IR Case Study
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Bata India Limited was originally incorporated in 1931 as BataShoe Company Limited to manufacture and market footwear and related products. It has undergone several name changes over the years. Bata faced significant labor problems at its major factories in West Bengal and Bangalore, with the Bata Mazdoor Union (BMU) in West Bengal being a central issue. In the 1990s and 2000s, Bata struggled financially and made major changes like top management overhaul and factory closures, exacerbating tensions with unions and leading to shutdowns and violence, often influenced by political parties. Communication failures between management and workers as well as political interference contributed to the long-running labor disputes faced by Bata.
IR Case Study
- 1. A case study on Bata By S. Rama krishnan(301228) K. Raj Kumar(301225)
- 3. History of the Company The Company was originally incorporated as BataShoe Company Limited on December 23, 1931 under Indian Companies Act, 1913 for the purpose of manufacturing and marketing of all types of footwear,footwear components, leather and products allied tothe footwear trade. Subsequently, the Company changed its name to.Bata Shoe Company Private Limited. on April 6, 1956upon conversion into private company. The Companychanged its name from Bata Shoe Company PrivateLimited to .Bata Shoe Company Limited uponconversion to a public company on April 18, 1973.
- 4. Contd.. The name was once again changed to the currentname, i.e. Bata India Limited, on April 23, 1973. The Company was promoted by Leader A.G., St.Moritz, Switzerland, a member of the multinationalBata Shoe Organisation (BSO) with a 100% EquityShareholding, and consequently, the Company too isa member of the BSO. The BSO consists of independently run companiesoperating in several countries across the world. BataLimited, Toronto, Canada acts as the headquarters of BSO
- 5. CONTD.. Bata Shoe Organisation provides an importantinterchange of new manufacturing technologies,machine design, factory lay-out plans advertisingmarket forecasts, fashion trends, modernmarketing techniques, new material testing andalso information on the most advanced machineryand technology for production of shoes are madeavailable to the Bata group of companies,including Bata India Limited
- 6. Case facts Throughout its inception Bata had shown At the centre of Bata has always growthin profits, with all labour faced labour the only loss shown in problems was problems in 1995, but in2000 Bata the BMUor itsmajor factories again began Bata Mazdoor in West Bengal and its downward phase union in West Bangalore. whichwas mainly due to labour problems. Bengal.
- 7. Contd.. The company after making a huge loss in 1995wanted to save itself by bringing in W.K Westonwho was an expert in turning around performance. Weston brought in his own team and changed theentire top management of the company. Weston made major changes like overhaulingoperations and selling the Bata headquarters inCalcutta to cover losses. The commercialdepartment was also shifted to Bata Nagar despiteresistance from trade unions
- 8. Contd. The management also retrenched 250 managers aswell as juniors and froze recruitment activities whilefilling up gaps through internal transfers. What added fuel to the fire between management andtrade unions was the assault on Weston and a senior officer by members of the union. Although Bata had plants in Faridabad, Bangalore,Patna, Hosur but most of the output came frombatanagar factory in west Bengal which was plaguedby influences of political parties which madenegotiation with trade union very difficult.
- 9. Contd.. Assault case influenced the SVP to stop renewedinvestment plans in batanagar which broughtinference from CPIM the ruling party at the time.This brought violence which was more of apolitical issue then labour. Meetings between the management and unionfailed which led the factory to be shut down for several months. A lockout also took place in Bangalore peenyafactory in 2000 due to disputes regarding expiry of wage agreement.
- 10. Contd.. • Lifting of the lockout also did not solve anyproblems as employees demanded thatsuspended colleagues be called back. • In 2004 Bata began a huge downsizing activity inwest Bengal which it justified by stating that it wasoutsourcing its finished products from china • This also led the workers to approach thegovernment to intervene on their behalf.
- 11. Inferences The reasons for labour problems in Bata co. Ltd were as follows:- • The management failed to make any meaningfulcommunication with the workers before making anydecisions. • Bata had opened factories where trade unions andpolitical parties had a very strong and negativeinfluence. • The interference of political parties ensures that thematters became violent and through which suchparties could satisfy their own agenda.
- 12. Contd.. • The company took drastic steps very frequently like lock down, retrenchments, downsizing. • The top management only show the benefits of the company and not the problems of workers. • The workers were heavily influenced by tradeunion and had no logic in decision making. • Expatriates do not know about Indian culture andsensibilities of the Indian workers and hence the decision was not very beneficial.
- 13. MERCI