Bata Ltd - Bata Shoes Returns to the Czech Republic in 1991
Bata Shoes Returns to the Czech Republic in 1991
In the 1970s and 1980s, the manufacture of shoes began to shift increasingly to Pacific Rim countries, where lower labor costs provided a competitive edge that proved devastating to shoe companies around the world. With its widely cast operations and well-established distribution network, Bata was better able to compete, but it too suffered from a softening in its business.
With the fall of communism in the late 1980s, Bata was able to return to the country where the family business was founded. The company was not able to resume ownership of its prior assets, which has been combined with other Czech shoe operations, nor did Bata wish to be encumbered with facilities that the communists had neglected for more than 40 years. Nevertheless, Thomas Bata was committed to establishing a business in his native country. After some study, the management team elected to focus on a retail distribution business and a modest manufacturing facility, one that was not part of the old Bata operation. A small factory established by the communist regime was found acceptable, and the company then selected a number of retail locations, which would total a 20 percent market share, and presented the government with a joint venture proposal that was accepted in late 1991.
Thomas Bata, at the age of 80, elected to retire in 1994. His son, Thomas Bata, Jr., had been serving as president since 1985. According to The Globe and Mail, Thomas, Jr. "took over at a time when the international shoe maker was experiencing heightened competition from strong global marketers. The movement toward free trade challenged its network of quasi-autonomous national companies. Mr. Bata tried to make changes, but insiders says he lost the support of key members of the board." He was widely expected to succeed his father, but to the surprise of many, Stanley Heath, a Canadian with considerable executive experience with RJR Nabisco, took over as president and CEO to assume the day-to-day running of the business, while the younger Bata assumed the chairmanship, ostensibly charged with focusing on the "big picture." He soon left the family business and moved to Switzerland. His father, with a reputation as an autocrat, was slated to become honorary chairman, but the post proved to be far from ceremonial, as he continued to be involved in the company's operations on a day-to-day basis and was not reticent about letting management know his opinions. Little more than a year after coming to Bata, Heath resigned for "personal and family reasons." Taking over for Heath was a loyal company man, Rino Rizzo, who had been with the Bata organization since 1969. In 1999, Bata brought in Jim Pantelidis, an executive who had no experience in the shoe industry, to assume the CEO position. Pantelidis's background was in retail gasoline sales, and during his career he had worked for one of Canada's largest chains, Petro-Canada Corporation. Pantelidis instituted a plan to develop regional shoe lines, as opposed to lines created for individual countries. In addition, he wanted to create economies of scale by building regional infrastructures. The goal was to use the regional infrastructures to position the Bata brand on a global basis.
The tenure of Pantelidis lasted just two years. In late 2001, Thomas Bata, Jr. returned, gained control of the business, and was named chairman and CEO, while Pantelidis left to "pursue other challenges." Bata began to reorganize the company, essentially running the business out of Switzerland. It remained to be seen if he would be able to succeed where outsiders had failed in the effort to transform Bata from a federation of stand-alone local subsidiaries into a truly international company.
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