Lubna Alli

Attending The Bata Shoe Company headquarters in Zlín, Czech Republic, which was founded in 1894 by Tomáš Baťa, provided valuable insight as to the reason for its success. Bata flourished as a private company before it was nationalized in 1945. The Baťa family’s company carried on abroad, headquartered in Toronto for four decades and now in Lausanne, Switzerland, while the nationalized Zlín operation was later renamed Svit. Their business strategy pioneered that of future successful businesses, where their overall social philosophy was the driving force for their success. This success was brought to them as a result of their value for research and development (R&D), unrivalled corporate social responsibility (CSR), and strong vertical integration of business.

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Research and development

Highlighted in the tour of the Bata Shoe Company’s Zlín headquarters was their heavy emphasis on research and development, which was the key to their innovative modern designs and their excellence in manufacturing. At the time of their launch into the market during the early 1900s, despite the fact that there were other shoemakers in the market, the Bata Shoe Company proved to be innovative as they offered a segment-of-one mass customization at the consumer level. Shoes that they made came in many different designs, sizes, styles, colours and material choices, and the tour also showcased celebrity shoes on display. The company also provided excellence in manufacturing, as Bata was known to be synonymous with quality. To ensure a superior product, Bata manufactured predominantly in its own facilities, which was demonstrated on the machine line. They had their own footwear production starting in 1894 and added other areas of work to increase innovation over the years. A few notable additions to the excellence in manufacturing were precision engineering in 1903, the tannery in 1915 and the shoe-repair shops in 1923. The addition of shoe-repair shops, in particular, adds to the company’s excellence in manufacturing, as it guarantees the customer durable, long-lasting shoes, kept in shape at Bata’s expense. To keep up with strong worldwide demand, Bata operates an astounding 27 production facilities across 20 countries. As a result of Bata’s commitment to excellence, most of the company’s production facilities were awarded ISO 9000 certifications, while the others were in the certification process.

Corporate social responsibility

Second, The Bata Shoe Company set the pace for other companies with their unrivalled corporate social responsibility (CSR), where Bata believed firmly in environmental sustainability, employee wellness, and overall economic development. CSR is defined as a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders. Concerning awareness for the environment, Bata had (and still has) a sustainability approach integrated into its strategy, which includes the use of materials that are environmentally friendly, as well as providing aid and funding to less developed areas in need through the Bata Relief Fund. Tomáš Baťa also pushed for sustainability in his time as the Mayor of Zlín, where one of his three goals included making Zlín a greener city. This became a model for the factory towns that were established around the world and showed his value for employee health and wellbeing.

He promoted employee development by providing extensive management training courses for specialized technical skills. Bata also had special education facilities such as the shoemaking apprentice school (known as the Baťa School of Work) and a postsecondary institution in Zlín, which was stopped due to the Second World War. This sophisticated management training provided further development and growth opportunities for employees, as they were able to take on leadership roles in the global market when Bata needed off-site managers for new locations across the world. He started first in 1919 with the United States as his primary market of entry. Additionally, those working for Bata were provided with the incentive of much higher wages than those offered by other companies at the time. Subsidized housing and profit sharing were also offered, an especially early idea for the time. Furthermore, Bata believed in economic development, which was pushed by the idea of improving the social and cultural lives of people in the area. He was, in some sense, an egalitarian, as he did not want wide gaps between the wealthy and the poor. His social philosophy was to make prices affordable, as he himself did not believe he needed excessive profits. One way in which he did this was by offering half-priced shoes in 1922, which had an impact on the price level in Czechoslovakia and put most other smaller independent shoemakers out of business. He reinvested his retained earnings back into the company to further develop and grow his business.

Vertical integration

Last, The Bata Shoe Company was widely successful for its time because of its vertically integrated business strategy, which benefitted the company by providing greater process control, increased supply chain coordination, and decreased cost. Bata was a business that was extremely integrated and that covered many functions, such as banking, retail selling, production, advertising, manufacturing, and even insurance. For better insight, they had their own herds of cows to make leather, as well as their own forested lands used for cutting down trees to make the pulp needed to produce paper for boxes, along with other materials needed for trucks and tires. By leveraging the market in this way, Bata dominated what was effectively an oligopolistic market, alongside a select few competitors.

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Why it worked

The Bata Shoe Company enjoyed major success and proved to be a pathfinder for future companies because of its renowned business strategy. They added more humanistic features into their business scheme by putting the market first and profit second. With a mindset like this, it was bound to have more long-term, rather than short-term, success. This is because Bata’s work environment created healthy employee and customer rapport with the brand. There was strong trust in and loyalty to the brand, and for that reason employees and customers alike were incentivized by guaranteed satisfactory results to continue to pledge allegiance to the further development of the company. By creating this healthy cycle, each end of the demand and supply chain is fulfilled and continues to complement the other.

They added more humanistic features into their business scheme by putting the market first and profit second.

Bata’s push for extensive research and development, emphasis on corporate social responsibility and strong vertically integrated business structure allowed for his own control both within his firm and within the market. Bata’s business model was particularly revolutionary because of the political, economic, socio-cultural, and technological state of Czechoslovakia at the time. Bata’s rise came in interwar, democratic Czechoslovakia, well before the communist takeover of 1948, but in an era when most businesses offered low pay and little incentive, and many workers felt trapped within those confines. This low incentive for work created low marginal utility and jeopardized production and efficiency. Bata’s focus on R&D, CSR and his use of the vertically integrated business model stood in sharp contrast, providing motivation and incentive for employees to produce their highest quality of work with the highest marginal utility and lowest cost. Aside from the vertically integrated business firm, the company’s core values and focuses, such as economic growth, employee development, and consumer wellbeing, are now considered to be fairly standard for most successful firms today that seek out talented individuals to contribute to their growth. In addition to Bata’s introduction of the five-day workweek and the four wage schemes (including fixed rate), most banks, government institutions, not-for-profit organizations and private firms today also have a component that focuses on employee development and wellbeing, all of which are noteworthy when pinpointing the success of the company then, and the successes of future companies today.