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Stability Strategy with relevant case study

Project submitted in partial fulfilment of the course in

Economics of Global Trade and Finance

At

M.com Part 1

2013-14

By

Mayuri Shetty

Guiding Teacher

Dr. Adhir V. Ambavane

Prof. Ms.Chitra Subramaniam

University of Mumbai.

Kelkar Vaze College,

Mumbai.

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Stability Strategy with relevant case study

Project submitted in partial fulfilment of the course in

Economics of Global Trade and Finance

At

M.com Part 1

2013-14

By

Mayuri Shetty

Guiding Teacher

Dr. Adhir V. Ambavane

Prof. Ms.Chitra Subramaniam

University of Mumbai.

Kelkar Vaze College,

Mumbai.

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Certificate

This is to certify that the project Titled Stability Strategy with relevant case study is being submitted by

me in partial fulfilment of the course in Strategic Management At M.com Part I during 2013-14

Date: 21/09/2013

Signature

Mayuri Shetty

REMARKS

Guiding Teachers: 1) Dr. Adhir V. Ambavane

Signature _____________

2) Prof. Ms.Chitra Subramaniam

Signature _____________

External Teacher:

Signature ______________

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Declaration

I, Mayuri Shetty, student of K.E.TsV.G. VAZE College of arts, science &commerce, Mulund

pursuing for M.com (Advanced accounting) Part I, Semester 1, hereby declare that I have

completed the project on Stability strategy with relevant case study in the academic year

20132014. I do hereby declare that the information furnished below is true & correct to thebest of my knowledge & belief.

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Content

Sr.no Particulars Page no.

1Stability strategy

7

2When & why to pursue stability strategy

15

3Bata Ltd company

18

4Case study

23

5Batas strategy to boost sales

33

6Conclusion

34

7 Bibliography 35

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Stability Strategy

A strategy that is characterized by absence of significant change, a stability strategy is

best known for what it is not; that is, the stability strategy is characterized by an absence of

significant changes. With this strategy an organization continues to serve its same market and

customers while maintaining its market share. When is a stability strategy most appropriate? It is

most appropriate when several conditions exist: a stable and unchanging environment,

satisfactory organizational performance, a presence of valuable strengths and absence of critical

weaknesses, and non-significant opportunities and threats.

Some organizations successfully employ stability strategy, but most do not get the press that

companies using other strategies get. One reason might be that no change means no news.

Another might be that the company itself wants to keep a low profile; stakeholders may consider

the status quo to be inappropriate, or the strategy may be indication of rigidity of the planning

process. Nonetheless, a company such as Bata India does use the stability strategy very well.

Bata has not moved far from its footwear emphasis. The company has not demonstrated a desire

to diversify into other apparels as have of its competitors.

One of the leading researchers into strategy formulation is Michael Porter of Harvards Graduate

School of Business. His competitive strategies framework argues that managers can choose

among three generic competitive strategies. According to Porter, no firm can successfully

perform at an above average profitability level by trying to be all things people rather, Porterproposed that management must select a competitive strategy that will give it a distinct

advantage by capitalizing on the strengths of the organization and the industry it is in. These

three strategies are cost leadership, differentiation and focus.

According to Porter, when an organization sets out to be the lowest cost producer in its industry

it is following cost leadership strategy. Success with this strategy requires that the organization

be the cost leader, not merely one of the contenders for that position. In addition, the products or

service being offered must be perceived as comparable to that offered by rivals or at least

acceptable to buyers. How does and firm gain such a cost advantages? Typical means include

efficiency of operations, economies of scale, technological innovation, low cost labour, or

preferential access to raw materials. Firms that have used this strategy include Moser Bear India,

Big Bazaar, Bajaj Auto, Reliance petrochemicals and Gujarat Abuja Cements.

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Stability strategy is most likely to be pursued by small businesses or firms in a mature stage of

development. Stability strategies are implemented by steady as itgoes approaches to decisions.

No major functional changes are made in the product line, markets or functions. However,

stability strategy is not a do nothing approach nor does it mean that goals such as profit growth

are abandoned. The stability strategy can be designed to increase profits through such approaches

as improving efficiency in current operations.

Why do companies pursue a stability strategy?

1) The firm is doing well or perceives itself as successful

2) It is less risky

3) It is easier and more comfortable

4) The environment is relatively unstable

5) Too much expansion can lead to inefficiencies

Situations where a stability strategy is more advisable than the growth strategy:

a) if the external environment is highly dynamic and unpredictable

b) Strategic managers may feel that the cost of growth may be higher than the potential benefits

c) Excessive expansion may result in violation of antitrust laws

Types of stability strategies:

1) Pause/Process with caution strategy some organizations pursue stability strategy for a

temporary period of time until the particular environmental situation changes, especially if they

have been growing too fast in the previous period. Stability strategies enable a company to

consolidate its resources after prolonged rapid growth. Sometimes, firms that wish to test the

ground before moving ahead with a full-fledged grand strategy employ stability strategy first.

2) No change strategy a no change strategy is a decision to do nothing new i.e. continue

current operations and policies for the foreseeable future. If there are no significant opportunities

or threats operating in the environment, or if there are no major new strengths and weaknesses

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within the organization or if there are no new competitors or threat of substitutes, the firm may

decide not to do anything new.

3) Profit strategyThe profit strategy is an attempt to artificially maintain profits by reducing

investments and short-term expenditures. Rather than announcing the companys poor position to

shareholders and other investors at large, top management may be tempted to follow this

strategy. Obviously, the profit strategy is useful to get over a temporary difficulty, but if

continued for long, it will lead to a serious deterioration in the companys position. The profit

strategy is thus usually the top managements short term and often self serving response to the

situation.

In general, stability strategies can be very useful in the short run, but they can be dangerous if

followed for too long.

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Nature of Stability Strategy

A firm following stability strategy maintains its current business and product portfolios;

maintains the existing level of effort; and is satisfied with incremental growth. It focuses on fine-

tuning its business operations and improving functional efficiencies through better deployment

of resources. In other words, a firm is said to follow stability/ consolidation strategy if:

It decides to serve the same markets with the same products;

It continues to pursue the same objectives with a strategic thrust on incremental improvement of

functional performances; and

It concentrates its resources in a narrow product-market sphere for developing a meaningful

competitive advantage.

Adopting a stability strategy does not mean that a firm lacks concern for business growth.

It only means that their growth targets are modest and that they wish to maintain a status quo.

Since products, markets and functions remain unchanged, stability strategy is basically a

defensive strategy. A stability strategy is ideal in stable business environments where an

organization can devote its efforts to improving its efficiency while not being threatened with

external change. In some cases, organizations are constrained by regulations or the expectationsof key stakeholders and hence they have no option except to follow stability strategy.

Generally large firms with a sizeable portfolio of businesses do not usually depend on the

stability strategy as a main route, though they may use it under certain special circumstances.

They normally use it in combination with the other generic strategies, adopting stability for some

businesses while pursuing expansion for the others. However, small firms find this a very useful

approach since they can reduce their risk and defend their positions by adopting this strategy.

Niche players also prefer this strategy for the same reasons.

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Conditions Favouring Stability Strategy

Stability strategy does entail changing the way the business is run, however, the range of

products offered and the markets served remain unchanged or narrowly focused. Hence, the

stability strategy is perceived as a non-growth strategy. As a matter of fact, stability strategy does

provide room for growth, though to a limited extent, in the existing product-market area to

achieve current business objectives. Implementing stability strategy does not imply stagnation

since the basic thrust is on maintaining the current level of performance with incremental growth

in ensuing periods. An organizations strategists might choose stability when

The industry or the economy is in turmoil or the environment is volatile. Uncertain

conditions might convince strategists to be conservative until they became more certain.

Environmental turbulence is minimal and the firm does not foresee any major threat to itself and

the industry concerned as a whole.

The organization just finished a period of rapid growth and needs to consolidate its gains before

pursuing more growth.

The firms growth ambitions are very modest and it is content with incremental growth.

The industry is in a mature stage with few or no growth prospects and the firm is currently in a

comfortable position in the industry

Rationale for Using Stability Strategy

There are a number of circumstances in which the most appropriate growth stance for a

company is stability rather than growth. Stability strategy is normally followed for a brief period

to consolidate the gains of its expansion and needs a breathing spell before embarking on the

next round of expansion. Organizations need to cool off for a while after an aggressive phase of

expansion and must stabilize for a while or they will become inefficient and unmanageable. India

Cements went through a rapid expansion by acquiring other cement companies before stabilizing

and consolidating its operations. Videocon and BPL had first diversified into new businesses and

then started consolidating once faced with stiff competition.

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Managers pursue stability strategy when they feel that the enterprise has been performing

well and wish to maintain the same trend in subsequent years. They would prefer to adopt the

existing product-market posture and avoid departing from it. Sometimes, the management is

content with the status quo because the company enjoys a distinct competitive advantage and

hence does not perceive an immediate threat.

Stability strategy is also adopted in a number of organizations because the management is

not interested in taking risks by venturing into unknown terrain. In fact they do not consider any

other option as long as the pursuit of existing business activity produces the desired results.

Conservative managers believe product development, market development or new ways of doing

business entail great risk and therefore, avoid taking decisions, which can endanger the company.

A number of managers also pursue consolidation strategy involuntarily. In fact, they do not react

to environmental changes and avoid drastic changes in the current strategy unless warranted by

extraordinary circumstances.

Sometimes environmental forces compel an organization to follow the strategy of status

quo. This is particularly true for bigger organizations, which have acquired dominant market

share. Such organizations are usually not permitted by the government to expand because it may

lead to monopolistic and restrictive trade practices detrimental to public interest.

Approaches to Stability Strategy

There are various approaches to developing stability/consolidation strategy. The

Management has to select the one that best suits the corporate objective. Some of these

approaches are discussed below. In all these approaches, the fundamental course of action

remains the same, but the circumstances in which the firms choose various options differ.

Holding Strategy:

This alternative may be appropriate in two situations: (a) the need for an opportunity to

rest, digest, and consolidate after growth or some turbulent events - before continuing a growth

strategy, or (b) an uncertain or hostile environment in which it is prudent to stay in a

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holdingpattern until there is change in or more clarity about the future in the environment.

With a holding strategy the company continues at its present rate of development. The aim is to

retain current market share. Although growth is not pursued as such, this will occur if the size of

the market grows. The current level of resource input and managerial effort will not be increased,

which means that the functional strategies will continue at previous levels. This approach suits a

firm, which does not have requisite resources to pursue increased growth for a longer period of

time. At times, environmental changes prohibit a continuation in growth.

Stable Growth:

This alternative essentially involves avoiding change, representing indecision or timidity

in making a choice for change. Alternatively, it may be a comfortable, even long-term strategy in

a mature, rather stable environment, e.g., a small business in a small town with few competitors.

It simply means that the firms strategy does not include any bold initiatives. Itwill just seek to

do what it already does, but a little better. In this approach, the firm concentrates on one product

or service line. It grows slowly but surely, increasingly its market penetration by steadily adding

new products or services and carefully expanding its market.

Harvesting Strategy:

Where a firm has the dominant market share, it may seek to take advantage of this

position and generate cash for future business expansion. This is termed has harvesting strategy

and is usually associated, with cost cutting and price increases to generate extra profits. This

approach is most suitable to a firm whose main objective is to generate cash. Even market share

may be sacrificed to earn profits and generate funds. A number of ways can be used to

accomplish the objective of making profits and generating funds. Some of these are selective

price increases and reducing costs without reducing price. In this approach, selected products are

milked rather than nourished and defended. Hindustan Levers Lifebuoy soap is an example in

point. It yielded large profits under careful management.

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Profit or Endgame Strategy: A profit strategy is one that capitalizes on a situation in

which old and obsolete product or technology is being replaced by a new one. This type of

strategy does not require new investment, so it is not a growth strategy. Firms adopting this

strategy decide to follow the same technology, at least partially, while transiting into new

technological domains. Strategists in these firms reason that the huge number of product based

on older technologies on the market would create an aftermarket for spare parts that would last

for years. Sylvania, RCA, and GE are among the firms that followed this strategy. They decided

to stay in the vacuum tube market until the end of the game. As with most business decisions,

timing is critical. All competitors eventually must shelve the old assets at some point of time and

move to the new product or technology. The critical question is, Can we make more money by

using these assets or by selling them? The answer to that question changes as time passes.

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When and Why to Pursue Stability Strategy?

As discussed above, stability is common for most of the organizations at some point of

time. However, its better that the organizations concerned should evaluate when they should go

for change in their strategy. In the following conditions, it is better to adopt stability strategy.1.

When the organization is serving a defined market or its segments according to business

definitions, it can adopt stability strategy. This happens with most of organizations in the short

term because their environment does not change and they can continue in the same business.2. If

the organization continues to pursue same objectives, it is better to adopt stability strategy

adjusting the level of achievement about the same percentage each year as it has achieved in the

past without substantial additional investment. For example, renovation of plant and machinery

may add top production but by better efficiency and not through any substantial increase in the

production facilities.3. When there is scope for incremental improvement of functional

performance in the same line of business, the organization should go for stability strategy. This is

the motto of taking fullest advantages of the situation. Though most of the organizations follow

stability strategy for a period of time, some organizations follow it for much longer than others.

It has been observed that as the companies get older, they become more conservative and more

likely to pursue a stability strategy. Following are some important factors which suggest why the

organizations follow stability strategy:1. Perception of management about the performance of the organization may motivate it

to pursue stability strategy. If the managers are satisfied with present performance they will like

to continue with the same.

2. A stability strategy is less risky in that it offers the safe business to the organization

unless there is major environmental change. If management prefers to take less risk it can

continue stability strategy.

3. Some organizations are slow to change or resistant to change. Since stability

strategy fits in their total framework, they often prefer not to change.

4. If the organizations past history is full of change, it will like to adopt stability so as to

become efficient and manageable and to reap the rich harvest of all such past changes. In fact,

stability strategy should always be followed after the growth strategy to take the best advantages

of the situation.

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5. If the organizations competitive advantage lies in the present business and market, it

pursues stability strategy. The stability strategy is basically defensive in its approach. It may be

pursued to protect certain present organizational strengths, e.g., certain patent right, technical

collaboration etc.

It is implemented on the basis of steady as it goes approach to decision on the level of

business definition and business objective. There is not much functional change in any part of the

organization

There are some identified specific situations when the Stability Strategy is best

to pursue:

Perception of Management about Performance:

If the management is satisfied with present performance and, is not willing to take market

risks, they may like to adopt stability strategy and continue with it. The management may

consider change of strategy only if results are not forthcoming.

Slowness to Change:

Some organizations are slow to change or resistant to change. This is particularly true of

public sector companies. Many such companies are not organizationally equipped for fast or

sudden change and lack the ability to cope with risk and uncertainty inherent in such change.

Frequent Past Changes:

If a company had made frequent strategic changes in the past, it should follow stability

strategy for some period for more efficient management. In fact, it is always recommended that,

after a period of internal change and restructuring or expansions, stability strategy should be

pursued as a pause or rehabilitation. Otherwise, the organization may show signs of

destabilization.

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Strategic Advantage:

If an organizations strategic advantage lies in the present business and market, it should

pursue stability strategy. If, for example, an organization has high market share, it can continue

in the same business and defend its position through incremental strategic changes.

Profit Objective/Maximization: Every company has some profit objective which is

commensurate with the level of investment, output level, market structure, willingness to

take risk, etc. If the stability strategy helps the company achieve its profit objective, the company

should stick to this. Sometimes, stability strategy may even help in profit maximization.

Stable Environment: Given the organizational resources and capabilities, the nature

of environment determines, to a large extent, the kind of strategy to be followed by a company.

If the environment is generally stable in terms of macroeconomic situation, government policy

regulations and competition, stability strategy may be the best. The particular strategy to be

followed depends on the precise nature of the environmental impact. If the environment is hostile

or volatile, stability strategy is not recommended.

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BATA LTD.

History

Bata India is a footwear manufacturing company incorporated in 1931. The company was

earlier known as Bata Shoe Company; later in 1973 the name was changed to the present one.The company manufactures footwear for men, women and children. The Company manufactures

shoes of various quality such as leather, rubber, canvas and PVC shoes.

Bata Group has worldwide presence across 5 continents, serving 1 million customers per day and

operating 4,600 retail stores globally.

Prior to incorporation of Bata footwear were manufactured by handicrafts and small enterprise

sectors. The company started with its small operation unit located at Konnagar (near Calcutta) in

1932.

Currently it has five factories located at Batanagar, (West Bengal), Bataganj,

(Bihar), Faridabad (Haryana), Peenya (Karnataka) and Hosur (Tamil Nadu).

Today the company is the largest shoe company in India in terms of sales and

revenues. It commands around 35 percent of market share in India. Company 98 percent

revenue comes from domestic operation. It owns 1250 stores spread across India.

BIL manufacturing unit became first Indian shoe company to receive the ISO: 9001 certification.

The company currently sells over 45 million pairs of shoes every year and has an annual sales

turnover of more than Rs 8000 million (USD 178 million).

Currently the company owns brands like Hush Puppies, Dr Scholl, North Star, Power, Marie

Claire, Bubble gummers, Ambassador, Comfit and Wind.

Milestones:

Awarded Amity Corporate Excellence Award - 2009 in a ceremony held in Amity

Business School, NOIDA on February 27th 2009. Bata received the award for the third time.

Business Week lists Bata India in list of the world 25 Unsung Innovative Companies in its May2009 issue. The report was compiled by Boston Consulting Group, Business Week partner in

Annual Most Innovative Companies Special. Awarded Outstanding Sales performance for Year

2008 for Hush Puppies by Wolverine Group- Announced in May 2009 in Michigan Brand Equity

recognized Bata in the TOP 50 Most Trusted Brands in June 2009. Bata is the only lifestyle

retailer in the top 50 brands.

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Bata India awarded the prestigious Images award of the year for the Most Admired

Retailer of the Year Fashion & Lifestyle in Mumbai on September 16, 2009.Other nominees in

the category were Levis, Benetton, Wills Lifestyle, Bata, Louis Philippe and Titan Bata India

awarded the Most Admired Footwear Brand by Images Fashion Forum in 2009, the ceremony

was held in Mumbai on January 28, 2009

Bata India received the Amity HR Excellence Award for Corporate Ethics on 28th

August 2009 in a ceremony held at Amity Business School, NOIDA.

Bata India is selected as a POWERBRAND in the POWERBRANDS 2010. The selection is

done after an extensive pan India research conducted by Indian Council for Marketing Research

to select The Most Powerful Brands in India in the year 2009.

Bata Shoe Company is the market leader in the footwear industry since its operation in

Bangladesh. The name Bata achieved such a position in the customers mind that whenever they

heard the name of Bata, a footwear with high quality comes into their mind. Bata has been

serving its customers with wide assortments of products for about five decades and doing it

successfully. It is very difficult to identify the customers class of Bata Shoe Company. Bata

touches almost every social class possible. Bata meets the footwear demands of the higher class

and lower class simultaneously. However to stay closer to the customers, Bata shoe company

undertakes an assessment of the customers at a regular interval.

Bata desires to fulfil the ever changing customers needs, and to do so the outcome of the

customer assessment plays a significant role. Here the similar study undertaken with a

permission of Bata Shoe Company to get the feedback from regular customers. The

questionnaire is taken from Bata shoe company Bangladesh ltd to conduct the survey among the

regular customers. This study is the analysis of customer satisfaction of Bata Shoe Company

which will help to analyze the customers level of satisfaction with Bata products and stores.

This study will try to compare Bata with other competitors in footwear industry. It will help to

get the knowledge of customers overall shopping experience at Bata shoe stores.

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OVERVIEW OF BATA SHOE COMPANY

Brief History of Bata Shoe Company

Bata Shoe Company was founded by the famous entrepreneur Mr. Tomas Bata who blew

the wind of change in the footwear industry in 1894. The company was started from Zlin,

Czechoslovakia, now known as the Czech Republic. From that day onwards Bata Shoe Company

has been the largest manufacturer and marketer of footwear in the world. The global business of

Bata comprises of shoe factories, tanneries, engineering plants, quality control laboratories,

product development and research centres.

Bata has developed a strong distribution channel all over the world through the

establishment approximately 6,300 retail outlets, 10,000 franchise and thousands of depots and

dealers. More than 50,000 people are directly involved in the production and selling of over 300

million pairs of shoes each year. Bata Shoe Company manages a retail presence in 55countries,

and runs 40 production facilities across 26 countries. Bata international headquarter is located in

Switzerland which was previously located at Toronto, in Canada.

ANALYSIS OF COMPETITORS:

APEX:

Most of their shoes are expensive. They dont provide any school shoes. The sports shoe

they bring into the market are mostly imported Addidas shoes and quite expensive. In the

mens section the most dominating colour is black, in women section-black and chocolate. They

provide sophisticated colour shoes for children. The most dominating sizes of the men, women

and children are the average sizes that are sold in any Bata store. They remain open on everyday

of the week except any government holiday. Opening hour is 9:00AM-10:00PM. They generally

implemented new design after every 6 months according their employees. The most successful

sales campaigns are 60% off on specific design. Their market share is about 1.50% in

Bangladesh.

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LIBERTY:

Here in this shoe stores the average price of the shoes are also expensive. Their average

retail price is 600+. They also have the same kind of offerings in their respective divisions.

Usually the normal colour and size that are sold elsewhere are also sold here. They remain open

every day except of any government holidays. They open at 10 in the morning and remain open

up to 10 in the evening. After 3-6 months they brought new design shoes in the market. The most

effective sales campaign is 40-60% discount on specific design shoes. The market share of

Liberty shoe is about 1%. They are in the market for about 13 years as a franchisee they are from

India.

REEBOK:

They only sale sports shoes and some children shoes who are in their teens. The price of

all shoes is high 1200+. The colour and design of their shoes are of high quality. Reebok brings

different types T-shirts, tracksuits and non-shoes items, which are quite expensive. After every 1-

2 months new design of shoes comes in their store. 20-25% discounts on specific design are their

most effective sales campaign. About .10% market share Reebok is quickly gaining ground and

getting attention of the brand conscious segment of the country.

NIKE:

Same as Reebok, Nike only offers high quality sports and some children shoes. Their

shoes are also expensive sports shoes ranging from 2000-5000, which are sold most. Best-sold

non-shoe items such as T-shirt, tracksuits are ranging from 750-2250 taka. They open their store

everyday of the week. They brought new design in the market after every 3 months. They dont

have any sales campaign up to now. Same as Reebok but their market share is less than their

international rival as they have enter Bangladesh market for 6 or 7 years.

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PAGASUS:

They made their name as sports shoe manufacturer. After that they come up shoes for

both the male and the women. Their best-sold price range is 800-1200 for men, 550-750 for

women and 300-500 taka shoes for children. Their best sold sports shoes are ranging from 700-

900 taka. They open their store everyday from 9:00-10:00 in the evening. After 2 months they

bring out at least some kind of new design in one of their segments. Most effective sales

campaign up to 20% discount. Their market presence in the country is over 25 years but not

doing that well. Market share is only .50% mainly the quality of the shoe is moderate.

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Case Study

Introduction

This case highlights the challenges faced by the Bata Management in the wake

of changing market trends in the form of increased competition from the local players as well

as the constantly increasing threat of Chinese imports. Bata had traditionally targeted the lower

middle and middle class segments of the society and was now contemplating changes in its

strategy to be able to survive in the market.

Analysis of Batas Current Market Positionwith the evolving market and changing

market dynamics Bata was being given a tough time by its local competito rs and

other footwear being imported from China. Bata management feared that they would

not be able to survive because they could not compete with the low cost Chinese products, hence

they embarked on a plan to enter the premium segment of the market to be able to

survive, because they felt competition from Chinese products there would be much

less. However, in my opinion, their management in the year 2001, made a mistake by

committing to go after the premium segment as well, without realizing the fact that

their image would be hurt and could get diluted because they were moving into a domain

for which their activities were not aligned. Other than the activities too we have to consider

the Brand image that Bata had developed over the past 40 odd years of its existence

in Pakistan, and this image was by no means that of a brand which could boast about

having premium footwear products, in fact Bata was just meeting the basic

functional needs of its middle class customers. Therefore their strategy does not seem to

be at all well cut out, as from most of their activities it appears that once they were challenged

they resorted to a fire fighting approach and tried their hand at almost all arrangements, without

gauging the fit of the activities to their stategy . It may be concluded that Batasmanagement made the fatal error of just enjoying their successes whilst the market was not

mature, but when the competitors kicked in and the market approached maturity, they were left

in the lurch because of not having made clear tradeoffs in terms of image, activities & internal

co-ordination and then, had to pay price. Their current predicament has been analyzed in detail

using a strategy framework below.

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Target Customers

Bata had traditionally been targeting the middle strata of the society in Pakistan. In

precise terms they were focused more on the lower middle and middle classes. Due to the

changing market dynamics the competition had started undercutting their prices and

Bata was thinking of shifting its focus towards the higher premium end of the market as

well. This basically resulted in it pursuing practices, through which it could not focus its efforts.

Identity

Middle Class families were being offered footwear by Bata as they had shoes

ranges for school going children, young men, and even some offerings for women. It

can be inferred about the customers that these would be spending roughly around Rs. 300 to

Rs. 1500 for a normal purchase.

Behaviours

In terms of the behavioural aspects Batas target customers could be quite price

sensitive, demanding value for money, looking for utilitarian needs to be met, and not

excessively conscious about the shoe lasting for ages and being very sturdy, yet at the same time

demanding adequate quality footwear which they can trust to last for a season or two. Bata may

also be categorized as a store where usually entire families visit together because of the various

offerings that Bata has to offer to them.

Value Proposition for the Customers

If analyzed for the value that Bata was providing to its customers their value

proposi tion may be categorized as follows:

Reasonable quality at low or reasonable price

Footwear for the entire family

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Footwear catering to various functional needs e.g. sports, casual footwear, formal-semi

formal

Conveniently accessible outlets in various parts of the country

Prior to entry of local players and the Chinese imports, some sort of social visibility could

also be associated with Bata, as it was one of the two major brands in the country then.

Position of the Firm

Variety

Bata although traditionally had product lines catering to the middle class

se gmen t of the society, yet recently it had also targeted the higher income segment with

certain products.

Needs

In terms of the needs, Bata was in a way successful in positioning itself as a

brand having stores with products to meet the needs of almost all members of the family, since

it had product ranges for children, men, women etc.

Access

Bata had positioned itself by employing various distribution channels (retail

as well as wholesale) to enhance its access for the customers. Their nationwide

retail network was one of their key strengths.

Sustainability of the PositionInitially Bata as has been elaborated was positioned as brand offering footwear products

for the entire family members and for the people belonging to the middle class. But when its

management decided to also tap the premium segment of the market, their decision

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may be categorized as one which cast doubts about the sustainability of Batas desired

position in the market.

In my opinion Batas image would be diluted as a result of it pursuing various segments

and trying to cater to their needs. Its traditional positioning would also be

impacted and there would bechance of Bata not being able to provide an experience fit to its

customers as per their expectations.

Activities

The sort of activities which they employed e.g. manufacturing in-house as well as

outsourcing having four categories of outlets (A,B,C,D)catering to various segments of

the society from upper to the lower ones, selling through retail as well as the wholesale

channel, would not help in any way at conveying a consistent image to its customers.

Hence it can be stated that they failed to make any particular tradeoffs as far as the key

activities were concerned.

Internal Coordination

With Bata engaging a wide array of activities and practices it would be

almost impossible to maintain internal coordination and hence achieve optimization.

Sustainability of Competitive Advantage

The competitive advantage for Bata based on what they are currently planning to do i.e.

trying to offer something for each and every segment would render them pretty uncompetitive.

The various levels of fits, that a firm should strive for, would not be easily achievable

for Bata given their current moves. The first requirement of having the activities

consistent with their strategy would be tough to attain since with the decision of going

after the premium segment, they would be having strategies based on operational excellence aswell as dwelling the fact that they would be having product leadership to an extent too, since the

premium product seekers look for this as well. Once it would be difficult for them to have the

1st level fit at that point it would be just impossible to foster the

2nd or the 3rd levels of fit as with conflicting strategies having the activities reinforcing each

other and optimizing them would bout of question.

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Proposed Future Strategy

I would recommend that Bata should exit from the lower end segment and

focus more on the middle and upper middle class of the society, because of the

growth in numbers of people belonging to these segments and also because of the

rising incomes of its target customers. The market overall is one which is becoming

mature and people are quite quality conscious now. Bata in order to deal with the threat of the

Chinese imports would have a strategy focusing primarily on customer intimacy as

i t would be aiming to enhance its brand equity and provide a complete experience for families

who come to shop there. Another positive for Bata will be that the customers, who are more

aware now, usually do not associate quality and reliability with Chinese products, where as Bata

can use its brand to fill this void. Bata should not be pursuing the very high quali ty

premium products under it s Bata brand because of the fact that Batas image has been

created over its existence of around 40 odd years and trying to just move out of its current

segment of the middle and upper middle class people and trying to capture the higher

end of the market overnight can be an uphill task for Bata to say the least. In order for this

strategy to be executed the following decisions would need to be implemented in these three key

areas.

Manufacturing

Bata can dwell on its international presence which is its competitive edge and develop a

select band of ABUs in Pakist an by impor ting its best practi ces from abroad to be

able to handle the manufacturing requirements for slightly trendier lines with lesser

volumes. It can also utilize its regional expertise e.g.in Malaysia for rubber based shoes and in

China for artificial leather shoes and use their expertise and economies of scale to be able to

meet the needs of the product lines for which they had some sort of acost disadvantage and those

which are targeting the middle and upper middle class consumers.

Distribution

In terms of distribution Bata should lay emphasis on the company owned

stores and maybe the K-scheme stores because these are the stores in the retail channel where

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they can have the most impact by bringing up systems and providing training to the staff present

at these stores. Since their access based posi tioning is to the ir advantage they can a lso get

maximum out of the franchises by raising the ir stakes and maybe institutionalizing

practices such as having the inventory owned by the franchisees, to make them push the sales of

their products whilst making sure that staff present at the franchises is also trained. This will

enable Bata to provide a consistent experience to its target customers at all the outlets and enable

it to leverage its brand equity. With regards to the wholesale channel, they can conveniently

move out of that and stop having their footwear at the independent shops, because having that

can dent their chances of maintaining a proper image for their brand.

Brands

Considering the fact that the Bata brand has traditionally been targeting the middle class

customers, it would be appropriate for Bata to use its Bata brand name only with its traditional

product offerings. It would be better advised to move out of the fashion footwear for women, as

again prospective buyers in this segment will not really be able to associate style or

fashion with a brand like Bata known for its functional footwear offering utility and

reliability etc. So even if they do bring out a fashion brand Bata would not be in a position to

challenge the supremacy of local, more responsive and trendy stores famous for

women footwear. However they may continue to carry brands like Power, Weinbrennerfor which they have exclusive d istribution rights and also focus on their successful

brands like Bubble gummers. With brands like Slazenger and Hush Puppies which have their

own stores in the market as well, Bata might not be able to leverage these brands for its success

and may discontinue them.

Strategy Mapping DetailsWith the proposed strategy above Bata would need to make some prominent

changes in the way it operates especially in the face that the firm provides to its customers

and realign its internal processes to be better geared at achieving the goals laid down in the

strategy.

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Financial

In terms of financial aspects in order to have better returns ensured for the shareholders,

Bata as per the proposed strategy would be banking on its focus on the middle and upper middle

class segment through its Bata brand, to enable to it to be a major force and have

higher profits through enhanced market share. Also the fact that the renewed brand image will

enable Bata to earn premium at the upper middle end of the market will aid the achievement

of the financial goals.

Customer

The customer value proposition will also be substantial as Bata would now be offering

value for money along with the trust which its customers would have because of the established

Bata brand. In terms of access, functionality and selection options it would again be fulfilling its

promises of being a fami ly outl et where each member of the f amil y can buy

something. The service standards would be strictly monitored and hence an

experience fit will be provided to the customers and these customers for this will be

willing to pay a bit of premium because of Batas brand and hence the competition

undercutting Bata on price would no longer be that big a threat.

Internal Processes

As far as the internal aspects of the firm are concerned Bata will need to

revamp its operations management processes, customer management processes, innovation

processes and regula tory and social processes . Changes in the Operat ions management

processes wi ll al low Bata to have low cost to an extent, through economies of scale

attained through specialist regions worldwide supplying the products, as import duties

would no longer be a barrier, and other stable high volume products being manufactured

locally at the Bata plants. For the brand targeting the upper middle end of the market,Bata will use the expertise of a few ABUs, whose capabilities it will need to develop by

importing best practices from its internationally operational units. Hence these ABU

would be able to reduce costs too even for the slightly premium products and achieve

specialization in such products. This would be a competitive edge for Bata only, since

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Batas competitors would not have th i s edge which Bata enjoys because of i t s

international presence. In terms of customer management processes

It will need to focus on marketing itself as an outlet meeting all basic needs of the families in

its target market segment. For innovation and R&D Bata can rely on its international

research centres and with their aid bring newer designs and further enhance its brand image

especially for the trendy footwear targeting the upper middle segment. Bata, with regards to

regulatory & social processes, can also enhance its care for its employees by allowing more K-

scheme stores to open and even help its franchises by providing them with some of the

employees Bata plans to lay off, and thereby helping the franchises to resolve their

attrition related problems, and also enabling itself to maintain a proper culture even at

the franchise stores through those trained employees

Learning & Growth

In order to attain its goals as per the new strategy Bata will need to put quite a lot of

effort into training its human resource, especially those at the outlets to provide

consistent quality service to its customers so that customers can associate the same

experience with whichever outlet they visit of Bata. Investments would also need to

be made in ra is ing the requi si te human capital which would be able to better handle the

dynamically changing environment and through increased coordination.

Informationcapital would need to be developed to allow better forecasting a nd tr en d an al ys is

e tc . for the Bata management and a l so to meet the growing needs of

i n t ernal coordination. This emphasis on developing information capital will be a key feature

allowing Bata to get closer to its customers as part of its revamped strategy with more

focus on customer intimacy. Acultureof empowerment would need to be fostered and

younger energetic management would need to be given the responsibilities so that they

may fill in any leadership void, if created. However overall longer Leadership Stints for

executives e.g. CEOs would be needed to allow them to take the company towards its goals by

implementing the strategy. With these changes in place, Bata would be a better position to

cope with the various challenges posed to it, by its immediate environment. Long-Term

Shareholder Value Expand Revenue Opportunities with more focus on the target segment

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Enhance Customer Value due to Improved Experience at Outlets Improved cost structure with

ABUs and International specialized regions as suppliers

Financial Perspective Customer Perspective

Customer ValuePropositionQuality, Reasonable Price, Reliable product, improved

availability with access, Product range selection, functional products, brand image, catering to

the needs of the whole family

Internal Perspective Operations Management

Supply, Production and Distribution setup revamped

Customer Management

Building the brand, to acquire, retain and finally grow through more customers

Innovation Processes

Relying on its international research centres to come up with better tailored products for its target

segment

Regulatory & Social Processes

Providing opportunities for employees and franchises to have better operations e.g. by adjusting

employees there or having more K-scheme stores

Learning & Growth Perspective Human Capital

More Training, Empowerment to have better employees at outlets making it a better experiencefor the family

Information Capital

Enhanced uses of IT to have more data on customers to get to know them better and meet their

needs

Culture

Emphasis on providing the same experience at all outlets to customers and having a culture

of improved service

Leadership

Empowerment would help nurture better leaders who would be able to continuously serve Bata

and implement the strategy

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Batas strategy to boost sales

New Delhi: the Bata India is making a serious effort to rejig its performance. This includes

launch of Batasoverseas brands and revamp of retail formats, among others. After a consistentbad 2001, spurts of labour unrest and a change of guard, the company has lined up a series of

initiatives to bring the customer back into the stores. They are: importing high-end brands from

Batasinternational stable, launching a slew of locally designed footwear, revamping retail

structure and a high-decibel ad campaign. Within a few weeks, Bata India plans to bring in

weinbrenner, a global Bata brand and wipe n' go, shoes that will need no polishing at all, for the

executive literally on the run. And, a part of corrective action will be clearer positioning. The

company is reorganising retail efforts. Twenty flagship stores will be demarcated in the metrosas high-end ones, stocking international brands and imported products. Next will be 80 city

stores located in metros/semi-metros. About 770 family stores will be chalked out for medium

and small towns. And, 190 bazaar stores will serve as clearance ones. This exercise will be

carried out within existing retail network. Also, this year, the company will focus on the up-market stores. About 16 new flagship stores will come up in the four main metros. "Bata has set

in motion a 360 degree revamp operation driven by a strategy of focussed marketing and

segmentation. It is designed to impact the customer in every income group through both

innovative product development as well as fine-tuned distribution," Fernando Garcia, md, told

the times of India. Last week, the company kicked off a campaign to launch new designs every

week. It launched chiara, a Bata international best-seller; power international, a high-end

imported brand; and tino, a Bata international design for men. The therapeutic dr Hawaii and the

handmade stitch top are being designed locally and bubble gummers are an internationalchildren's brand. With the year 2001 not being one that Bata India would particularly want to

remember, the efforts are definitely much needed.

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Conclusion

Bata Company is one of the largest shoe companies in the world and 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.

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Bibliography

Web references Sree Rama Rao www.citeman.com19 December, 2009.

Sadhuji www.management4all.com21 November, 2012.

Wikipedia www.wikipedia.com.

Article

Neera bharadwaj Batas strategy to boost sales articles.timesofindia.inditimes

9 March, 2002.

http://www.citeman.com/http://www.citeman.com/http://www.management4all.com/http://www.management4all.com/http://www.wikipedia.com/http://www.wikipedia.com/http://www.wikipedia.com/http://www.management4all.com/http://www.citeman.com/

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Sr.no Particulars Page no.

1Stability strategy

7

2When & why to pursue stability strategy

15

3Bata Ltd company

18

4

Case study

23

5Batas strategy to boost sales

33

6Conclusion

34

7Bibliography

35