ECONOMIC PROJECT

ANALYSIS OF FOOTWEAR INDUSTRY AND TRAITS

OF AN ENTREPRENEUR
-SADDHVI NAYAK

200101114(2020-2025)
 DECLARATION

I hereby declare that the project work entitled “Footwear Industry

Analysis and Traits of an Entrepenuer” submitted to the Dr. Ram
Manohar Lohiya National Law University, Lucknow is a record of an
original work done by me under the guidance of Dr. Mitali Tiwari,
faculty of economics, the Dr. Ram Manohar Lohiya National Law
University and this project is submitted in the partial fulfillment of the
requirements for the award of the degree of B.A.L.L.B (Hons.). The
results embodied in this have not been submitted to any other
University or Institute for the award of any degree or diploma.
 
 ACKNOWLEDGEMENT
This research paper would not have been accomplished without the generous
contributions of individuals. First of all, I express my gratitude to the Almighty, who aided
me with his strength, wisdom and patience to complete this project as a term paper.
Additionally, I express my gratitude and deep regards to my teacher for the subject Dr.
Mitali Tiwari for giving me the freedom to work on “Footwear Industry Analysis and
Traits of an Entrepenuer” and also for her exemplary guidance, monitoring and constant
encouragement throughout the course of this research paper.
I would also like to thank the authorities of Dr. Madhu Limaye Library who provided the
remote access of the library to provide the research material.
Moreover, I also thank all my batchmates and seniors who aided me along the way, and
my family and friends for their constant encouragement without which this assignment
would not have been possible.
I know that despite my best effort some discrepancies might have crept in which I believe
my humble professor would forgive.
THANKING YOU ALL.
Saddhvi Nayak.
 TYPES OF FOOTWEAR

BOOTS SHOES SANDALS

SLIPPERS HEELS FLIP FLOPS

 FOOTWEAR INDUSTRY IN INDIA
• India is the second largest global producer of footwear after China, accounting for 13% of global
footwear production of 16 billion pairs. The footwear sector is a very significant segment of the
leather industry in India. 95% of India’s total footwear production goes to meet its own domestic
demand.
• Footwear exported from India are Dress Shoes, Casuals, Moccasins, Sport Shoes, Horracies,
Sandals, Ballerinas, Boots, Chappals made of rubber, plastic, P.V.C. and oter materials. The
Government has permitted 100% Foreign Direct Investment through the automatic route for the
footwear sector.
• The global import of footwear increased from US$124.43 billion in 2013 to US$134.943 billion in
2017, growing at a CAGR of 2.1% . In 2017, India’s share in the global import is 2%. India’s export
of footwear components had increased from USD$ 320 million in 2012-2013 to USD$335.24
million in 2016-2017.
• 90% of India’s export of footwear goes to European countries and the USA. In 2016-2017, the main
markets for Indian footwear are USA, UK, Germany, France, Italy, Poland, UAE, Spain, Belgium
and Netherlands. These 10 countries together accounts for 80.53% share in India’s total footwear
export.
 INTENSITY OF INDUSTRY RIVALRY
• Nike: American multinational corporation that is engaged on designing, developing, manufacturing, marketing and
selling world’s top most shoes for athletics. Its headquarters are in Beaverton, Oregon, U.S. and it provides it’s service
worldwide, it also manufactured various sports accessories and equipments. It promotes it’s product through sponsorship
of famous celebrity athletes, professional teams and college athletic teams. Nike’s revenue from footwear is 24.22bn USD
And it’s market share in 2020 was 47.14%. North America is the biggest market of Nike.
• Addidas: German multinational that designs and manufactures shoes and is the second largest brand after Nike. It’s
headquarter is in Herzogenaurach, Germany and it provided service in whole world, it also produces apparel, sportswear,
toiletries. The three strips are addidas’ identity mark, having being used on the company’s clothing and shoe designs as a
marketing aid. The group is made up of Reebok, TaylorMade and Runtastic. Addidas’s revenue from footwear segment is
15.14bn USD and it’s market share was around 42%.
• Skechers: American lifestyle and performance footwear company and is the third largest athletic footwear brand in the
United States. It’s headquarter is in Manhattan Beach, California, US and it does not provides service in whole world, It
only produces footwear and apparel. It uses celebrity-driven advertising and it host an annual walk to raise money for a
non-profit that helps connect special-needs students with their peers. It’s revenue from footwear segment in 2019 was
US$5.22 billion and it’s total assets in 2019 was US$4.89 billion.
• Bata: Swiss domiciled multinational footwear and fashion accessory manufacture and reatiler founded in the town of
Zlin. Now, it’s headquarter is in Lausanne, Switzerland and it provides service worldwide, it produces footwear and
accessories. The company is the world’s leading shoemaker by volume and there are several brands and label of the same.
The revenue of Bata India Ltd. In 2020 was 30.5 billion Indian rupees and it is the largest retailer and manufacture in
India.
INTENSITY OF INDUSTRY RIVALRY
180
160
140
120
100
Column2
80
IN 2020
60
40
20
0
NIKE ADDIDAS SKECHERS BATA
 INTENSITY OF INDUSTRY RIVALRY
WORLD RANK IN 2020
4000

3500

3000

2500

2000

1500

1000

500

0
BATA NIKE ADDIDAS SKECHERS
 THREATS OF POTENTIAL ENTRANTS
• Capital investments: footwear industry does not require high capital investment, it can be set up wit a medium
amount of money. So, capital investment is not a barrier to entry in case of footwear industry .
• Economies of scale: fixed costs or start up costs are not as large as compared to any other capital intensive sectors.
Economies of scale can be achieved with a medium volume of units and new product development costs are also
low in this case. So, economies of scale is not a barrier to entry in footwear industry.
• Product differentiation: footwear industry as seen a lot of innovations over the years and various companies have
targeted the emotional attitudes of the customers. If a new entrant wants to compete in a non-niche segment there is
a lot of scope, by designing standard footwear with existing technologies and still earn profits. Customer loyalty is
not that strong in this industry in Indian context because mostly Indians are lie in middle earning group, which as
low income and cannot afford high styles brand like Nike and Addidas. So, overall product differentiation is not a
considerable barrier to entry.
• Access to channels of distribution: factory outlets, specialty and departmental stores are mostly captured by big
brands such as Nike, Reebok, etc which mostly is bought by the people living in urban areas. But sporting good
stores and small shops are more popular in rural areas which as 72.5% of Indians living there, so any new entrant
can focus these people and can make their name in this business. Plus, the advent of e-commerce has also opened
various opportunities for small companies. This is also a low barrier entry.
Seeing all the above factors, we can say that the threat of new entrant is high in this industry and due to this we see
many local brands in footwear doing great business.
 THREATS OF POTENTIAL ENTRANTS
There are many other threats of new entrants such as :
1. Research and development expense : low in this footwear industry
2. Specified knowledge: not much knowledge required in this field as to set up in
this business, one has to know only how to make footwear from machine. Any
prior experience will help in this a lot.
3. Production cost: there are many cities in India in which the production cost is
relatively lower than some cities. There are many cities which are not as
expensive than some cities, the metro cities are generally expensive than non-
metro cities.
4. Labor cost: if one wants less labor cost, there are some cities which has less
cost. In rural areas, the labor cost is generally low.
BARGAINING POWER OF SUPPLIERS AND
BUYERS
• BARGAINING POWER OF SUPPLIERS:
In this footwear industry, the bargaining power of suppliers is low because the company has many
suppliers. There are large number of suppliers that can supply raw materials such as rubber,
plastic, leather and other raw materials needed to make the footwear. There is no cost associated
with switching of suppliers as the quality remains the same. Using backward vertical integration
acquisition with suppliers is common in the footwear and apparel industry, there is a fragmented
supplier concentration.
• BARGAINING POWER OF BUYERS:
This industry has high bargaining power of buyers for wholesalers and low bargaining power of
buyers for retail customers. It is high for wholesalers because they can switch with low cost
buyers for the same, they just want it at low cost and have no loyalty towards any company. It is
low for retail customers because they have to maintain loyalty with the brand. The high-end
brands and large companies are able to decide the price points for their products. Other than
differentiated products such as athletic, orthopedic or dance shoes, substitutes available are
usually of lower quality. There are almost no bulk buyers in this industry and there is less
sensitivity to price due to brand recognition and brand loyalty.
 THREAT OF SUBSTITUTE GOODS

The threat of substitutes in the footwear industry mainly arises from rival brands,
apart from the larger brands with higher market share, there are also several
smaller local brands with limited market share and presence that compete with big
brands like Nike, Puma, Addidas and etc. These brands consider each other as
their biggest competition but several other smaller local brands also make and sell
footwear at lower prices and gain profit. Overall the threat of substitutes goods is
low because of product quality, brand image, market presence and marketing
strategy of the companies. It is low because the big brands enjoys high brand
awareness in most corners of the world and this is the leading factor that helped
them to manage the competitive pressure and grow its market influence. So,
concludingly the threat of substitutes is low due to high brand loyalty.
 POLITICAL FACTORS
Political factors play a significant role in determining the factors that can impact footwear industry long term
profitability in a certain country or market. The achieve success in such a dynamic Retail industry across
various countries is to diversify the systematic risks of political environment. Government of India supports the
footwear industry in enhancing its competitiveness through up gradation and modernization by providing
financial assistance.
• Departmental of Industrial Policy and Promotion (DIPP) provides a comprehensive scheme for modernization
and technology up gradation in all the segments of the leather industry, from tanneries, footwear, footwear
components, saddlery, leather goods and garments.
• Government had sanctioned Rs 290 Crores for this project and will be implemented through two Program
Implementation Units (PIU) namely CLRI and FDDI.
• Financial assistance will be provided to the extent of 30% of the cost of the plant and machinery for SSI and
20% of cost of plant and machinery for other units for both categories for technology up gradation and
expansion.
Industry has repeatedly been affected by issues such as worker’s right and child labor law. Union workers in
manufacturing plants picket their employers and this impacts production. This can cause delays for retailer in
getting spring and fall fashions on time, this negative publicity may impact a small footwear retailer’s sale and
profits.
 ECONOMIC FACTORS
Footwear industry is a highly working capital intensive due to substantial investments required in
maintaining high raw materials well as finished goods inventory and extending significant credit to clients,
especially in the case of footwear exports. Owing to weak economic condition in India since the past few
years, domestic footwear companies into high value product segment have witnessed moderate sales growth
mainly due to pressure on their volumes.
• Prospects: footwear is expected to perform strongly over the forecast period with a constant value of CAR of
7% growth. The GOI announced a number of initiatives for the footwear industry in the budgets presented
including cut in excise duties of footwear products and to attract foreign direct investment would also help
propel growth of the industry.
• Trends: rising disposable income, especially among the lower and middle income classes is still allowing
consumers to increase their footwear purchases. The economic scenario also started showing positive signs
of recovery leading to consumers increasing spend.
• Competitive landscape: Bata India Ltd remained the leader in footwear with a retail value share of 7% in
2017 and it continues to have a strong presence in terms of number of stores across the country. The
company although not the strongest performer in percentage growth terms, managed to register the biggest
increase in absolute terms during the year.
 SOCIAL FACTORS
• With the advent of technology and increase in average income levels of the people in the past years, because
of this there is an upward shift in the lifestyle of people the footwear industry in India is going to prosper.
• Now, people attitudes and opinions are changing towards footwear and they are more attracted towards
branded footwear rather than a cheap one with less durability. With all the major brands already having their
manufacturing units in India the sector is set to boom.
• Consumer demand is driving industry trends that affect footwear manufactures. These demographic trends
relate to the size of the various demographic groups and their particular wants. If we see, we find that mostly
kids and adults has the most needs of different types of footwear.
45.00%
40.00% Demographic structure
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
0-14 years 15-24 years 25-54 years 55-64 years 65 and above
 TECHNOLOGICAL FACTORS
• Technological competence of India, particularly for mid and high priced footwear segments have proven
beneficial in the boom of this industry. India offers benefits like low cost of production, abundant raw material
and a huge consumption market. Due to India’s low cost of labor many multinational footwear brands have also
come and establish in India, many local footwear brands have also cropped up and entered the market. Resource
strength of India in the form of materials and skilled manpower is a comparative advantage for the country.
• The footwear sector has matured from the level of manual footwear manufacturing methods to automated
footwear manufacturing systems. There are approximately 4500 units involved in manufacturing footwear in
India and that is the reason India is called as sleeping giant in footwear terms.
• Many multinational and local brands are spending a lot on innovating and improving on the existing trends to
match the consumer demands and cultural trends of India. Breakthrough product innovations coming in the
sector enhancing comfort, agility and durability.
• With the rise in technology, more and more buyers are shifting towards e-commerce websites for purchasing and
value deals. There are mainly two reasons for that: 1st) it saves a lot of time of consumers and 2nd) it gives a lot of
variety to choose from.
• Many companies are using digital media for their product advertising and sponsoring at major events organized
in India. With the use of digital marketing along with the famous and people’s favourite superstars and
sportsperson there has been constant growth in this industry.
 SWOT ANALYSIS
Strengths: Weaknesses:
•Easy availability of low cost of labor. •Less number of organized product manufactures, highly
•Exposure to export markets and exporter-friendly government unhygienic environment and environmental problems.
policies. •Uneconomical size of manufacturing units, little brand image,
•Comfortable availability of raw materials and other inputs. lack of fresh investment in the sector and delayed deliveries.
•Massive institutional support for technical services, designing, •Low level of labor productivity due to inadequate unskilled
manpower development and marketing. labor, difficulties in accessing to testing and technical services.
•Tax incentives on machinery by Government. •Non availability of quality footwear components.
•Well-established linkages wit buyers in EU and USA. •Low machine and material productivity.
•Managements with business background become quality and •Weak support infra-structure for exports.
environment conscious. •Lack of quality job work units.
Opportunities: Threats:
•Use of information technology and decision support software •Entry of multinational in domestic market and fast changing
to help eliminate the length of production cycle. fashion trends are difficult to adapt for Indian industry.
•Growing fashion conscious globally, there is a lot of scope for •Stiff competition from other countries and improving quality to
diversification into other products. adapt the stricter international standards.
•Growing international and domestic markets and exposure to •Developing countries are restoring to more non-tariff barriers
newer markets through Fairs/BSMs. indirectly.
•De-reservation of the footwear sector, use of modern •Limited scope for mobilising funds through private placements
technology and exhibit strengths in manufacturing. and public issues.
•Aim to present the customer with new designs.
TRAITS OF AN ENTREPRENEUR

SANDEEP KATARIA
 TRAITS
• Sandeep Kataria is an alumunus of IIT-Delhi and XLRI-Jamshedpur. He was a gold
medalist of the 1993 PGDBM batch at XLRI. He has work experience of 24 years at
Unilever, Yum Brands and Vodafone in India and Europe.
• He is a Indian entrepreneur, marketing manager and marketing director which most of
the Indians were unaware of. He became famous recently when he was appointed as the
global CEO of Bata, first Indian in the long history of Bata in 126 years. He was India’s
CEO previously and he replaced Alexis Nasard in August, 2017.
• Initiative: Sandeep Kataria has initiative trait of an entrepreneur as he has the ability to
turn his and his team ideas into action. He has the courage to create, innovate and take
risk, as well as the ability to plan and manage projects in order to achieve objectives. He
has also awareness of ethical values and promote good governance.
• Looking for opportunities: he always uses opportunity for making profit for his company
and also not looses his customers in making profit. In the corona time, every company’s
value and share was falling down including Bata but Sandeep Kataria maintained his
customers not to go anywhere and very soon started to make rise in his company in
whole world by making Bata available online.
 TRAITS
• Persistence: he has the ability to push himself to complete his objective in the stipulated
time even if the finish line seems comically out of reach. It’s about tenacity and
stubbornness, in the best sense of both words. Any project does not come with
completion in one attempt, it requires many attempts to complete it and having patience
at that time is the biggest quality.
• Information seeker: Sandeep Kataria definitely keeps all the information about every
item of his own company as well as his rivalry. He keeps all knowledge because it would
help him to know about his competition and keep up with his company to overcome his
rivalries.
• Committed work: he is committed to his work in every way and does his every work
which will only relate to his company. If we see his past, we find that he did every work
when he was CEO of India’ Bata company and make the company grow in all aspects.
• Planner: Sandeep Kataria first plans everything and then takes his next step. He plans
himself as well as listen to his team for any further change in plans, overall he thinks,
plans, sees his outcomes and then executes his plan.
 TRAITS
• Self confidence: the entrepreneur has full confidence over himself, his company and his
team. Through his confidence, he had made many profits in the Bata company as
marketing manager, marketing director, CEO of Bata India and now as CEO of the
global Bata.
• Assertive: he has courage in his convictions and he stands up for what he believes in. He
knows how to communicate effectively, stand by his decisions and earn respect, feel
secure in his actions. He is direct, open and honest about his opinions without impacting
another person.
• Persuasive: he can easily persuade to his partners for his approach to tell them he his
right. He convinces his investors that he has a great idea and they should invest in it. He
always has the next big thing with him because he thinks out of the box.
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