Gul Ahmed Business Strategy Analysis

Introduction

This case discuss the challenges and threats faced by the Bata Management in the dynamic environment that has changing market trends in the form of increased competition from the local players also threat of Chinese imports. Bata had focused the lower middle and middle class segments. Now Bata is changing its strategy according to the environment in order to compete and also for its survival.

Mission and Vision of BATA

Vision

To grow as a dynamic, innovative and market driven domestic manufacturer and distributor, with footwear as its core business, while maintaining a commitment to the country, culture and environment in which they operate.

Mission

To be successful as the most dynamic, flexible and market responsive organization, with footwear as its core business

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DEEPLIST ANALYSIS

Demographics

• Population of Pakistan in 2002 is 140 Million and it is increasing at a growth rate of 3%.

Economic

• 150 Million Pairs of shoes are sole per year.

• Informal sector has 80% of the market share with 17000 units working.

• Sale of non-branded shoes sold by the informal sector and taxes are not paid by them.

• Formal sector comprises of 20% of the market share with 500 small manufacturers producing 500 to 40000 pairs daily.

• Increase in foreign remittances and increase GNP by 6%. Because of that per consumer spending is increasing.

• Decrease in tariffs of import duties on equipment and raw material.

• Decrease in tariff duty on import shoes from 65% to 25%. Further decrease expected to be from 25% to 5%.

Environmental

• Environmental concerns in Europe due to which tanneries are closed and the local tanners have access to inexpensive used equipment.

Political/Legal

• Benefit to and influence of large firms on government policies.

• Small firms prefer not to grow as they do not have to pay 15% sales tax. For that they want to remain just under the CBR screen.

Informational

• N/A

Social

• BATA, EPCT, Firhaj, Footlib, Rajex, Servis and Shafi Group participated regularly in major annual footwear exhibitions in Dusseldar, Germany.

• Media revolution brought about awareness global brands.

• Increase in the number of local and international brands.

Technological

• New technologies (Air molding injection machine) can reduce the labor cost as only two laborers were required to use the new machine.

Opportunities

• Integration of franchises and decreasing company owned stores to decrease fixed cost

• Acquiring new brands

• Building new brands

• Outsourcing from China to counter the competition and reduce the cost.

• Research and development of new products and improvement of processes.

• Use of financial derivatives to counter economic risks such as devaluation of currency against foreign receipts and payments.

Threats

• Economic Risks

o Inflation risk

o Exchange rate risk

o Interest rate

• Political and Legal risks

• Competition among key players and new entrants

• Change in consumer preferences

• Imitation

• Consciousness among customers about the brands and quality

EFE Matrix

Opportunities Weight Rating Score