International Strategy Of Bata Company Essay

Question:

Discuss about the International Strategy of Bata Company.

Answer:

Introduction

When a firm takes its operations beyond local borders, we say the company has gone global. In this case, its services and products aim the international market. The global operation offers a wide market and consequently will come with benefits and more profits would be realized. However, it comes with a lot of challenges and difficulties in the sense that certain qualifications must be met and several requirements should also be attained before thinking of taking the great step to move operations globally (Kraap, 2005). Global market captures many customers with varied tastes, therefore, it would give the firm an opportunity to come up with different types and styles of products to fit the needs of customers. The Company therefore keen to globally make its products available and get hold of more customers both locally and internationally. The firm has widened its base and its operations should, therefore, be felt outside the country since their satisfaction rate has risen to a tremendous level due to their endeavor to manufacture quality products compared to their competitors in the region. One thing that has made this firm to keep a positive track is the availability of raw materials (Kedia, 2013).

Importance of Global marketing

Consequently, the quantity of production would have to increase to take care of the high demand and increased area of the market to serve. Apart from enjoying a wide market, the firm would be able to increase its sales volume. Venturing into the global market would make the firm acquire proper technological advances because a number of firms using varied technological skills would be met (Sandra, 2012). It is important to note that technology can be copied and shared at the same time, therefore, The Bata Company apart from using its own technology, will be in a position to learn and benefit from new technologies which may assist their production positively. Operating internationally would enable the firm to make perfection since it will give them an opportunity to meet other serious competitors who may be having an established base and more advance in the kind of products they manufacture (Chrispus, 2014).As a matter of fact, it is important to meet competition that is challenging enough to you work extra hard to perfect your services and products. This can only be possible if your competitors are also strong to give you challenge that will make you change your approaches and tactics. The table below shows how Bata Company has competitively shares the market with its competitors in the last 5 years both locally and internationally.

Bata

Other companies

% share

40

2014

60

44.4

2015

55.6

48

2016

52

49.1

2017

51.9

Firm level approaches and strategies

The firm employs different strategies to meet the demands and preferences of its customers in their local market. To ensure that there is a total satisfaction guaranteed, the firm uses sales persons to market its products. At the same time, it has opened distribution points so that its customers can easily find their products. The sales outlets are spread almost in all major and small towns. This ensures easy accessibility and comparison of the prices and quality of products. When the firm expands to the international market, there are some new approaches that will come into place are able to change the face of the firm at the same time allowing the firm to perfect its operations to satisfy the expectations of its customers (Sushil, 2011). The current approaches of the firm do not allow the firm to explore its full potential as they limit the operations to local markets only. With the expansion to foreign markets, the company would be able to interact with new ideas and challenges from a global perspective. These ideas are significant in sharpening the firm’s strategies to challenge its competitors and compete at a favorable level with them. The current approaches also do not open an elaborate door for technological growth because the firm may only delve into the locally available technology. New technological advances can easily be derived from global market because there are countries that have more advanced technology than others (Michael, 2014). The Bata Company is keen on entering a new market such that is necessary to compare different market strategies available and that can be explored easily. A market strategy is a way in which an organization uses to enter a new market (Mookerjee, 2013). The new market can be local or international market. The Bata Company is taking the opportunity seriously and has several options with it. The following are some of the common entry strategies that would be looked at by the company:

  • Exportation
  • Licensing
  • Franchising
  • Partnering and
  • Joint Venturing
  1. Exportation

The Bata Company would wish to export its products to the international market through two ways. First, direct importation can be carried out by shipping goods to international market directly without involving subsidiaries. Secondly, indirect importation, which involves using intermediaries seem to be less costly and this would be the preferred method the which, Bata Company would wish to adopt before it strengthens itself for international market.

  1. Licensing

To license is to allow another company the right to produce and participate in selling another firm’s products elsewhere through agreement. Although, this is a viable entry strategy, it can be a challenging strategy for the Bata Company since such company will need the knowledge of our own firm in doing so. Such local company must therefore be given all the right to information and it needs the resources in order to produce the same products as the Bata Company. Despite all the risks, this could be a better strategy for Bata Company, which has a big share of the potential market.

  1. Franchising

It is so far the best method for entry into the international market, but only for food dealing companies. It stands for copy and pasting what is done in the local market into the international market. It will only serve for smaller markets and it may be successful when the company brand has been well established and known all over. The Bata Company is an established one, but we cannot use this strategy because we wish to control a very large market globally such that copying and pasting would be quite hard to achieve.

  1. Joint Venturing

In this strategy, the Company may wish to work in collaboration with another company due to the expanded market. Because the international market is large, the Bata Company would need a local company to work together especially because of varied cultural differences. The two companies may come together to form a big third company, however, this company must be one that deals in similar products. They will therefore make a new product that is expected to create a new impact in the market. However, it needs a lot of consultations and trust because one company may decide to swallow the partner.

Recommendation for the best strategy for the Bata Company

The Bata Company should choose to use Export strategy because it is the easiest way to venture into global market. Having looked at the rest of the strategies, it is only the export strategy that does not need several procedures to undertake. Although, indirect exportation needs intermediaries to undertake, it is something that can be done one-on-one without having to build branches or big offices in other cities and towns. It is important therefore that the Bata Company learns about these strategies because they all have advantages and disadvantages as have been highlighted in this report.

Risk, Cost, and Environmental factors

Global business looks like a promising idea for businesses like the Bata Company; however, it comes with several challenges that must be looked upon. The common problem with international business is the language and cultural barriers. Sometimes working with customers or sales persons who do not understand or speak your native language may be challenging. This firm (Bata) in venturing into the international market would face this great problem. To counter this, the firm will require employing full-time translators or involve local people as their employees in order to have smooth operations (Robert, 2016). This as has been stated in this report, would require additional resources and a greater commitment on the side of the company’s top management. We cannot forget that venturing into foreign market requires the firm to meet certain requirements as per the laws of that land. This may come through paying taxes and acquiring permits to carry out such businesses. Some of the procedures may be too involving, time-consuming, and expensive to undertake. This may delay the success and lower the morale of people. It is important to choose the right people on the ground to deal with at all times because some of working partners may have misleading thoughts and ideas that may lead to the collapse of the business or slow expansion (Onesmus, 2015). The Bata Company is looking forward to coming into a market in other countries that already have been invaded by similar business; therefore, we expect stiff completion from several competitors both locally and internationally. It is thus important to ask the question whether it would be possible to penetrate the market. If possible, they would it be profitable under the circumstances.

Global ventures involve many risks as having been highlighted in this report. It is almost the same taking an entrepreneurial risk at some instances (Kerry, 2010). Quite little may be known about what may come later in the process of setting up the business in foreign countries. For example, there could be a stiff competition that could make the firm lose its business strategy grip thus failing at some points. In addition, some environmental problems may be caused by the exposition of certain by-products from the used materials. However, the firm ensures a proper disposal measure that leaves the environment clean and friendly. These are factors that need a proper explanation to the authorities of any foreign company so that there are no problems caused thereafter (John, 2012). Lastly, the cost of this venture is expected to be high because certain structures have to be in place to ensure smooth operations. Therefore, the Bata Company has arranged for financial backup to take care of any financial need in terms of employment, building new machines and equipment.

The most feasible entry approach for Bata Company would be to carry out proper research in the country they wish to venture in. This will enable them to understand everything they need before implementing the idea (Rufus, 2017).

Conclusion

Foreign investment is termed as a good approach which can help both countries, for example, the host country benefits and the source country benefits too. The Bata Company has been in existence for decades now and has a strong base of capital and human capital as well. Therefore, there is a strong belief that it can do better outside its own country (Ritta, 2011). It has whatever it needs to stretch its wings to external world because it has managed to build its outlet locally. Global market captures many customers with varied tastes, therefore, it would give the firm an opportunity to come up with different types and styles of products to fit the needs of customers. The Company therefore keen to globally make its products available and get hold of more customers both locally and internationally (Robert, Global Management Issues and Ethics, 2014). The firm has widened its base and its operations should, therefore, be felt outside the country since their satisfaction rate has risen to a tremendous level due to their endeavor to manufacture quality products compared to their competitors in the region. One thing that has made this firm to keep a positive track is the availability of raw materials.

References

Chrispus. (2014). Globalization. Global Business Business and strategies for development, IV (4), 60-70.

John. (2012). Business Technological Advances and Management. Business Adventure, V (7), 32-34.

Kedia. (2013). The importance of international skills for international business. Business Daily, 8-10.

Kerry. (2010). Business Enterprises and Development. Business Focus, III (5), 70-80.

Kraap. (2005). Global Venture. Business Insight, II (10), 10-12.

Michael. (2014). Global Business foundations, conditions, and challenges. Business Daily, 20-23.

Mookerjee. (2013). A study of Influence of Source Characteristics and Product Importance on Consumer Word of Mouth Based on Personal Sources. Global Business Review, 177-193.

Onesmus. (2015). How to venture outside the local country. Business Insight, IV (14), 30-40.

Ritta. (2011). How to go global and challenges of global business. Business Daily, 50-60.

Robert. (2014). Global Management Issues and Ethics. Business Tactics and reorganization, 45-50.

Robert. (2016). Strategic Level Approaches. Business Daily, III (12), 50-60.

Rufus. (2017). Business statistics and key values of concern. Greater Achievers, 30-48.

Sandra. (2012). International Business. Entrepreneural Development and Strategy , IV (6), 10-15.

Sushil, L. a. (2011). The Importance of Situation, Actors, and Process in Management of Strategic Alliances. Global Business Review, 29-39.

Tallman. (2017). Business Model in Global Competition. Business Insight, 5-9.

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