The Bata Shoe Organization

1. Based on the economic freedom scales, what kind of differences do you think Bata might face in the Czech Republic and Slovakia? The Czech Republic is clearly further along in its progress to economic freedom than is Slovakia. In the Czech Republic, Bata is likely to face considerably less government intervention in its business than in Slovakia. Private property ownership and protection, property rights, and economic competition are likely to be more common in the Czech Republic. In Slovakia, Bata is likely to face greater political risks. Since economic freedom and political freedom usually go hand in hand (though China and a few other countries serve as exceptions to this “rule”), there is likely to be more political instability in Slovakia. It also appears from the case that Slovakia may not have a very positive attitude toward foreign investment (despite Bata’s roots in the region). Bata’s battle for restitution in Slovak courts may be a long and expensive process. 2. What are the advantages and disadvantages to both Bata and the Republic of Slovakia of having Bata take over his former operations? Why do you think the Czech Republic allowed Bata to reenter the market, but Slovakia had not? * From a nostalgic point of view, Bata will be able to return to the home country. * Bata will gain access to large facilities and a huge market in Eastern Europe and the former Soviet Union. * The Czech Republic will gain access to Bata’s global design, production, and marketing expertise. They will be able to design better, more fashionable, and more reasonably priced shoes. * The Czech Republic might be able to get Bata to invest significant capital into the plant to get it up to world-class standards. * Bata will create new jobs for Czech workers. Bata reentered the Czech Republic and not Slovakia because the two countries have very different economic environments. The Czech Republic is moving more quickly than Slovakia