Basic principles of the Bata Management System were outlined in Zeleny (2005). The
areas covered include autonomy and the business activities of workshops; the employees’
share in profits of the workshop and company; capitalization of employees
(associates) and the company bank; the Bata system of education; and the unity of the
system, binding together customers, innovation, processes and finances.
Before the Great Depression of 1930 there was the severe crisis of 1920–1923.
In 1922 it reached Czechoslovakia and affected Bata Enterprises. The recovery was
swift in the U.S. because the market was allowed to recover and reinstate its balance
without the Fed employing any of its macroeconomic tools. In Czechoslovakia there
was considerable meddling by the government, when lawyer and Minister of Finance
Alois Rasin engineered an unprecedented rise in the value of the Czechoslovak crown
by raising the interest rate to 7 percent through speculative interventions on the Zurich
stock exchange. His aim was to create deflation, but as a result of the high value of the
crown, he effectively ruined the competitiveness of Czechoslovak exports. The result
was a huge drop in industrial output and very high unemployment.
This was what Bata had to deal with. He managed to maintain full production,
though partly due to lowering both expenses and the prices of the company’s shoes.
The company’s strategy dealt brilliantly with the government’s incompetent policy.
At the time, Tomas Bata issued a public proclamation announcing that wages of his
employees were being dramatically reduced in order to maintain full production and to
provide the public with affordable shoes. In fact he went as far as reducing the retail
price of his shoes by 50 percent. At the same time, Bata pledged to provide his workers
with groceries and living essentials at greatly reduced prices.
The measures were a success and demonstrated that a good businessman can successfully
resist such adverse conditions as short-sighted governmental policy. In a conversation
with Mr. Sonnenschein, the CEO of Vitkovice metal works, Bata was asked
how he expected his workers to survive a 40 percent wage cut. After informing him
that he would supply them with essentials at highly subsidized prices, the steel baron
facetiously asked Bata if he was also a grocer. Bata replied proudly: “Yes, I am also
a grocer.” The spirit of FDR’s “little sweater company” was alive and kicking in the
Batas.