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The Case Analysis:Bata Shoe

4112 words - 17 pages

Section 1: IntroductionMultinational enterprises (MNEs) like Bata must operate in countries with different political and legal conditions, so the political impact on the foreign investments is very important. This paper explains this issue based on the Bata case in three parts. The first part evaluates the different ways in which Bata has interacted with foreign political systems in its investments and operations aboard. In the second part, the advantages and disadvantages, which MNEs bring to their company and the host-country when doing foreign direct investment, are analyzed relating to the Bata case. And the last part gives a detailed analysis of the complex political impact on ...view middle of the document...

As such, Bata is able to decentralize control of its political strategy--giving subsidiaries significant autonomy in managing relations with their respective government. For example, although Bata prefers not to export production, in the countries where the governments does not like it only imports raw materials but does not export, Bata adjusts to the local laws. Since important issues will vary from country to country, Bata must allow subsidiaries to identify the appropriate issues (step one of political strategy formulation) themselves. The strategies that are formulated to deal with those issues are likely to be subsidiary specific as well [2].2.2 Different ways interacting with different political and legal environmentBata's presence in dozens of countries complicates its political strategy. For the company to succeed, its management must carefully analyze whether its corporate policies will fit a desirable political and legal environment. According to the different governments' demand of organizational ownership, Bata opens the global possibilities through partnerships, licensing arrangements, consulting, technical assistance, franchising, or direct ownership and management of subsidiaries in different countries or even being nationalized [3].Bata has showed its ability to operate in countries with different political systems. Besides its successful investments in democratic countries that have more freedom such as the United Kingdom and the U.S.A., Austria, Bata also operates under the totalitarianism countries. Its manufacturing units' shifting to the communistic country---China, where the economy has changed to market-driven is a good example. And Bata realizes that the wisest way is to remain silent in some totalitarian countries. When its local operation in Uganda was nationalized and denationalized reiteratively, Bata continued to operate as nothing has happened [3].A mentionable issue is rebuilding the organization in Eastern European countries that have moved away from communism to various degree democracies. After the Second World War, communist dominated governments nationalized Bata's operations not only in the former Czechoslovakia, but also in Poland, Yugoslavia and East Germany. But after that special period, Bata successfully proved to the Communists that they could rebuild organizations in the economic restructuring of countries that used to be behind the Iron Curtain [4].Take the investment in Czech republic for example, during the Second World War, Bata had to leave the former Czechoslovakia where its operations started because the political situation had worsened. After many years communists took power in Czechoslovakia and confiscated Bata. However, following the "velvet divorce" of the former Czechoslovakia, the Czech Republic rushed into a market economy with entrepreneurs being agents of social change [5]. After negotiating with the government over conditions surrounding the organization's investment in Czech...

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