INTERNATIONAL BUSINESS CASE STUDYJaved Kalangade (P1118) Ashish Khandare (P1124) Amit Kumar (P1129) Raul Pinto (P1148) Sonal Sherekar (P1155) 1. Bata Company Overview History, Evolution and Positioning FLOW OF PRESENTAION 2. Case Study Overview Bata’s Journey over the world 3. Foreign Political Systems Bata’s interaction with foreign systems 4. Road Ahead for Bata International Challenges for Bata Ahead Facts about Bata • Founded by Tomas Bata in 1894, riverside town of Zlin , Czechoslovakia BATA COMPANY OVERVIEW • Trusted global company that offers fashionable and affordable footwear to every member of the family • 5,000 international retail locations in over 70 countries • Services over one million customers per day Facts about Bata • Core Principle – To know its customers and to create the best possible products to meet their needs BATA COMPANY OVERVIEW • Mission – Offering style, comfort and quality at the best price Facts about Bata • Innovators and Leaders • International and Local • Future of footwear BATA COMPANY OVERVIEW • “Our success is built on our legacy of values and belief” . Bata .Thomas G. the local production is basically dedicated to the internal market . which means that the company is able to adapt to the local environment BATA COMPANY OVERVIEW • Bata has a performing business strategy based on economies of scale • Trying of not exporting.Policy at Bata • Managed in a decentralized way. during World War I started rapid growth and small manufacture turned into modern industrial concern. military shoes and rising demand for them. one of the first mass producers of shoes .FOREIGN POLITICAL SYSTEMS Czechoslovakia • The company was founded in 1894 in Zlín (Czech Republic) by Tomas Bata • A large order from the army. FOREIGN POLITICAL SYSTEMS Czechoslovakia 1918 The Czechoslovak state was conceived as a parliamentary democracy 1939 The Company relocates to Canada after the movement of German military forces into Eastern Europe 1945 Czechoslovakia business operations are nationalized by the new communist government following World War II . including a shoe factory and engineering plant. centred in a town that still bears his name. moved to Canada in 1939 to develop the Bata Shoe Company of Canada. together with over 100 families from Czechoslovakia. Thomas J. the founder's son. Batawa. Ontario . Bata.FOREIGN POLITICAL SYSTEMS Canada • Anticipating the Second World War. Business in Canada • Canada defines Small Businesses as those with fewer than 100 employees (in goods producing firms) and 50 employees (in service firms) FOREIGN POLITICAL SYSTEMS Canada . Canadian Provincial Taxes FOREIGN POLITICAL SYSTEMS Canada . FOREIGN POLITICAL SYSTEMS Uganda • The local factories of Bata in Uganda had been – – – – nationalized by Milton Obote. de-nationalized by Idi Amin. re-nationalized by Amin and finally de-nationalized also by Amin • Meanwhile the company had worked as nothing had ever happened . 1962 1966 Uganda gained independence from UK Following a power struggle between the Obote-led government and King Muteesa. the UPC-dominated Parliament changed the constitution and removed the ceremonial president and vice president After a military coup in 1971. Obote was deposed from power and the dictator Idi Amin seized control of the country Amin's reign was ended after the Uganda Tanzania War Museveni has been in power since 1986 FOREIGN POLITICAL SYSTEMS Uganda 1971 1979 1986 . including fertile soils.Economy of Uganda • For decades. regular rainfall. Uganda's economy suffered from devastating economic policies and instability. and sizable mineral deposits of copper and cobalt FOREIGN POLITICAL SYSTEMS Uganda • The country has largely untapped reserves of both crude oil and natural gas • Uganda is rated among countries perceived as very corrupt by Transparency International . leaving Uganda as one of the world's poorest countries • Uganda has substantial natural resources. FOREIGN POLITICAL SYSTEMS Chile • Bata had been also criticized for maintaining different types of relationships with totalitarian regimes. meanwhile many political regimes had changed . as the one of Chile • The company presented in its own defence the argument that it had been activating in Chile more than 40 years. Economy of Chile • Chile is one of South America's most stable and prosperous nations FOREIGN POLITICAL SYSTEMS Chile • During the early 1990s. though at a slower pace . deepened the economic reform initiated by the military government • The 1973–90 military government sold many state-owned companies. and the three democratic governments since 1990 have continued privatization. who took over from the military in 1990. Chile's reputation as a role model for economic reform was strengthened when the democratic government of Patricio Aylwin. FOREIGN POLITICAL SYSTEMS Types of Governments . managed by the government communities of workers Under Capitalism.Under Communism. has the role of the government favoring the needs of society has the role of easing the class struggle in favor of Capital . production is Under Socialism. . . mainly generated by low labour costs and rich deposits of mineral resources • The relatively large South African market allows the companies to obtain economies of scale in production by using cheap labour force .Bata in South Africa • The case of South Africa was a major challenge for Bata • The GDP per capita in this country is the highest of all nations in the African continent • The main attraction of the country is represented by the incredible high profit rate. social and economic segregations between black and white people • The black Nationalists were fighting for the right to vote of each and every citizen.Bata in South Africa • The general background deteriorated rapidly at the beginning of 1980s • For decades. but the white Government was refusing them • The African National Congress. led by Nelson Mandela. South Africa had an apartheid regime that led to political. no matter if the companies considered were national or owned by foreign entities . was fighting against capitalism and was sustaining the idea of nationalizing the whole industry. Bata in South Africa • The Canadian Government had imposed a very conservative legislation regarding the new investments in South Africa • As a result. but the company did not admit that the apartheid had represented the cause of its decision • The selling conditions were clearly stipulating that the name of the company and the production brand would not be used anymore in South Africa and all the connections with Canada would be broken off • The new buyer of the business operations and the production facilities had to keep the jobs of all workers. Bata decided to leave South Africa in 1986. most of them black people . Bata in South Africa . Bata in South Africa . 25 a day • South Africa has a comparative advantage in the production of agriculture. and the top corporate tax rate is 28% Bata in South Africa .South African Economy • The economy of South Africa is the largest in Africa • About a quarter of the population is unemployed and about the same proportion lives on less than US $1. mining and manufacturing products relating to these sectors • The top income tax rate in South Africa is 40%. Business in South Africa • South Africa suffers from relatively heavy overall regulation burden compared to developed countries Bata in South Africa • State ownership and interference impose high barriers to entry in many areas the top corporate tax rate is 28% . Bata in South Africa . Bata in South Africa . Bata in South Africa . Bata in South Africa . Bata should re-enter South Africa Bata in South Africa • Bata should continue with it’s strategy of using local production to cater to domestic markets as .• Since South Africa has evolved into a more favourable investment destination. Czech Republic and Slovakia.Bata’s re-entry in Czech & Slovakia Political scenario of the region • After the collapse of Czechoslovakia. both were considered free politically • Czech Republic was considered mostly free economically • Czech started to encourage privatization of companies • But Slovakia encouraged nationalization of companies . Advantages for Bata for getting back operations in Republic of Slovakia • Bata will be able to return to the home country • Bata will gain access to large facilities and a huge market in Eastern Europe and the former Soviet Union • Already an established company there Disadvantages for Bata for getting back operations in Republic of Slovakia • Bata will have to face the not so free economic policy of Slovakia as its not promoter of free trade • Bata have to comply with the economic policies which are not desired by a company which has been operating freely around the globe Bata’s re-entry in Czech & Slovakia . Advantages for Republic of Slovakia • Bata chooses local resources for the production so the local resources of the Slovakia will be explored and utilized in the proper manner Bata’s re-entry in Czech & Slovakia • Bata gets its raw materials from diversified local suppliers. this will help create strong supply base in the host land and it increase the revenues of the raw material producers Disadvantages for Republic of Slovakia and the reason for not allowing Bata to reenter The compensation which was promised has to be paid back to Bata It has to handover the management to Bata itself The relation with the Slovakian government will not be truly positive and the support from the government will be less to Bata causing mutual conflict • • • . they are in great shape to deal with things there . and marketing expertise The Czech Republic might be able to get Bata to invest significant capital into the plant to get it up to world-class standards Bata will create new jobs for Czech workers and the purchasing power of the Czech will increase The success in the host country comprises of the better knowledge of economic. production. political and cultural diversity knowledge Bata having operated in almost 60 countries knows and have dealt with diverse conditions worldwide so.• Bata’s re-entry in Czech & Slovakia • • • • Why Czech Republic allowed Bata to re enter The Czech Republic will gain access to Bata’s global design. democratic state • Power is divided into legislative (Czech Parliament). executive (Czech Government and the President of the Republic) and judicial • The President of the Republic and the Czech Government are representatives of executive power within the country Bata’s re-entry in Czech & Slovakia .Political System in Czech Republic • Parliamentary republic. Political System in Slovakia • The National Council of The Slovak Republic Country’s sole constitutional and legislative body Bata’s re-entry in Czech & Slovakia • It has 150 members elected for 4 year terms in direct elections • Courts and Judicial Power: Consists of general courts (district courts. regional courts and the supreme court) and military courts • The Constitutional Court is an independent judicial body and is not part of general courts system • Military courts handle disputes of military personnel . Why Tom Bata Sr. cant bear to lose grip on business he started • He is the one who took his ancestral business to a global level Bata’s Future • He did a lot of hard work to keep the Bata philosophies alive and also ensured that it grew into a global empire • His entrepreneurship method of keeping the company alive was a success in his time and perhaps he believes that the same tradition should be carried forward to the future . Having seen and managed all this so effectively and for so long. Different countries have different political and cultural environment. its difficult to trust someone else . it is often hard to turn it over to others who may have different ideas about how the firm should be managed Bata’s Future • Bata is huge. having operations in about 60 countries.• Having grown a business. Bata led his firm through a period of great turbulence and growth but both the world and the company are now very different than they were in • Doing business is changing rapidly and being dynamic to adapt to those changes is a necessity • So Tom Bata should formulate a retirement plan in such a way that the new CEO or a successor will be able to continue his inheritance in a new way Bata’s Future . cant find a way to retire • Tom J. if Bata Sr.What is the risk. Bata should focus not only in its current strategies but also have a good succession strategy . Bata will prove more effective Bata’s Future • Hiring and training the best candidate after he is gone. will be the challenge for the management • Hence. if Bata Sr.What is the risk. cant find a way to retire • The training under Tom J. Thank You .