Bata Corporation operates 40 manufacturing facilities in 26 countries and has a retail presence in 55 countries. Africa, Latin America, Asia Pacific, Latin America, Europe, and South Asia are the five regions in which the corporation operates. In the South Asia region, Bata products are made in India's biggest footwear center at Batanagar, Kolkata (Bata Corporation, 2018). The growth of Bata's business in this region has been aided greatly by India's exchange rate. However, the currency has been depreciating for the past five years (Yahoo finance, 2021). The reasons for the rupee's depreciation have been attributed to the 2017 monetary policy announcement. The situation is expected to worsen due to the ongoing pandemic with India being the latest epicenter of the epidemic.
When compared to the US dollar, the Indian rupee has grown less expensive. As of now, one US dollar is worth 73.300 Indian rupees (Yahoo finance, 2021). A weaker currency raises the importation costs and boosts exportation of goods. In this situation, the Indian rupee is a weaker currency, influencing Bata Corporation's activities in the region. As a result of the sinking currency, importing commodities has become more expensive, and the firm has resorted to using locally accessible raw resources. However, locally available resources have proven to be a disadvantage to the company, as they hurt the quality of the company's products.
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Local providers, on the other hand, have benefited from currency weakening. The need for locally available materials has been gradually increasing, providing a significant boost to local businesses. Bata Corporation's increased rate of exporting its products has given them access to a wider range of consumers in various nations. Increased sales in other nations have encouraged economic growth and job creation while also raising profitability for overseas markets. It has also allowed the Bata Corporation to diversify market options, ensuring that the company would still sell its products in other countries even if the domestic economy begins to suffer.
Changes in currency rates would have to prompt the organization to make business decisions to adjust. One of the decisions would be to increase their production levels to meet demand in overseas markets. As a result of this choice, the amount of locally available raw materials will need to be increased, as importing them will be a costly option that must be avoided. In addition, the workforce will be affected by this decision. To boost production levels, the company will need to expand its workforce. The net effect is that the corporation's expenses will have increased, and recouping the money will be entirely dependent on successful profit-making. Due to the increasing expenditures that must be fulfilled regularly, if the company does not earn a profit on the sales, the company's future operations will be in disarray.
A week currency has its own set of business investment opportunities (Zhangqinglong, 2011). The Bata Corporation will be able to compete in foreign markets due to a weak Indian rupee. That is because the firm can offer its products at a lower cost than other countries with strong currencies. This element will give the company a fantastic opportunity to change its prices and sell at a competitive price. Increased sales will have a direct effect, and the corporation will be assured of favorable returns. However, the unpredictability of international pricing is a clear risk for a company that relies largely on exporting commodities. Even with manufactured products, whose prices are more predictable, export-oriented businesses risk losing if global demand falls, leaving massive quantities of idle capacity (Kneller & Timmis, 2016). Transportation risk is another danger that the company may face. There is a danger of damage, theft, or loss while shipping a product. It is quite improbable that the export business will succeed in the long run unless there is a sufficient level of commitment.
References
Bata corporation. (2018, September 10). The company . Bata Corporation. Retrieved June 12, 2021, from https://thebatacompany.com/the-company/
Kneller, R., & Timmis, J. (2016). ICT and exporting: The effects of broadband on the extensive margin of business service exports. Review of International Economics , 24 (4), 757-796. https://doi.org/10.1111/roie.12237
Yahoo finance. (2021). Currencies . Yahoo Finance - Stock Market Live, Quotes, Business & Finance News. https://finance.yahoo.com/currencies
Zhangqinglong. (2011). The effects of monetary policy of currency internationalization: A simple analysis framework. 2011 International Conference on Business Management and Electronic Information . https://doi.org/10.1109/icbmei.2011.5914499
