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Strategic Management

Assignment # 3 (Till QSPM)


Sec - A



Submitted To: Prof. Amjad Hussain




Submitted By:


Group ID B (Rocks)


1) Muhammad Afzal L1F09MBAM2009 (Group Leader)
2) Nasir Iqbal L1S09MBAM0147
3) Sheikh Mustafa L1S10MBAM0116
4) Abdul Qayum
Assignment # 3, Strategic Management Page 2




Industry : Foot Wear Industry
Company : Bata Shoes


Why we Selected Foot Wear Industry & Bata Shoes as Company?

Respected Sir, I (Muhammad Afzal) currently running my own Bata shoes Franchise
located at Sadder Cantt for the last 10 years. My family background is of shoe
business. Thats the reason I choose Footwear Industry & Bata as a company.
After my B.COM, I properly do all my shop operations myself, means opening &
closing the shop, marketing operations selling and buying etc
After completing my MBA, I shall apply all my concepts that I have studied and my
vision is to enhance my business throughout Lahore. Before MBA, I just simply
running my shop, but now I should apply the strategies that relates to my mission &
vision.

The other reason to choose Bata Shoes Lahore Pakistan because they are using some
techniques for finding opportunities and evaluation of new initiatives among their
competitors. They are also using a technique for testing its concept before
development and launch new product in the market. They are also using a technique
for evaluate the organization capabilities before developing product.
As the assignment proceeds to a complete project, we shall discuss all that
techniques/strategies which are used by Bata, discuss about the draw backs and give the
recommendations on these techniques for improvement at the end.



Assignment # 3, Strategic Management Page 3

B Ba at ta a s s V Vi is si io on n & & M Mi is ss si io on n S St ta at te em me en nt t

B Ba at ta a V Vi is si io on n

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

B Ba at ta a M Mi is ss si io on n

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



A An na al ly ys si is s o of f V Vi is si io on n


I think the vision of Bata is long and include few things that must be included in
Mission, so I Purposed a one line Clear Vision of Bata


O Ou ur r P Pr ro op po os se ed d V Vi is si io on n


To become the front ranking multiple shoes company in the world


Assignment # 3, Strategic Management Page 4


A An na al ly ys si is s o of f M Mi is ss si io on n S St ta at te em me en nt t



According to my analysis, Batas current mission statement is too short and missing major
components.
Mission Statement must include 9 components. So I proposed a mission statement for Bata. I
have bold and underline the main components in my proposed mission statement.




O Ou ur r P Pr ro op po os se ed d M Mi is ss si io on n


To provide quality shoes at an affordable price to our valued customers and
maintain our competitiveness and leadership in the shoe market with our aesthetic
functional standard and cost effectiveness with increased market participation by
ensuring regular return to our shareholders through increased market share keeping
in line with the Nations interest



Assignment # 3, Strategic Management Page 5


STAGE 1
INPUT STAGE



External Factor Evaluation (EFE) Matrix
IFE Matrix
CPM Matrix



Assignment # 3, Strategic Management Page 6


External Factor Evaluation (EFE) Matrix


Key External Factors
Weight Rating
Weighted
Score
Opportunities
Increasing Trends Towards Fashion Shoes 0.13 2 0.26
Sales of apparel & footwear on the Internet has been growing at a
double digit pace
0.06 1 0.06
Increasing Sports Events in Pakistan 0.11 3 0.33
Increase in wedding seasons and festivals (average wedding
season of 8 months now)
0.08 1 0.08
Awareness of Quality among customers 0.11 4 0.44
Increasing population by 10% 0.09 3 0.27

Threats 0
Stiff competition in the market from local and foreign brands 0.12 3 0.36
Electricity Shortage 0.08 3 0.24
Increase in unemployment has impacted the household income
which may result in spending less on brand name
0.07 3 0.21
Decrease in customers purchasing power ( Inflation) 0.09 2 0.18
Political Instability 0.06 3 0.18
Total
1 2.61

Assignment # 3, Strategic Management Page 7

ANALYSIS OF OPPORTUNITIES


With the rapid growth of middle class in the state, the purchasing power of the
average person has increased. The awareness for the quality footwear has created a
rise in demand for quality footwear affordable prices.

The fashion conscious customers always look for new styles and designs in favor.
The Pakistans footwear market is highly dynamic nature.

Increasing Trends towards Fashion Shoes
Bata has an opportunity to move into the casual footwear and apparel business. This
area is not totally new for Bata, but represents a very high fraction of their sales. Bata
needs to be in tune and quickly test this market with desirable and well built products.

Increasing population by 10%
Women represent a huge market. Stylo sells nearly 50% of it shoes to women after its
great success with Fancy shoes. Bata should begun to take notice of the female market
and started to market to it. We feel the female sector is strong opportunity in both
fancy & athletics.


Sales of apparel & footwear on the Internet has been growing at a double digit
pace, considerably faster than more traditional sales models such as retail stores
The Internet allows footwear companies to pursue a direct to consumer sales channel.
Internet sales of apparel, accessories, and footwear could reach 18 percent of category
sales by 2012 Companies that added a Web-based sales strategy are able to customize
footwear and other merchandise directly to the customer's needs and taste, are enable
to achieve considerably better pricing as well as "deepening" the emotional bond
consumers have with the brand


Assignment # 3, Strategic Management Page 8

IFE MATRIX

Sr
#
Key Internal Factors Weight Rating W-
Score

Strengths

1 Largest retailer network of 1300 outlets, 4000 franchises and
another 10000 dealers. Extensive Distribution with 241 retail
stores (Forward integration)
0.09 4 0.36
2 People associated Bata for quality and real value for money.
(Shoe Quality)
0.11 4 0.44
3 Brand loyalty 0.09 4 0.36
4 Financial Strength 0.11 4 0.44
5 Geographical coverage 0.09 4 0.36
6 Variety of products 0.07 3 0.21
7 Image of durable shoes 0.09 4 0.36
8 Largest footwear group in Pakistan 0.08 4 0.32
0

Weaknesses
0
1 Insufficient promotional activities 0.09 1 0.09
2 Bata at present conducts all the store management activity
manually. This results lots of lengthy paper works, errors &
waste of time.
0.04 1 0.04
3 Inability to catch the present trend in time (old Fashion & Old
Designs)
0.07 2 0.14
4 Bata does not present itself as a brand of corporate and sports
personalities.
0.03 2 0.06
6 Supply chain and Inventory management issues 0.04 2 0.08
0

Total 1 3.26
Assignment # 3, Strategic Management Page 9


Competitive Profile Matrix


Bata Major/Close Competitors are

1. Servis
2. Local Brands
3. International Brands
4. Shafi Group ( Urban Sole)
5. Chinese Shoe


Bata Servis Local China
Critical Success
Factors
Wei
ght
Rati
ng
W-
Score
Rati
ng
W-
Score
Rati
ng
W-
Score
Rati
ng
W-
Score
Shoe Quality 0.25 4 1 3 0.75 2 0.5 1 0.25
Customer Loyalty 0.09 4 0.36 3 0.27 2 0.18 2 0.18
Financial position 0.21 4 0.84 4 0.84 2 0.42 3 0.63
Price 0.09 3 0.27 3 0.27 4 0.36 4 0.36
Outlets 0.09 4 0.36 4 0.36 2 0.18 2 0.18
Market Share 0.07 3 0.21 2 0.14 1 0.07 2 0.14
Advertising 0.15 3 0.45 3 0.45 1 0.15 1 0.15
R & D 0.05 3 0.15 2 0.1 1 0.05 3 0.15
0
Total 1 3.64 3.18 1.91 2.04


Assignment # 3, Strategic Management Page 10

STAGE 2
MATCHING STAGE


SWOT/TOWS MATRIX
SPACE MATRIX
IE MATRIX
BCG MATRIX
GRAND STRATEGY MATRIX



Assignment # 3, Strategic Management Page 11

SPACE MATRIX

Financial Strength (FS)
(+1 worst, +6 best)
Environmental Stability (ES)
(-6 worst, -1 best)
Return on Assets 6 Rate of inflation -5
Leverage 5 Technological changes -3
Net income 6 Price elasticity of
Demand
-3
Income/Employee 4 Taxation -3
Inventory Turnover 4 Barriers -2

FS Average 5.0 ES Average -3.2

Competitive Advantage (CA)
(-6 worst, -1 best)
Industry Strength (IS)
(+1 worst, +6 best)
Market Share -3 Growth Potential 5
Product Quality -2 Financial Stability 6
Customer Loyalty -2 Ease of Entry into market 5
Technical know-how -2 Resource Utilization 6
Control over Suppliers & Distributors -3 Profit Potential 4

CA Average -2.4 IS Average 5.2


Assignment # 3, Strategic Management Page 12



Aggressive Strategy

As Bata falls in aggressive, But still we have to see at which
angel it lies. If it lies in exactly 45 degree line, then all good
strategies will follow.
But Bata falls just below the 4f degree line, so we should select
these strategies
Forward, Horizontal Integration
Market Penetration, Market Development & Product Development
Related Diversification

Note: Unrelated Diversification and Backward Integration should not be followed


Assignment # 3, Strategic Management Page 13

1. SWOT/TOWS MATRIX




TOWS Matrix
for
Bata Shoes
STRENGTHS
1. Distribution Network
2. Shoe Quality
3. Brand loyalty
4. Financial Strength
5. Geographical
coverage
6. Variety of products
7. Image of durable
shoes
8. Largest footwear
group in Pakistan
WEAKNESSES
1. Insufficient promotional
activities
2. Bata at present
conducts all the store
management activity
manually.
3. Inability to catch the
present trend in time
(Old fashion and old
designs)
4. Bata does not present
itself as a brand of
corporate and sports
personalities.
5. Supply chain and
Inventory management
issues.
OPPORTUNITIES
1. Increasing Trends
Towards Fashion
Shoes
2. Sales of apparel &
footwear on the
Internet has been
growing at a double
digit pace
3. Increasing Sports
Events in Pakistan
4. Increase in wedding
seasons and festivals
(average wedding
SO Strategies
1. Can get national and
international
contracts of Sports
manufacture (S4, O3).
2. Can diversify the
nature of business (S3,
O4).
3. Increase promotion of
Bata not only as
comfort but also a
fashion brand shoes
4. Market development
WO Strategies
1. Can transform itself or
develop an SBU to reflect
an image of fashion and
innovation (O1, W4).
2. Offer more products
other than just focusing
on footwear
Assignment # 3, Strategic Management Page 14

season of 8 months
now)
5. Awareness of Quality
among customers
6. Increasing population
by 10%

5. Market Development
THREATS
1. Stiff competition in the
market from local and
foreign brands
2. Electricity Shortage
3. Increase in
unemployment has
impacted the
household income
which may result in
spending less on brand
name
4. Decrease in customers
purchasing power
(Inflation)
5. Political Instability
ST Strategies
1. Product development
for local taste and
requirements (S4, T4).
2. Right sizing and cost
minimization to cater
inflation and retailing
problems (T4, T3, S3).
3. Promote Bata Shoes
more aggressively
through more high
profile stars
WT Strategies
1. Improvement in
distribution channels and
retail management to
combat the penetration
of competitors (W5, T1,).
2. Project and target based
assignments to
development teams in
efficient resource
utilization environment.
(T2, T3, W4).


Assignment # 3, Strategic Management Page 15






Bata lies in the quadrant 1 and in that quadrant we can apply the following strategies:
Market Penetration
Market Development
Product Development
Backward Integration
Forward Integration
Horizontal Integration


Assignment # 3, Strategic Management Page 16

Data Regarding BCG MATRIX & IE MATRIX


Brands/Divisions of Bata are:
This data is collected on my assumptions & past sales of my Bata Shop.
Weinbrenner
Power
Bubble Gummers
Plaza
B-first School
Shoes
Sandak


Bata
Divisions/
Brands
Revenues
%
Revenue
Profi
ts
%
Profits
IFE EFE RMSP
IG
Rate %

In
Millions
0-10
1 Weinbrenner 4930 29 800 24 3.5 3.7 0.8 6
2 Power 4100 24 678 20 3.2 2.94 0.2 -2
3
Bubble
Gummers
3500 20 613 18 3.6 2.8 0.4 5
4 Plaza 2300 13 548 16 2.9 2.6 0.3 3
5
B-first School
Shoes
1500 9 512 15 3.1 3.8 0.5 7
6 Sandak 900 5 250 7 2.4 2.1 0.1 2
Total 17230 100 3401 100



Note:
These 2 matrices are drawn separately on Page and attached to the assignment

Assignment # 3, Strategic Management Page 17


STAGE 3
DECISION STAGE



QSPM




Assignment # 3, Strategic Management Page 18

Matrix Analysis

Before making QSPM, We first analyze all matrices and pin point that common strategies in
all matrices and then makes sets to make choices among resulting strategies from these sets.


Strategies SPACE BCG IE
Grand Strategy
Matrix
Total
Count

1 Market Penetration 1 1 1 1 4
2
Market
Development 1 1 1 1 4
3
Product
Development 1 1 1 1 4

4 Forward Integration 1 1 1 1 4
5
Backward
Integration 1 1 1 1 4
6
Horizontal
Integration 1 1 1 1 4

7
Related
Diversification 1 0 0 1 2
8
Unrelated
Diversification 0 0 0

9 Retrenchment 0 0 0 0 0
10 Divestiture 0 0 0 0 0
11 Liquidation 0 0 0 0 0



Assignment # 3, Strategic Management Page 19

QSPM


In QSPM, We have not found any alternative strategy. But we have a choice of 2 same set
strategies out of which we decide which we implement 1
st
.

The two strategies are:

1. Promotional Companes
2. Product Development


Results:
Promotional companes got a total attractive score of 4.14 and Product Development got 3.33
So we shall adopt Promotional Companes first






Assignment # 3, Strategic Management Page 20




Assignment # 3, Strategic Management Page 21


Recommendations


Company should focus on Product Development, Market Development and Market
penetration Strategies!
Should exit from the lower end segment and focus more on the middle and upper
middle class of the society!
Renewed brand image will enable Bata to earn premium at the upper middle end of
the market will aid the achievement of the financial goals!
Footwear industry is highly fashionable industry; hence Bata must improve the
efficiency of product development in order to bring new design and style.
The service standards should be strictly monitored and hence an experience fit will
be provided to the customers and these customers for this will be willing to pay a bit
of premium!
It will need to focus on marketing itself as an outlet meeting all basic needs of the
families in its target market segment!
Should provide consistent quality service to its customers so that customers can
associate the same experience with whichever outlet they visit of Bata!
Internet is a broad medium so they should also improve E-BUSINESS.

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