Bata Shoes Ltd Case study Essay

how has Bata acted with contrary form _or_ arranging of authorities-making bodysQuestion 1Following the First institution warf ar the Austro-Hungarian empire was fragmented into Austria, Czechoslovakianoslovakianoslovakia, Hungary, Romania and Yugoslavia. During this period the Czechoslovakian body politic was conceived as a parliamentary country, with the constitution of 1920 giving the central semi policy-making relation a mellow spot of go everyplace local anesthetic authorities. Czechoslovakia, in particular, dictum rapid frugal growth during the 1920 brought intimately by foreign intrustment and advances in manu eventuring technology. The body politic proved specially allure for foreign investors such as the British, French, Belgian and Dutch due to low craunch costs and readily available immanent resources.Only in the brake shoe industry the foreign capital played no outstanding role. Thanks to a monopoly countersink of Bata Works Czechoslovaki a held the first place among the k right offledge bases make iting shoe exportati wizardrs in 1930s after over winning ample Britain and the USA. In 1938 interference by Hitler resulted in the old Slovak and Ruthenian demands for autonomy finally been granted. Czechoslovakia was strip of one third of its territory containing just about of its nearly eventful industrial centres and most fertile farm-land, leaving the rural economically crippled.Following this Bata realised his business did non ingest good future prospects if it were to detain in Czechoslovakia. He sought to play along routines and preserve the business by moving to Canada as the awkward was mooted as a safer run environment, approximately(prenominal) economically and governmentally.Bata move to Canada, along with one century of his staff and families, would give ear the smart set and its workers having to aline to exploits in a some(prenominal)(predicate) political system to Czechoslovakia, t he first of numerous adaptations they would restrain to arrest as the smart set expanded across the globe.The relocation in Canada was a big change for Bata, as the organisation there wear outs significant political occasion to the provinces which all(prenominal) gift their take in flip barriers. This is a big line of business to Czechoslovakia, where the central government has great power over the provinces. However, Canada was seen as actually politically and economically change slight in semblance to Czechoslovakia disdain the political differences mentioned higher up.With op geological erations in over 60 countries across the world, Bata contain runs as a decentralised operation in order to allow its managers to arrange operating procedures to local environments. However impish control of Batas core philosophies and strategies ar in place, even though these whitethorn be antithetical from that of the arna the operation is in and the managers and workers diligent there. This could potentially work problems if pursued too rigorously. However, the text states that Bata does interact with foreign political systems with Thomas G.Bata change of location extensively to check on feel control and to ensure good traffic with the governments of the countries in which Bata races. This inter motion is particularly important as I feel Bata nonchs a spot of key pull ins to galore(postnominal) of the countries it chooses to invest in such as change magnitude economic stability due to their project intensive operations and policy of purchase materials locally.The countries Bata operates in vary in the pith of political and economic devoiddom they qualifying to their citizens and companies operating there. The eggshell states that Bata does non win cytosine pct of the factories it has in virtually countries. It calculates that Bata prefer to own 100 percent of their factories, but argon go forthing to agree if the politic al situation requests. This intromits taking minority self-control, or in whatever cases providing licensing, consulting and proficient assistance where it does not throw away an beauteousness interest in a domain. Bata seem to work this policy well as they have the flexibility to cope with these different operating environments. I believe this is a sensible policy as it allows Bata invasion into grocery stores that whitethorn be herald clean-handedr and much thriving in the future.Bata serves its markets by producing in each market all it pull up stakes cover there. It depart buy raw materials locally and achieves economies of scale due to its processes creation very labour intensive. One whitethorn signify that the overlook ofexports would make Bata a little attractive prospect for the host countries as little outside money is feed into the preservation. However, since operations ar labour intensive there leave behind be a great public assistance fro m the job opportunities created. The chief(prenominal) issue that causes problems to arise in whatever countries is if raw materials are imported into the countries in question rather than being brought locally. In such cases the case states that Bata must go down the stairs to local laws and requirements for operation. However, by commonly buying raw materials within the countries Bata operates in it appears to work well with the governments concerned.The main driving force force underside Bata choosing not to export goods is the security that operating domestically brings, such as the avoidance of problems associated with exporting standardised if an importing country were to restrict trade. Bata manifestly feels that stability is of key importance to its strategy, particularly in many of the less economically essential areas in which it operates. In these countries there are not the laws to protect workers rights and forethought income in cartridge clips of unemployme nt, so if a factory were to close the essence would be very hard hitting to the workers and would potentially ruin Batas political dealing permanently.Bata operates in countries with varying degrees of freedom. Tom Bata Snr. prefers to operate in parliamentary countries as these offer the chance to discuss issues, whereas totalitarian regimes do not. However, Bata have still operated under roughly Totalitarian regimes such as southeasterly Africa, Chile and Uganda.In Uganda Bata has had its operations bailiwickised and de-nationalised double trance operating under a violent and repressive regime that see the expulsion of many skilled foreigners. Bata took the view that pile would still enquire jobs and raiment whatever political system they were victuals under, a similar view that has been uttered recently by many people talking about Iraq. in that respectfore operations would continue. Bata bene receiveed as the way it operated fitted in with the Ugandan governments po licy of becoming more than egotism sufficient, rather than relying on imports. This is because Bata obtained its raw materials from with the country and offered the stability of sellingin their office market. Bata in assenting helped the government with a arcsecond policy that aimed to promote links amongst agriculture and industry, with the raw materials coming from hobnailed areas. The move presence of Bata in Uganda, scorn the expulsion of many foreign workers, reinforces its cartel in local workforce, which in morsel helped build trust.By fitting in with these policies Bata was able to operate in Uganda spell many other companies were forced to leave, and benefit from a 98% share of the shoe market. Bata followed a similar model in Chile where Pinochet noticed the country for a period of time while the political party operated there. A shit Bata saw no pauperisation to leave to country as it viewed its enthronement there to be long term, in which time different political systems would come and go, but people would always need jobs and shoes. Many of the benefits offered by Bata to Uganda were also of benefit to the Chilean government and people.The regimes in both(prenominal) Uganda and Penochet Chile both suffered from poor adult male rights records. Bata was therefore put under some pressure to withdraw from these countries by various parties including governments and world-wide organic laws. However, Bata was always able to postulate that it had been in the countries far longer than the regimes in place and had seen many come and go. Its unsubdivided reason for being there was the fact that people needed shoes, and it was in a good position of providing this basic need. atomic number 16 Africa caused far greater problems for Bata. Here the uniform type of extreme regime was seen as in countries such Uganda and Chile. The difference for Bata was that to the south Africa attracted far more public economic aid across the globe. T he Canadian government took a very negative view of Canadian countries having interests in southernmost Africa. Maybe more importantly public opinion and cognition about the regime in southern Africa were to have a big effect on the company. Bata possibly realised that if it continued to operate in sulphur Africa it would encounter of infection alienating itself from its consumers in countries such as Canada and the US and set itself up for banter by the super number of international organisations opposed to apartheid.In this situation it was important for Bata to interact with the various political systems regard to withdraw operations from South Africa while causing minimum disruption. It sold its attribute in South Africa in 1986. It did not identify the buyer or the gross sales price, and it denied that apartheid was the reason for its pulling out, citing that all factors had been interpreted into account with respect to its enthronisation. Bata ensured that the Bata name and label could not be used by the buyer and that the jobs of the workers in its coiffures would be preserved.why they now operate in Czech Rep, but not Slovakia.Question 2Czechoslovakia has being subject to turbulent time in the period following terra substantiala War II. With the advent of commie rule countries were very much formed from different heathenish groups held to disturbher by totalitarian rule, as was the case here. The break-up of the communist bloc in 1989 resulted in the disintegration of countries such as Czechoslovakia, that would be split into two strong-minded nations The Czech commonwealth and Slovakia.The fact that both of these countries are now free from communist rule does not necessarily think about that they are free. supernumerarydom office is an organisation that monitors the political rights and complaisant liberties of countries around the world and rank them to the degree that freedom exists. on a lower floor is a summary of the asse ssment they give to the Czech nation and Slovakia.Since 1972, liberty House has published an annual assessment of state state of freedom by designation each country and territory the situation of Free, Partly Free, or Not Free by averaging their political rights and complaisant liberties ratings. Countries whose feature averages for political rights and for civil liberties fall between 1.0 and 2.5 are designated free between 3.0 and 5.5. artly free? and between 5.5 and 7.0 ot free.?As we can see from the chart above, both countries are now considered politically free. However, economically Slovakia still lags behind the Czech republic. It has being politically free for less time and lacks consistency in the freedom scores it achieves, suggesting that the political system may be subject to some unbalance. Bata express concern relating to Slovakia not being economically free in the case. As The Czech Republic is clearly come on along in its progress to economic freedom than is Slovakia, Bata is in all probability to face comfortably less government intervention in its business. Private space ownership and protection, property rights, and economic competition are probable to be more common in the Czech Republic making the operating environment more stable.In Slovakia, Bata is likely to face greater political risks. There is likely to be more political instability in Slovakia, commonly an index number that there is also a lack of economic freedom. It also appears from the case that Slovakia may not have a very positive attitude toward foreign investment, despite Bata roots in the region.Bata would benefit from investment in both the Czech republic and Slovakia. From a nostalgic point of view, Bata will be able to return to the home country. Bata will also gain inlet to large facilities and a huge market in Eastern Europe and the motive Soviet Union.The Czech Republic and Slovakia would also benefit from Batas investment themselves. They would gain access to Bata global design, production, and marketing expertise. They will be able to design better, more fashionable, and more reasonably priced shoes. The Czech Republic and Slovakia 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 and Slovakian workers, especially as the processes are rather labour intensive. Bata also has a policy of buying raw materials locally, benefiting the host countries miserliness as a whole.There are some disadvantages of investment for both parties too. Bata may be forced to pay stipend for its own plants if the company chooses to invest in Slovakia. There is also a reasonably higher risk of political instability and economic restrictions in the country. There are also disadvantages for the countries involved. Bata may actually have better production processes than are shortly employed in the Czech Republic and Slovakia. Therefore they may actually re quire less workers than are legitimately employed in the factories so workers would be do unemployed. Bata do not export goods so do not bring as much foreign capital into the country as maybe would be evaluate by a company of their size.Bata reentered the Czech Republic and not Slovakia because the two countries have very different economic environments. The Czech Republic is moving more apace than Slovakia toward a free market system. Slovakia are also in dispute with Bata regarding the ownership of the companies causation factories in the country. The Slovak government appear disinterested in helping to act the problem by implementing new laws to make it very difficult for companies in the self alike(prenominal) situation as Bata to regain their former property without either reaching commensurateness with the new owners or by taking expensivelegal action. When feel at this evidence it looks advantageous for Bata not to attempt to reinvest in Slovakia at present.Explai n the current situation and relate to probable causes mentioned aboveThe political environment can have a dramatic impact on the operations of a firm. For sample managers in most western European countries may be accustomed to a stable political system and a relatively homogenous population. This is often not true in other countries. A political system integrates the parts of a hostelry into a viable, functioning unit. Sometimes that is a very difficult task. A country political system influences how business is conducted domestically and internationally.The basic political ideologies of a country are the body of ideas, theories and aims that constitute a socio-political program. The ultimate test of any political system in its ability to hire a society together despite pressures from different ideologies tending to split it apart. History, culture, language, religion, geography and political ideologies help define national borders.Forms of government range from Democracy to T otalitarianism. Democracies commonly have economic freedom and laws that sentry duty individual and corporate rights and are often preferred by investors. The more developed democracies tend to have the following characteristics. license in the areas of political rights and civil liberties are particularly important in democracies. These are measured by the organisation granting immunity House using a number of indicating factors, and the results compiled to rank countries according to their degree of freedom. In 1998, 88 of the worlds countries were free and 50 were not free. Free countries are high in both political rights and civil liberties, whereas those countries who deny their citizens basic political rights and civil liberties are not free. In addition 53 countries were partly free, with limited political rights and civil liberties, often in the stage setting of corruption, weak rule of law, ethnic engagement or civil war.Despite the large proportion of countries claimi ng to operate democratic governments, many new democracies around the world are not yet stable with fewer political parties and corruption threatening the systems survival. Examples include Indonesia and some countries from the former Soviet union. Businesses should be cautious when looking to invest in these areas.In some(prenominal)ize to democracies, totalitarian regimes offer far less political and economic freedom. Forms of totalitarianism include fascism (Mussolini Italy), authoritarianism (Chile under Pinochet), and communism. Communists believe in the equal distribution of wealth, which entails total government ownership and control of resources.Political systems have a great impact on management decisions. This includes political risk and government intervention in the economy.Political risk occurs when there is a possibility that the political climate in a foreign country will change in such a way that the operations ofinternational companies in that country will deteri orate. Types of political risk include government takeovers of property, operating restrictions, and agitation that damage the company performance. Such problems can be caused by changing opinions of political leadership, civil disorder, and changes in external relations (such as ire between the home and host country governments.We can see many examples of the above in the Bata case. The companies operations were taken over in Czechoslovakia with the advent of communist rule. They are subject to operating restrictions in several countries where they are not allowed to have 100 percent ownership of their plants. Animosity between the home Canadian government and the South African host government during the Apartheid era was a contributing factor that lead to Batas eventual withdrawal from South Africa. Civil disorder and strike action has affected the companies operations in several countries over the years.Government intervention in the economy occurs because some governments adopt an ndividualistic image?and keep intervention in the economy at a minimum. Others adopt a ommunitarian paradigm?wherein the government plays a large role in the economy. They thrive on a respected, centralised bureaucracy with a stable political party or coalition in power.If a U.S. firm moves from the United States (individualistic) to Germany, Japan, or South Korea (communitarian), it may have to develop new strategies for its relationships with government, suppliers, customers, and competitors. Bata study evidence of adapting to different environments as the case states that the company is run as a decentralised operation in which its managers are free to adjust operating procedures to local environments. This highlights how the company acknowledge the need to be flexible in order to fit in under varying restrictions depending where in the world they are.Stable democracies are usually seen as the safest operating environment for businesses. In the Bata case Tom Bata Snr state s that he prefers a democratic system a democracy offers the potential to discuss and change proceedings, whereas under totalitarianism it is sometimes wisest to remain profound. However, one must remember that not all democracies operate in the same way. For example the degree to which citizens are involved in thepolitical process and the degree of centralised control.In the case Bata relocate from Czechoslovakia to Canada. Here the provinces have significant political power at expense of the national government. Many provinces have their own trade barriers. Companies often have difficulty find out how to operate in decentralised democratic systems because they face many different laws and regulations. For example different tax laws. For this reason one assumes that Bata carefully chose exactly which state it would relocate to when it moved to Canada.Bibliography?Kurian, George Thomas 1992. Encyclopedia of the one-third World, fourth edition, volume III, Facts on turn on New Y ork, N.Y., pp. 2009-2011.?Source Byrnes, Rita M. (ed.) 1992. Uganda A expanse Study, Library of Congress Washington D.C. p. 123?The accounting of Slovakia (1929 1938) From Wall Street Crash to Munich http//www.adc.sk/ slope/slovakia/index.htm?Skilling H. G. ed. Czechoslovakia 1918-88. MacMillan Academic and Professional LTD., 1991.?J.D. Daniels and L.H. Radebaugh, internationalist Business, purlieu and Operations, 9th Edition 2001, Prentice hallway. Ch 3?D. Holt and K. Wiggington, International Business, Second Edition ?2002, Harcourt College Publishers, Ch 3?Freedom House, http//www.freedomhouse.org/?R. Griffin and M. Pustay, International Business, A managerial perspective, Third Edition ?2002, Prentice Hall