BUSINESS STRATEGY – II

SUBMITTED BY: SUBMITTED TO:

HARLEEN KAUR (10BSPHH010264) Prof. G.K. SRIKANT

KHUSHBU GUMBER (10BSPHH

WHY A COMPANY GETS SICK

Mismanagement in various functional areas of a company like finance, production, marketing and personnel;

Wrong location of a unit; Overestimation of demand and wrong dividend policy; Poor implementation of projects which may be due to improper planning or managerial inefficiency; Poor inventory management in respect of finished goods as well as inputs; Unwarranted expansion and diversion of resources such as personal extravagances, excessive overheads,

acquisition of unproductive fixed assets, etc.; Failure to modernize the productive apparatus, change the product mix and other elements of marketing

mix to suit the changing environment; Poor labor-management relationship and associated low workers' morale and low productivity, strikes,

lockouts, etc. Energy crisis arising out of power cuts or shortage of coal or oil; Failure to achieve optimum capacity due to shortage of raw materials as a result of production set-backs

in the supply industries, poor agricultural output because of natural reasons, changes in the import conditions, etc.

Infrastructural problems like transport bottlenecks; Credit squeeze; Situations like market recession, changes in technology, etc; International pressures or circumstances, etc.

We will discuss how Bata Shoes, a reputed name in the footwear industry, went sick or underperforming and how a turnaround of the organization was done and Bata Shoes was restored back to its original place of a leading shoe manufacturer.

Bata Shoes is a large, family owned shoe company based in Bermuda but currently headquartered in Lausanne, Switzerland, operating 3 business units worldwide – Bata Metro Markets, Bata Emerging Markets and Bata Branded Business. It has a retail presence in over 50 countries and production facilities in 26 countries. In its history the company has sold more than 14 billion pairs of shoes.

The company was founded in 1894 Tomáš Baťa , whose family had been cobblers for generations. A large order from the army, military shoes and rising demand for them, during World War I started rapid growth and small manufacture turned into modern industrial concern, one of the first mass producers of shoes.

Tomáš Baťa was recognised for his social consciousness, establishing housing, cinemas and advancement programmes for his employees. The phrase "work collectively, live individually" is one of his sayings. Baťa recognised the potential of large-scale production, and was often called the "Henry Ford of Eastern Europe". He saw technology as a means of progress, and wanted to make the shoes as cheaply as possible so that the greatest number of people could access them

After the global economic changes in 1990s, the company closed a number of its manufacturing factories in developed countries and has focussed its activities on expanding its retail business there. In developing countries it still has a large number of manufacturing units and still produces a significant number of shoes each year.

The company is currently headquartered in Lausanne, Switzerland, with 3 business units

Bata Metro Markets, Lausanne

Bata Emerging Markets, Singapore

Bata Branded Business, Best, Netherlands

The MBU approach provides quality resources and support in key areas to the companies operating in similar markets such as product development, sourcing or marketing support. Each MBU is entrepreneurial in nature, and can quickly adapt to changes in the market place and seize potential growth opportunities.

Bata’s strength lies in its worldwide presence. While local companies are self-governing, each one benefits from its link to the international organization for back-office systems, product innovations and sourcing.

Although Bata operates in a wide variety of markets, Bata companies share the same leadership points. Two important ones are product concept development and constant improvement of business processes in order to offer customers great value and the best possible service.

Current shoe brands are:

Bata (Baťa in former Czechoslovakia)

Bata Premium (handcrafted dress shoes)

Bata Industrials (safety footwear)

Bubblegummers (children)

Power (athletic shoes)

Marie Claire (women)

Hush Puppies (Premium)

North Star (youth)

Weinbrenner (Premium Outdoor Shoes)

According to Bata, in 2007, the company served 1 million customers per day, employed over 40,000 people, operated 4,600 retail stores, managed a retail presence in over 50 countries and had 40 production facilities across 26 countries.

BATA - INDIA’S FAVORITE FOOTWEAR BRAND

Bata India is the largest retailer and leading manufacturer of footwear in India and is a part of the Bata Shoe Organization.

Incorporated as Bata Shoe Company Private Limited in 1931, the company was set up initially as a small operation in Konnagar (near Calcutta) in 1932. In January 1934, the foundation stone for the first building of Bata’s operation - now called the Bata. In the years that followed, the overall site was doubled in area. This township is popularly known as Batanagar. It was also the first manufacturing facility in the Indian shoe industry to receive the ISO: 9001 certification.

The Company went public in 1973 when it changed its name to Bata India Limited. Today, Bata India has established itself as India’s largest footwear retailer. Its retail network of over 1200 stores gives it a reach / coverage that no other footwear company can match. The stores are present in good locations and can be found in all the metros, mini-metros and towns

Bata’s smart looking new stores supported by a range of better quality products are aimed at offering a superior shopping experience to its customers.

The Company also operates a large non retail distribution network through its urban wholesale division and caters to millions of customers through over 30,000 dealers.

Key Facts

 Bata - Today

Sells over 45 million pairs of footwear every year

Serves over 120,000 customers every day

Sells through over 1200 retail stores

Operates 5 manufacturing facilities

Employs more than 6800 people

OPERATING PERFORMANCE

Bata is the largest player in the Indian footwear market, having a market share of about 8%. By virtue of a long presence of more than sixty years in the country, it has inherent advantages in terms of brand equity and reach vis-à-vis new entrants in the branded footwear market. Its primary strength is that it offers a full family range of shoes, unlike most of its competitors. It manufactures a wide range of shoes covering leather, canvas, rubber and plastic footwear, for men women and children, for a variety of uses such as formal, casual, sports, and the like. The company follows a strategy of manufacturing shoes in large volumes for the masses, mainly the middle and upper-middle income groups, and selling them through a countrywide network of retail outlets.

As part of a corporate philosophy followed world-wide, Bata maintains and operates its own retail outlets. These outlets cater mainly to the urban segment, while Bata also sells shoes through wholesalers to enable access to semi urban and rural markets. Out of total sales, almost 70% by value comes from Bata's retail outlets, while the wholesale segment accounts for about 30%. In terms of pairage, however, the sales in the two segments have been more or less equal, as realisations from the wholesale segment are lower on account of the margin offered to wholesalers. 90% of the company's operating profit is generated from the retail segment, while the wholesale segment generates volumes which are necessary in order to utilise capacity and reduce overhead costs per unit.

REASONS WHY BATA SHOES WENT SICK

1. DECLINING SALES

Bata's sales witnessed a decline in 1994 and 1995, due to the company's strategy of focusing less on its traditional mass market and concentrating on the premium segment. The company began manufacturing high value added footwear and selling them at high prices, sacrificing volumes in the process. This did not find acceptability in the market, resulting in a significant drop in the number of pairs sold. Sales fell from 52.4 million pairs in 1993 to 49.9 million pairs in 1994 and 48.1 million pairs in 1995.

2. POOR FINANCIAL PERFORMANCE

In 1992, the company made a loss of Rs 85.7 million, primarily on account of a 4-month closure at its Batanagar factory, the result of the employees' union not accepting the management's system of standard productivity norms. The OPBDIT was low at Rs 97.2 million, the operating margin (OPBDIT/OI) being only 2.5%. The recovery in 1993 was followed by two years of declining sales, culminating in a huge operating loss of Rs 231.5 million in 1995, the net loss being Rs 421.6 million. Bata's policy of sacrificing volumes and concentrating on the premium segment thus had a direct impact on its bottomline, as its operations are characterised by high fixed costs consisting of employee expenses (both factory and shops) and expenses associated with maintaining a large distribution network. As a result, profit margins are highly sensitive to volume sales.

Bata's tangible net worth fell from Rs 970 million as on December 31, 1994 to Rs 550 million as on December 31, 1995. Total debt increased from Rs 870 million as on December 31, 1994 to Rs 1200 million as on December 31, 1995, which again was mainly due to increase in short term debt.

3. LACK OF SUSTAINED ADVERTISING AND PROMOTIONS

Bata was continuously introducing new designs of footwear; but the company was still not associated with being ‘fashionable’. Neither the promotion, nor the advertising of the company, was strong in its times. The premium segment competitors seemed to completely overshadow the presence of the company. However, Bata did not announce any new products or business segments even after seeing stiff competition. Further, the investments on advertising and promotions seemed to be ‘following’ rather than ‘leading’. That is, rather than spending more on advertising, Bata started spending less on advertising, as a direct result of sales decreasing.

4. GLOBALLY COMPETITIVE BUSINESS ENVIRONMENT

With the opening of the Indian economy through liberalization, privatization and globalization, Bata faced a competition from international players, along with existing competition from the national players. And company does not take necessary measures to curb the competition.

5. POLITICAL ISSUES

When quantitative restriction was lifted from import then footwear industry slowed down from 20% (in 90’s) to 8-10% (in 2000). Thus increase in excise duty led to increase in cost of footwear 1993-94 excise exemption was withdrawn from shoe costing below rs.200 and hence price went up by 20% and this led to drop in profits from 20 crore to 95 lakh within an year in BIL.

6. HR ISSUES

Throughout its history, Bata was plagued by labor problems with frequent strikes and lockouts at its manufacturing facilities. The company incurred huge employee expenses (22% of net sales in 1999). Competitors like Liberty Shoes were far more cost-effective with salaries of its 5,000 strong workforce comprising just 5% of its turnover. In 1992 the factory at Batanagar was closed for four and a half months due to a labor strike which in turn resulted in huge losses in terms of manufacturing and sales to the company.

7. STRIKES AND LOCKOUTS

In 1992 the workers at Batanagar factory went on strike from 3rd January, to 23rd May, which resulted in a substantial loss of production during the initial 6 months of the year.

In February 1995, a lockout was declared in Bata’s Faridabad unit it lasted for eight months in October 1995 Bata signed a three-year wage agreement.

In 1999 a lockout was declared at Bata’s Peenya factory in Bangalore, followed by a strike by its employee union which lasted for 8 months.

The new leadership of the union had refused to abide by the wage agreement, which was to expire in August 2000. Following the failure of its negotiations with the union, the management decided to go for a lock out. Bata management was of the view that though it would have to bear the cost of maintaining an idle plant (Rs. 3 million), the effect of the closures on sales and production would be very high. Some of the workers opposed the company’s move to get an undertaking from the factory employees to resume work.

In September 2000, Bata was again headed for a labour dispute when the BMU asked the West Bengal government to intervene in what it perceived to be a downsizing exercise being undertaken by the management. The union said that Bata has started outsourcing the Power range of fully manufactured shoes from China, compared to the earlier outsourcing of only assembly and sewing line job. The company’s production of Hawai chappals at the Batanagar unit too had come down by 58% from the weekly capacity of 0.144 million pairs. Thus the above labor issues kept on troubling the company to focus on its growth strategies.

8. OTHER REASONS

There were various other reasons why bata india limited suffered from huge losses in the year 2002 -2005.

Two of the units situated at Faridabad and Mokameghat making staggeringly huge losses. under-performance by the wholesale business. charging of Deferred Tax Assets in compliance with Accounting Standard Interpretation 9. provision for unfunded pension liability due to unprecedented rise in cost of annuities by Life Insurance

Corporation. unsustainable employee cost low productivity of the workforce decrease in the export performance over the last 4 year. resistance of consumers to price rise in popular volume products, and discounts to clear slow moving

stocks. under utilisation of production capacity. provision for long term agreements.

HOW THE TURNAROUND WAS MADE

1. MANAGEMENT AND SYSTEMS

During 1995 and 1996, Bata witnessed a number of changes in its Board of Directors, as well as significant changes in its top management team. The current management team is professional and highly experienced. It has demonstrated its ability in effecting a turnaround. This could not have taken place without the concerted effort of all key management personnel, as the turnaround strategy spanned all major functions, involving financial restructuring, change in marketing strategy, and a revamp of operations.

2. FINANCES Bata India, a 51 per cent subsidiary of Canada based Bata Shoe Organization, had last revalued its

buildings in 1969, and the latest exercise which will cover all fixed assets is expected to substantially prop up its reserves.

Bata's parent company, Bata (BN) B.V., responded by implementing a comprehensive turnaround package. It deputed a new Managing Director and several key members of the top management team, selecting personnel from group organizations world-wide. The new management team refocused the company's operations back to the traditional, low cost range of shoes.

With the change in its strategy consequent to the turnaround programme, Bata made a net profit of Rs 41.5 million in 1996, and, in 1997, it has declared a half-yearly profit of Rs 83.5 million.

The debt-equity ratio (total debt / tangible net worth) had increased from 0.91 as on December 31, 1994 to 2.22 as on December 31, 1995 as a result of substantial erosion of Bata's net worth, with the losses in 1995. The scenario improved in 1996, with the parent company extending an interest-free loan of USD 10 million to Bata. This allowed the company to reduce the level of bank borrowings, and settle a large amount of creditors' dues.

In 1997, the company raised an additional Rs 427.8 million through a 1:1 Rights Issue at a premium of Rs 20 per share, and boosted its net worth further by Rs 343.5 million by conversion of the interest-free loan into equity. These measures, along with improving profitability, increased Bata's net worth to Rs 1461 million, the gearing to 0.49 as on June 30, 1997.

3. OPERATIONS Bata's large and extensive retail network necessitates the maintenance of a high level of finished goods

inventory. On an average, it maintains around three months' inventory. The company was considerably stretched to meet its debt obligations, but did not default on its loan commitments, even when its liquidity position had deteriorated. While it did stretch its creditors, the infusion of funds from the parent company in 1996 helped to improve the level of payables outstanding. The funds infusion, together with the proceeds of the Rights Issue in early 1997, has enabled the company to reach a comfortable liquidity position as on date.

All these measures resulted in a dramatic improvement in performance. The company's sales improved from 48.1 million pairs in 1995 to 51.1 million pairs in 1996, and it expects to sell 58 million pairs in 1997.

Both retail outlets and depots were computerised to improve control over inventory.

4. PRODUCT INNOVATIONS The company implemented measures to streamline the range of designs to a more comfortable number,

increase the pace of new design introductions, and improve stocking efficiency at various points in the distribution chain. Many retail stores were renovated.

Bata has entered into a marketing tie-up with Nike wherein the latter's products will be offered from select Bata outlets.

Many new products were introduced both in the premium segment and for the masses. Many renowned designers were roped in to bring out new collections like Malini Ramani introduced a new

range in Marie Claire.

5. HR PROBLEMS When the company was in the red in 1995 for the first time, BSO restructured the entire board and sent

in a team headed by Weston. Soon after he stepped in several changes were made in the management. Indians, who held key positions in top management, were replaced with expatriate Weston taking over as managing director. Mike Middleton was appointed as deputy managing director and R. Senonner headed the marketing division.

They made several key changes, including a complete overhaul of the company's operations and key departments. Within two months of Weston taking over, Bata decided to sell its headquarter building in Calcutta for Rs. 19.5 crores, in a bid to stem losses.

The company shifted wholesale, planning & distribution, and the commercial department to Batanagar, despite opposition from the trade unions. The management team implemented a massive revamping exercise in which more than 250 managers and their juniors were asked to quit. Bata decided to stop further recruitment.

The management offered its staff performance based salary. In 1996, for the first time in Bata's 62-year-old history, the company signed a long-term bipartite agreement. This agreement was signed without any disruption of work. In the six-year period 1993-99, Bata had considerably brought down the staff strength of its Batanagar factory and Calcutta offices to 6,700.

In fiscal 1996, Bata was back in the black with the company reporting net profits of Rs. 41.5 mn on revenues of Rs. 5.90 bn (Rs. 5.32 bn in 1995). In fiscal 1997, Bata further consolidated the gains with the company reporting net profits of Rs 166.9 mn on revenues of Rs. 6.70 bn.

A senior HR manager at the company admitted that with an upswing in Bata's fortunes, even its traditionally intransigent workers were motivated to do better.

In 1997, Bata workers achieved 93% of their production targets. The management rewarded the workers with a 17% bonus, up from the 15% given in 1996.

By the end of 1997, Bata still faced problems of a high-cost structure and surplus labour. Infact, the turnaround had made the unions more aggressive and demanding. Weston had failed to strike a deal with the All India Bata Shop Managers Union (AIBSMU) since the third quarter of 1997. The shop managers were insisting that Bata honor the 1990 agreement, which stipulated that the management would fill up 248 vacancies in its retail outlets. It also opposed the move to sack all the cashiers in outlets with annual sales of less than Rs 5 mn, which meant elimination of 690 jobs.

Other measures were aimed at increasing productivity, reorganizing some departments and extending working days for some essential services. On January 14, 1999, the BMU submitted their charter of demands to the management. The demands mainly revolved around economic issues. In the list of non-economic issues was the demand for reinstatement of the four dismissed employees.1 The Union had also demanded the introduction of a scheme for workers participation in management. On the economic front, the Union had demanded a wage hike of around Rs. 90 per week, additional allowances as provident fund over the statutory limit by the management, increase in 'plan bonus' and introduction of attendance bonus for migrant workers.

In July 1999, BMU was finally able to strike a deal. It signed a three-year wage agreement that included a lumpsum payment of arrears of Rs. 4,000 per employee. The management agreed to include 10% of the 400 contract laborers at Batanagar in its staff.

6. RETAIL

The  focus of the company has shifted more to retailing. Bata would target all kinds of customers by opening various categories of stores like Flagship Store, City Store, Family Store and Bazaar Stores. To increase production at its factories, the company has decided to invest in new technologies for which substantial budget has been earmarked.

In Retail, BIL improved the strategic positioning of its stores to cater to the masses and compete better in future with over 60 new Bata Stores opened every year, and existing stores being renovated during the year.

The growth of the retail business with penetration in newer markets - especially Tier 2 / Tier 3 cities and growth in existing metro market is the focus for Bata India.

All the new stores are in large format, with an average size of over 3000 sq.ft and offer an incomparable footwear shopping experience to the customer. The renovated stores are also modeled on these large format stores and promise a great shopping experience.

The specially designed shoe display systems, unique furniture for non-footwear sales, contemporary styling, and great ambience ensure that these new Bata Stores provide the best retail environment to its customers, so as to make their footwear shopping experience at Bata a very endearing one.

7. NON- RETAIL

The Non Retail business also showed a remarkable growth in business and profits. BIL opened new dealerships in unrepresented areas to increase the market coverage.

It launched various new products which resulted in serving many more customers. The Company concentrated on the top distributors for the growth of the business. Constant incentive programs were offered to existing dealers to ensure growth in wholesale business. It

established a country wide distribution network to harness the market potential and to become the market leader in the next coming years.

The Company has invested its resources in the factory to meet the stringent technical specifications and standards of the safety footwear business to ensure that its products are the best in the market.

8. PARENT COMPANY SUPPORT TO IMPROVE FINANCIAL PROBLEMS

Financial support from the parent company has helped Bata to reach a comfortable position of leverage and liquidity. Such support may not be needed in future, as the profitability of the company is likely to grow as a result of its strategic refocus being corrected.

However, in case of any operational crisis arising (such as a closure at its works), it may have to fall back upon support from the parent company. As the Indian operations are significant to the Bata group, even from a global perspective, it is likely that Bata will continue to enjoy support from the group in future.

Bata India happens to be the largest company on the Bata map world-wide, in terms of pairage sales and employee strength. Its importance to the parent company has been demonstrated in the past and this support is expected to continue in future.

THE STRATEGIC CHANGE PROCESS

Strategic change involves not only deciding what to change but how and when to change specific elements of one’s strategic orientation. This change may be driven by dramatic changes within the environment, declining organizational performance, or perhaps even both.

The strategic change process encompasses four basic steps as follows:

STEP ONESTRATEGIC ANALYSIS - analysis of an organization’s external environment, its current strategic orientation, and the degree of its effectiveness at meeting its objectives and mission.

STEP TWOSTRATEGY MAKING - begins with the decision to change its vision and orientation in the future and includes defining the products and services to be offered, specifying the markets to be served, developing a position to be competitive in those markets, and assessing the underlying organizational processes and culture that will either enable or inhibit the change.

STEP THREESTRATEGIC PLAN DESIGN - defines how the change process will be logistically accomplished through sequencing and pacing in light of the prevailing culture as well as anticipated resistance.

STEP FOURIMPLEMENTATION OF THE PLAN – transition to the new orientation which includes developing budgets and timetables, assigning roles and tasks that will guide the process, garnering commitment to ensure that there is a high level of ownership in the process, communicating to ease uncertainty, and allocating resources for support.

STRATEGIC PLAN AND IMPLEMENTATION OF THE PLAN

After suffering a 4 year consecutive losses in 1995 due to several reasons BIL decided to adopt a strategic change in its organization.

BIL decided to rejuvenate the 80-year-old shoe brand to make the 20-25 olds, and even the teens, fall for it. A plan was proposed wherein bata will introduce almost 4 designs everyday, open 70-100 stores of at least 5,000 sq ft every year, and push its online sales to shed its image as a low-cost functional footwear brand that appeals to the 40-plus age group.It's an uphill task for a brand known for its sandals and entry-level shoes. BIL closed hundreds of unviable stores and spawned them into large-format outlets, overhauled product portfolio with the help of Bata's global design centre and refined manufacturing and sourcing strategies, to help Bata come out of three years of continuous losses that peaked at 62 crore in 2004 and steadily grow since then. In 2010, its net profit rose 42% year-on-year to 95 crore.

"Turnaround is just a financial word. What is more important is how the organisation has been completely able to reinvent itself," Villagran MD and CEO of BIL.

The company shut down all unviable stores and ensured the stores remain open every day for 12 hours.

Bata has shut down almost 400 small stores, which looked more like warehouses with hundreds of pairs of footwear staked in 1,000 sq ft or less, and opened 270 large-format stores at prime locations.

The company now plans to increase the average store size to 5000 sq ft.

COMPARISON OF BATA INDIA AND MAJOR COMPETITORS (PORTER’S MODEL)

BASIS OF COMPARISON NIKE ADIDAS RELAXO ACTION BATA LIBERTY

BARRIERS TO ENTRY ABSENT ABSENT ABSENT ABSENT ABSENT ABSENT

BARGANING POWER OF BUYERS

LOW LOW HIGH HIGH HIGH HIGH

BARGANING POWER OF SUPPLIER

LOW LOW HIGH HIGH HIGH HIGH

THREATS OF SUBSTITUTES

HIGH HIGH HIGH HIGH HIGH HIGH

RIVALRY AMONG THE EXISTING COMPITITORS

HIGH HIGH HIGH HIGH HIGH HIGH

THREATS OF NEW ENTRANTS

BATA enjoys high EOS so any new and small competitor is less likely to affect BATA in any way. High capital is required to cater the whole market but as the market is highly segmented catering any

one segment is very easy. Competitive pricing is required for any new entrant to capture a market share. Low access to distribution channel by any new entrant.

THREAT OF SUBSTITUTE PRODUCT

Consumers switch if substitutes are available and that too on a competitive or low price in the same quality and product range.

Due to lack of proper promotional and advertising strategy consumers switched to other popular brands like Reebok, Adidas etc.

Threats from unorganized sector. Lacks in fashionable range of products so consumers generally switch to other brands.

BARGAINING POWER OF CUSTOMERS

With at least 10 major organized players in the market and a large number of unorganized players competing with each other here the consumer is the king.

The cost incurred in switching to other brand is low.

BARGAINING POWER OF SUPPLIERS

Being a major player BATA gets the raw material in bulk and comparatively cheaper. Having its own tannery helps BATA in reducing the dependency on suppliers. A threat of forward integration exists due to a large number of suppliers. Competitive Rivalry:

RIVALRY AMONG COMPETITORS

BATA has lowest price among all its organized competitors. Large number of competitors like Liberty, Relaxo, Reebok, etc. Sells a large number of shoes and targets a profit of 1000 crore, its market share had increased as well to

35% in organized sector.

INFERENCE:- BATA enjoys a high EOS and is rarely affected by any new entrant the same is the case with the suppliers who are ineffective in posing any serious threat to BATA. However the consumers have a great deal of options available to them and the switching cost is also low. And since BATA has highest market share in organized sector BATA has an edge over its competitors.

MACRO-ENVIRONMENTAL ANALYSIS

POLITICAL-LEGAL ENVIRONMENT

Change in India's Economic liberalization and deregulation policies, including shoe industry has affected the business of BATA a lot.

Change in Laws and regulation governing the leather and footwear industry adversely affects the business.

Increase in excise duty has affected BATA and hence the shoe BATA produces are poised to get costlier leading to a lowering of revenue.

ECONOMIC ENVIRONMENT

Availability of low cost skilled labor has fuelled the production capacity of BATA which has increased the production.

Abundance of Raw Material, since India has raw materials for footwear industry (rubber, leather etc) readily available the footwear segment is able to keep the cost of production as low as possible.

India is 3rd largest footwear market in the world which provides ample opportunity for BATA to introduce a wide variety of products.

Estimated Growth of 2.44% of global trade ensures that BATA's export will rise in the upcoming years. Inflation adversely affected the raw material cost. The price of raw material increased substantially

during the inflation thereby increasing the cost of production hence decreasing the revenue.

SOCIO-CULTURAL ENVIRONMENT

Consumers attitude and opinion has changed towards branded shoe primarily in the urban youth segment.

Due to eight recognized labor unions , the company faces problems of strike and labor unrest. Also BATA has a history of disputes with trade unions and labor unrest.

TECHNOLOGICAL ENVIRONMENT

Availability of Supporting Institutions. Research funding in design and requirements. BATA lags behind most of the companies in the footwear sector thereby it could not utilize its

production capacity upto the efficient level. Incorporates various new and innovative technology in its products such as Tunnel system, anti-slip sole

etc.

NATURAL ENVIRONMENT

Thinking Green Has been BATA India's endeavors towards minimizing CO2 produced which are done in compliance with the GOI orders.

BATA is dependent on various natural products like rubber, leather, etc. Although BATA is now largely independent in terms of raw material needs partially due to its owned tanneries, but they alone can't fulfill BATA's demand.

DEMOGRAPHIC ENVIRONMENT

Large and growing domestic market Growing middle class & growing buying power has led customers to look for branded shoes. Due to availability of low priced products BATA is way ahead of its competitors in rural areas. Young and working customers from all segments are growing so it acts as a biggest advantage for

BATA.

INFERENCE: - Due to increased GDP, per-capita income and increasing working class group footwear sector has a good scope of growth in the Indian Market. The ever stylish youth and their independence also hold a key in the growing footwear segment.