COSTING AND MANAGEMENT ACCOUNTING PRACTICES
BATA INDIA Ltd.
This report discusses the detail of
1) Bata’s main line of business.
2) Its main competitors and their value chain comparison. 3) Strategy the company is following.
4) Current Costing System of the company.
5) Decision making on the basis of cost and information.
6) Decisions are being taken using management accounting information. To summarise the above points we know that Bata is the fastest growing footwear brand in the country with a presence across 400 cities. The brand offers a wide range of comfortable, stylish and trendy footwear at affordable prices, ensuring there is something in the collection for everyone. The USP of the brand lies in the fact that they have successfully made fashion and durability so affordable and accessible to all. This explains why Bata India sells over 45 million pairs of footwear every year and serves over 120,000 customers every day. Today, Bata India is the largest retailer and leading manufacturer of footwear in India. Bata’s main competitors are Mirza Intl, Liberty Shoes, Crew B.O.S; Bhartiya Inter. In this report we have compared the Value chains of Bata India Ltd and liberty Shoes Ltd which says that Bata has a competitive advantage over Liberty shoes. Bata follows backward integration and are not dependent on some third party for procurement of raw materials which makes it cost effective. Apart from this Bata has a huge competitive advantage over Liberty in the area of sales and distribution channel. Bata follows Cost leadership strategy. The company enjoys the highest market share in India and this is evident from the fact that the total retail presence of the company currently is more than thrice that of its closest competitor (Liberty: 381 stores). Bata has over 15% market share in Organized Retail market and around 6.5% share in unorganized retail. Bata is produces its own raw material to improve its profitability. Bata reduces its cost by demand based production, setting up manufacturing base in tax-free locations, using different mix for footwear production with cheaper raw material. Also, they started cutting some cost through sales and distribution network, which is really huge distribution network. Bata earlier concentrated only on manufacturing footwear and selling them anyhow but in recent times it has changed its image of the production oriented company to affordable, market driven, fashion conscious, lifestyle brand and hence the decision to reposition. The Company has been focusing on consumers and market demand which will reduce inventories and improve sales-to-stock turnover. Bata has also adopted cost cutting strategies without any compromise on style, quality and design.
Management Accounting Project: Company selected – Bata India Ltd.
What is the company’s main line of business and which sector?
Bata India is the largest retailer and leading manufacturer of footwear in India and is a part of the Bata Shoe Organization. b. Who are the main competitors?
Bata India’s main competitors are Mirza Intl, Liberty Shoes, Crew B.O.S; Bhartiya Inter. Bata has the highest market share compared to all its competitors. c. Try to compare and contrast the value chains of the two companies.
Value Chain Analysis describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business. The activities of a business could be grouped under two headings: (1) Primary Activities - those that are directly concerned with creating and delivering a product (e.g. component assembly)
(2) Support Activities - not directly involved in production, may increase effectiveness or efficiency. The following come under support activities: Procurement
Human Resource management
It is rare for a business to undertake all primary and support activities....
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