Program: BBA (H)
Assignment # 2
BATA: STRATEGIC CHOICES
Mr. Ghulam Ahmad Rana
Zain fazal Ahmad
BATA PAKISTAN LTD
PAKISTAN FOOTWEAR INDUSTRY:
➢ Pakistan has a large footwear industry. It had a footwear market of above 150 million pairs per year.
➢ In Pakistan footwear industry can be divided into two sectors formal sector and informal sector
➢ Formal sector consist of about 500 small manufacturers, each producing from 500 to 40,000 pairs per day. Firms in this sector included giants such as Bata and servis
➢ Informal sector has the big market share of about 80 percent, was comprised of over 17,000 units, each with the average of two employees.
➢ Exports About dozen firms are involved in the exports but only Servis, Bata, Firhaj, Epcot. Shafi and Rajex participated regularly in the major annual footwear exhibitions in the Dusseldorf, Germany.
➢ Government Policy has big influence on the large players of the footwear industry through their import and export policies and duty rates.
➢ Sales Tax Small manufacturers prefer not to grow too large. They just want to remain under central board of revenue for to save themselves from 15 percent sales tax and by doing so they can save on many duties.
➢ Expansion The larger expansion in the leather industry happened in the 1980s that was resulted due to the remittances from migrant in the Middle East, together with the afghan war, resulted in 6% annual GNP growth.
➢ Market Size The number of tanneries tripled during 1981-1991 from 180 to 509, making quality finished leather widely available to footwear manufacturers.
➢ Tariff Duties Both tanneries and the footwear industry earned more from the Government deregulations which decreased tariffs on imported equipments and raw material. During 2000-2003 tariff duties on imported shoes dropped 65 percent to 25 percent and were expected to decrease further to 5 percent by 2005.
➢ The Bata shoes organization establishment in 1894 by Thomas Bata.
➢ In 2002 Bata shifted to Canada with head quarter was the largest in a Canada.
➢ The company had a network of 75 shoes factory, trannies in 95 countries, 6300 company owned retailed, 10,000 franchised, 40,000 independent dealers.
➢ Bata international Group (BIG) headquarters included South Asia countries, Australia, New Zealand and Africa.
➢ In Pakistan 1942 Bata establishment in Batapur plant.
➢ In 1984 another factory at the Maraka branch.
➢ 1987 Maraka factory 350 employees, 1.2 million pair of leather footwear.
➢ In 1988 another small factory.
➢ During 1980s the negative environment impact from Government and Bata headquarter on tannery operation.
➢ 1987 discontinuous the production of tires and tubes due to the loss.
➢ Footwear manufactured by Bata is grouped in to six main categories, which is primarily based on manufacturing technology and material used. Different processes used in manufacturing like labor intensive and capital intensive.
➢ Bata has 1500 Stock Keeping Units (SKU) in which almost 66% percentage is outsourced which is called Associated Business Units (ABU).
➢ Reasons of outsourcing by Doug Hearn’s MD:
• Media revolution in 1990 resulted in increase awareness for great variety, to attain that Bata increase its SKU’s from 400 to 2200 and because of this Bata production cost and defects rate went up and productivity decreases. That was the biggest reason to increase outsourcing.
• Another one is because...
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