Page 93 - DMGT545_INTERNATIONAL_BUSINESS

International Business

notes longer be used in South Africa and all ties with Canadian headquarters were broken. In
addition, the new buyer apparently assured that the jobs of the workers, most of whom are
black, would be preserved.
Bata also faced problems trying to get back into Slovakia. As noted earlier, the Bata operations
started in former Czechoslovakia and as Eastern Europe opened up, Bata immediately tried
to recover lost investments in the Czech Republic and Slovakia. The problem was that the
Czech and Slovak governments wanted compensation for the factories, but Bata (known as
Tomas Baoa in his homeland) felt that the factories were still his. He eventually opened one
factory in the Czech Republic and 48 retail outlets where the company sold 3 million pairs
of shoes in the first year, capturing 11 percent of the Czech shoe market.
However, things were not so rosy in Slovakia. Tom Bata said that the problem is that “his
company’s former Slovak properties ended up in the hands of the Slovak government, which is
not interested in giving them up. Instead, he is expected to rebuild his Slovak business using his
own resources.” He says that he is still waiting for the government to keep the promise it
made when his 45,000 employee factory in Slovakia was nationalized. Compensation was
promised by the communists but never paid. The official government position is that a
new restitution law has been put into effect and that Bata has to raise his ownership claims
with the new owner of the factory. If the two parties cannot agree to a joint solution to the
problem, Bata is welcome to file a lawsuit against the new owner to be settled in Slovakian
courts. Despite his success in the Czech Republic, Bata had not sold one pair of shoes in
Slovakia by the beginning of 1996.
Questions
1. Evaluate the different ways in which Bata has interacted with foreign political
systems in its investments and operations abroad.
2. Do you think Bata made the correct decision to pull out of South Africa? How do you
think the political events in South Africa in the past few years might change Bata’s
strategy for South Africa? How should Bata formulate a strategy for determining
whether or not to re-enter South Africa?
3. What are the advantages and disadvantages to both Bata and the Republic of Slovakia
of having Bata take over his former operations? Why do you think the Czech Republic
allowed Bata to re-enter the market, but Slovakia had not, at the end of 1995?
4. Why do you think Tom Bata, Sr., has joined the list of entrepreneurs who cannot bear
to loosen their grip on businesses they started? What is the risk to Bata, Ltd. if Tom
Bata, Sr. cannot find a way to retire?
5. What are the reasons which forced Bata to close down 20 percent of its retail outlets
in 1995 and 1996?
6. What was the policy of Bata towards export production?

Source: John D. Daniels and Lee H. Radebaugh, International Business Environments and Operations, 8 ed., 1992, Pearson
th
Education Asia, p.130.
5.4 summary

This unit attempts to give an overview of the functions in as simple manner as possible.

l z Government regulations and agencies at all levels of government have had a major impact
on how businesses operate.

l z In order to manage business activities in a complex, ever-changing society, governments at
all levels have created numerous regulatory agencies through the legislative process.

88 lovely Professional university