs, construction, insurance, publishing and a tannery in Zlin. The Bata System devised by the Zlin team, and later applied in other Bata dress Organization companies, organized operations into autonomous workshops and departments (profit meat), allowing employees to contribute ideas and stimulate merchandiseion, and contributed significant break by dint of and dones in footwear technology. By 1938 Bata Shoe Organization had established a unique and widespread presence, designing, producing and commercializeing footwear in much than 30 countries.The Bata Shoe Organization regarded itself as a Multi-Domestic rather than multinational enterprise, making it a priority to contribute to the parsimony in any new merchandises it entered. During the 50s, 60s and 70s the Organization redoubled its focus on retailing excellence, international footwear branding, advanced manufacturing techniques and extensive employee training, another Bata tradition that dated back to the Organi zations earliest years. At present, Bata is one of the worlds widest r all(prenominal)ing companies, with operations in 68 variant countries.They strive to pick up to the customers in their local markets and clearly identify their footwear needs, and then to leave intersection points that exceed their customers expectations in term of property, style and nurse. Bata in operation(p) companies are grouped into four business units based on similarities in markets and business issues. to each one group benefits from synergies specific to their makements, such(prenominal) as overlap development, sourcing and marketing hold out. 1. 1 Bata Today Bata is one of the worlds widest reaching companies, with operations in 68 different countries.Bata companies strive to listen to the customers in their local markets and clearly identify their footwear needs, and then to provide products that exceed their customers expectations in terms of superior, style and value. Bata operating c ompanies are grouped into four business units based on similarities in markets and business issues. Each group benefits from synergies specific to their requirements, such as product development, sourcing and marketing support. Each business unit is entrepreneurial in nature, and can quickly adapt to changes in the marketplace and set aside potential increment opportunities. Bata International serves customers in much of Asia, the Pacific and Africa through its 3,000 stores and many dealers. It is supervised from Singapore. Bata International operates shoe innovation centers in several(prenominal) countries as nearly as 30 factories to serve individual markets. * Bata atomic exit 63 is based in Paris and operates 500 stores offering fashionable footwear. The inaugural shoe innovation center just outside of Venice supplies many of the sole(prenominal) lines found in Bata stores throughout Europe. * Bata Latin America is based in Mexico City.Bata is the leading(a) retailer of lieu in Latin America and the leading marketer of childrens branded footwear. * Bata Canada is based in Toronto from where 250 stores serve the Canadian market. Its bowed stringed instrument of Athletes Worlds and Nike Shops is the leading fashion source in Canada for preteen urban customers. Bata Shoe organization (B. S. O. ) is the largest manufacturer and marketer of footwear in the world. Its global business comprises of shoe factories, tanneries, engineering plants, quality control laboratories, product development and research centers.Bata distributes its products through approximately 6,ccc retail outlets, 10,000 franchises and thousands of completesale depots and dealers. more(prenominal) than 50,000 throng are employed in producing and selling over 300 trillion pairs of plaza each year, primarily for the domestic markets in which B. S. O companies operate. Approximately 400,000 additional people and their families are engaged in the support services required by B. S. O. operations. Bata International Centre is located in Toronto, Canada. Mr.Tomas Bata, the demote of Bata Shoe Organization, initiated this worldwide operation in Zlin, Czechoslovakia, now cognise as the Czech Republic. The year 1994 marked the 100th founding anniversary of BATA. Over the years B. S. O. s operation fatten outed across the entire globe and established itself as the worlds largest organization in footwear manufacturing and marketing Today Bata operates in 68 countries. 1. 2 Bata Bangladesh At the Pakistan spot Bata was first came to this country. After independence Bata continue their commitment to provide good quality shoes at an affordable damage.Many of the elderly people still remember the Naughty Boy shoe of Bata that was known for its military posture among the kids of that time. But since then Bata Bangladesh has changed a lot. Now they are not solitary(prenominal) providing durable shoes but have brought new designs too check to the taste of the peop le. Bata expands its operation all through the country. It has now huge number of stores, agencies, dealers and wholesalers around the country. And undoubtedly it has the biggest shoe manufacturing and marketing organization here in Bangladesh.There are hardly any places in the country where one willing not found Bata store, which signals its expansion, success and popularity here. Bata Bangladesh is a public limited company, which has 51- 49% make do with the government of Bangladesh. Though it has established in Czechoslovakia but at present Bata is a Canadian company because of the migration and mergers of the family and now J. Bata who happens to be the grandson of founder G. Bata has his operation and headquarter in Canada and operates as a Canadian company. In Bangladesh it is operating as a Canada-Bangladesh company. . 3 Mission invention of a bullnecked shoe line targeted to various market segments to maintain leadership through emergenced market share. 1. 4 Vision To p rovide good quality shoes at an affordable price. By extending in headway the comfort that needs to be there and providing new designs with it. 1. 5 Objectives * operation of 100% estimated business in each category * Maintain a shoe line with 700 lines of which 200, 300, 150 & 50 lines for Men, Women Children & P delayic respectively * Introduction of a shoe ine as per life story style as well as fashion trend * Achieve an honest 55% allowance in each category * Innovate ideas or system for recrudesce focussing of merchandise scattering by maintaining 4 times line of descent turn. 2. Product Profile Bata shoe Bangladesh Ltd. has more than 900 lines of shoes in different categories. They distribute all of these lines of shoes in different parts of Bangladesh through wholesalers, dealers and through their own stores. In the following chart some of the shoes, its average price, size and other dominating features are mentioned.Best Price Range (TK) BATA tyrannic Color Mens 9 95-1695 Black Womens 250-550 Black, Chocolate School 200-330 Black, White Children 130-195 assorted Sport 695-995 White, Gray Non Shoes 50-100 Black, Chocolate 3. Competitive Status * Be obsessed with customer satisfaction * Build reputation for providing quality product * Be dedicated to continuous growing in the market * far-flung availability of Bata shoes in the market The prices of Bata shoes are rattling competitive and in many cases lower than its competitors * Very good dispersal channel with dedicated employees all through Bangladesh and established because of Batas follow out in the Bangladesh for very long * Taking opportunity of the lower get power of the people of the country by providing good quality shoe at a competitive price * To ensure that the end users feature medicines those are safe, effective and quality consistent with leadership position in the health care industry throughout the country * It has more than 900 lines of shoes in different categories * To apply the rinciples of customer-focused quality, service and excellence to all processes and system, from product design, development through production, scattering and marketing * To maintain the standard of quality in order to protect the patients, pr raset errors and optimize value provided to the consumer and company. * To accord with group product standards and regulatory requirements * The company has more than 1000 shoe designs and caters to all the segments.Over 60% of sales come from the mens celestial orbit, while childrens and womens range account for about 20% each * BB operates through a chain of exclusive own and franchise stores. BBs stores are located in prime locations countrywide. 70% of Batas sales are from its own retail outlets. as well as there is a clearwork of about 500 exclusive wholesalers who service about 300 retail stores all over the country. Bata has showrooms, wholesale depots and dispersion centers across the country. 4. Trends of performanc e Products tend to go through different stages, each stage being affected by different competitive conditions.These stages require different marketing strategies at different times if sales and lettuce are to be efficiently realized. The length of a product life cycle is in no way a fixed period of time. It can blend in from weeks to years, depending on the type of product. In case of shoe industry in Bangladesh it is presently going through the growth stages which are characterized by many new consumers entry in the market, by yield in price as experience and economies of scale have been attained, by developed diffusion channel and by increasing intensity of competition.Bata Bangladesh is the largest doer in the footwear industry with around 9-10% volume share and a 60% market-share in the organized segment. BB (Bata Bangladesh) has a market share of 70% in canvas shoes segment while it has a share of 60% in leather shoes. BB manufactures about 10% of the total hellos sold in the country. BB competes in manufacturing low priced Hawaiis with the unorganized sector with its price ranging from Taka35-Taka110 with unorganized sectors pricing in the range of Taka25-Taka50. 4. 1 Production Bata Bangladesh operates 2 manufacturing plants in Tongi and Dhamrai.The company is producing around 110,000 pairs of shoes daily. It has a modern tannery with the latest technological facilities to process 5 million square feet of leather yearly. Bata Bangladesh concentrates mainly on the domestic market through a countywide distribution network comprising retail stores, Dealer endorse Program (DSPs) and independent dealers. 4. 2 Sales Turnover 4. 3 gain ground & Profitability The average gross profit margin for the last cinque years has been 37% while average operating margin has been 12%. Average net margin stands at 8%.In 2008, 2009 & 2010 Batas net Income was (MM BDT) 449, 459, 509 Gross brim 34% 35% 35% operational Margin 14% ,12% ,12% Net Margin 10%, 9%, 9% and Operating Cash (MM BDT) 428,873 472,320 511,799 587,130 643,166 713,937 781,319. Average return on equity for the last tail fin years has been more than 40% while average return on assets has been around 14%. Bata is also among the largest dividend payers with an average dividend payout ratio of 80% for the last three years. moreover, the company has large land holdings which have not been revalued in a long time.The company has zero leverage and huge stockpiles of property which give them enough flexibility to expand and/or maintain a high payout ratio. 5. Growth Rate (Trend Analysis of Productivity) Consistent margin and growth Bata has been a consistent performer in recent years and this is reflected in their profit margins for the last five years. Bata also enjoyed consistent growth in sales and earnings. Sales growth has been averaging around 16% in the last four years while earnings growth has been averaging over 25% during that period. EBITDA growth has been around 20% on a verage.No credit sales insurance helped accumulate large cash. Bata maintains a no credit sales policy. This has helped snub cash cycle for the company. 6. SWOT Analysis * Strengths * Image of the company * theatrical role Product * Differentiated line of products * Competitive Pricing * Strong distribution channel * Modern manufacturing facilities * Brand loyalty at mass train * Weaknesses * Insufficient promotional activities * Bata at present conducts all the store management activity manually. This results lots of lengthy paper works, errors & waste of time. Inability to occlusive the present trend in time * Less competitive price due to high cost structure. * VAT & tax barrier * Opportunities * condescension political turbulence a segment of our middle-class is coming up with reasonable buying power. Many of them are women who are decision maker so the city store concept of Bata can attract them as whole of the family footwear can be available there. * Consumer care sepa rate products. They like to shop in a store where they serve the whole family. * More competition results in more campaign for products. * Business blowup in Shoe care products Utilize outsourcing especially the synergy sources to achieve competitive pricing * Franchi cope with opportunity with global brands like Nike, Reebok, Hush whelp * Market expansion opportunity in high fashion & value for money footwear market for all categories of shoes through retail & WCSM channels * Threat * Political instability affects the supply of raw materials and distribution of finished products. * Uncontrolled counterfeit of Bata products * New companies like Apex, Homeland, Pagasus of Bangladesh and the foreign companies like Nike, Reebok, Addidas are already in the market with good quality product.Have to keep up with them respect of quality. * Smuggelling of shoes and many stores in the city like the ones in elephant road are the major market leaders. As they dont have to pay for large tota lity of money for establishment, production, quality and advertising so they can sell at a much lower price than established brands like Bata. * quick market expansion program by organized competitors like APEX. 7. potential Measure to Improve Performance To alter the sales and profits, BB is planning to increase penetration by setting up more retail outlets and victorious space in shopping malls across the country.Existing retail stores would be upgraded even as wholesale depots would be set up in small towns and semi-urban areas. BBs main efforts will be to streamline the wholesale business. BBs thrust is on becoming marketing driven firm from a manufacturing oriented company. stairs are also being taken to reduce costs, improve distribution logistics and focus on launch of new products in order to improve the performance of the company. * Give sales discount and free samples to influence more sales in the growing shoe market. * Reduce the price level. More advertisements shou ld be aired. * Should build awareness among the potential users of this type of footwear product. * represent more design, color, and design combination to be competitive. * To merge with the local companies and to expand more segmentation. 8. Conclusion From the analysis of Bata Shoe Company Bangladesh Ltd and the shoe industry we 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.