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Best in France Case Study HEC January 2005 CABLE & WIRELESS European Headquarter in Paris, France Best in France MBA 2006 ES2-I Group Mr Minh-Tho DAO

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Presentation on theme: "Best in France Case Study HEC January 2005 CABLE & WIRELESS European Headquarter in Paris, France Best in France MBA 2006 ES2-I Group Mr Minh-Tho DAO"— Presentation transcript:

1 Best in France Case Study HEC January 2005 CABLE & WIRELESS European Headquarter in Paris, France Best in France MBA 2006 ES2-I Group Mr Minh-Tho DAO Mr Timo PFLUEGER Ms Ying ZENG Mr Yuri VENTURA

2 Best in France Case Study HEC January 2005 We Thank Mr Bruno DAVOINE Chief Executive Officer, C&W France Vice President of Enterprise Europe, C&W Europe Joined C&W in June PA tel: +33 (1) Mr François GUIRAUD Marketing Manager, C&W France Joined C&W in Tel : +33 (1)

3 Best in France Case Study HEC January 2005 Best in France The "Best in France" Case Study Project is an initiative organised by Professor Michael Segalla Ph.D. of the HEC School of Management designed to identify what adaptations firms must make when opening business units in France. Targeted firms are companies that have their Headquarter outside France and that decided to start a business unit in France.

4 Best in France Case Study HEC January 2005 Executive Overview Company presentation Why did C&W go to France ? Constraints in France Adaptation to France Comments on other countries General advices Final conclusion

5 Best in France Case Study HEC January 2005 Company Presentation C&W Profile Cable & Wireless is a British telecommunication company, with international customers in 80 countries, that provides IP, voice and data services to business customers. It provides also services to other telecoms carrier, mobile operators and providers of content, application and Internet services. Cable & Wireless was founded more than 130 years ago in the UK and has today more than employees in 80 countries worldwide. Turnover Group 2003/2004: £ 3,868 million. C&W relies on its worldwide network backbone.

6 Best in France Case Study HEC January 2005 Company Presentation C&W France Profile C&W France was founded in 1990 as the first European location within a continental Europe development strategy. During the rapidly growing days (mainly the Internet bubble) C&W France had reached 565 employees. Today C&W France has approx. 65 employees and has its headquarter in Paris-La-Défense. Turnover Europe: £ 262 million

7 Best in France Case Study HEC January 2005 Company Presentation C&W France products and customers In the 90s, C&W France started by selling telecommunication B-end solutions to businesses. In 1998, C&W France started selling A-end solutions also. During the Internet bubble, C&W has oriented its strategy around IP services through internal and external growth (Acquisition of Internet companies in France) and tried to reach residential customers. After the Internet bubble blew up, C&W decided to revert back and just address the market of enterprises that have an international infrastructure.

8 Best in France Case Study HEC January 2005 Company Presentation C&W France products and customers Now C&W France sells the group key products to French entities of international business customers. They dont address the strictly national businesses anymore. The future promising product of C&W will be Voice over IP services which is regarded as the main point of growth and competitiveness. C&W will probably not enter the residential business in the near future as the price war in that segment makes it unattractive.

9 Best in France Case Study HEC January 2005 Why Did C&W Come To France? The Ride for continental Europe European market (including UK) is bigger than that of the U.S. This market was critical for C&W to penetrate in the late 80s. Once an IT company like C&W decided to expand in continental Europe, 3 major markets where considered at the first place for their size and IT infrastructure : - UK (already domestic market for C&W) - Germany - and France Then the other European countries were considered. During the Internet bubble, continental Europe growth has continued through acquisitions of more than 20 small European companies, including 2 in France.

10 Best in France Case Study HEC January 2005 Why Did C&W Come To France? 1990: Germany vs. France As the most important European IT markets are the UK and France and Germany, the decision regarding where to enter the continental Europe market had to be made between France and Germany. Market structure All main targeted customers in France are located around Paris, i.e. that a French market centralized around Paris has many advantages compared to the German market where the big companies are located at several different locations like Frankfurt, Stuttgart, Munich, Berlin, Hamburg etc. 80% of the French business is generated in the Paris area. Geographical location & travel expenses France is central to Europe and has a big international airport (Charles De Gaulle). Travel expenses are lower in France not only because of the central location of Paris but also due to much lower flight costs comparing Paris and Munich as starting points.

11 Best in France Case Study HEC January 2005 Infrastructure The IT infrastructure (Telecommunication, Internet,…) is very well developed. The cost of office spaces is quite the same in France and Germany. Labour legislation The social systems regarding expenses for people and involvement of unions and work councils are comparable in France and Germany (a bit easier to deal with in Germany though). The French 35 hours law is not a big deal as people end up by naturally working more in C&W. In Germany, people work the minimum they need to work. Why Did C&W Come To France? 1990: Germany vs. France

12 Best in France Case Study HEC January 2005 Qualified employees It looks like Germany and France have the same advantages of getting access to qualified employees at all levels. Education France is regarded as the European country with the most international education system. Quality of Life Managers tend to prefer staying in Paris compared to many other big cities in Europe. Why Did C&W Come To France? 1990: Germany vs. France

13 Best in France Case Study HEC January 2005 Adapting to France Constraints and Adaptations Market specifics The European/French market develops and is structured in a different way than the company domestic country (UK). Education has to be made towards UK in order for the top management to understand the local market and products that should be developed. Then, it is mandatory to put local people in the management team of the local business unit. Customers From the marketing perspective there are different approaches necessary for each country, e.g. the way to reach potential clients is totally different in France compared to Germany or the UK. (For example in France there are special events on which a telecommunication company has to be present while As the headquarter of Cable & Wireless is located in the UK, the France (and other European) office has to find a way to balance the interests of the HQ with the needs of the European / French markets.

14 Best in France Case Study HEC January 2005 Adapting to France Constraints and Adaptations in other countries fairs and special journals are more important.) In France it is more important than in any other country to reach the decision maker directly, which might not only be the CIO but also the CEO. Authorities C&W France dont have to deal a lot with governmental organizations. Nevertheless, it has to sometimes cope with the ART which is the French telecommunication sector regulator. Financing In France, the access to venture capital is more difficult and the people put in the board are not really involved in the business. In the opposite, In the UK and the US, the board member who was appointed by venture capitals will be highly involved in the business. So it becomes easier to look for US or UK capital.

15 Best in France Case Study HEC January 2005 Labour legislation The labour legislation is very strict and lacks of flexibility in France so special attention is put on that topic at C&W. It is possible to make several people redundant only in case of loss and still then, the company needs to explain to the authorities how they will maintain an agreed fixed number of employees. The cost of hiring and releasing employees in France is very high in time and effort and cost because of the French labour legislation that involves long procedures including discussions between unions/work councils and management. Also in practical, unions dont really have the will to discuss with management and dont make any difference between different profiles of concerned employees. Adapting to France Constraints and Adaptations

16 Best in France Case Study HEC January 2005 The labour legislation was very costly for the company especially during the difficult time of the internet bubble blow where C&W had to reduce headcounts. C&W has recently tremendously shifted the allocation of resource of its operations departments from France to Germany partly because of this lack of flexibility. The top management has to take the constraints of the French social system into account and has to develop strategies of relationship (or avoidance) with the unions and the work councils. Management style The management style in the UK is different to France but C&W France had to adapt to the mother company, e.g. the way to deal with conflicts and targets. Adapting to France Constraints and Adaptations

17 Best in France Case Study HEC January 2005 Comments on other countries Italy Italy causes the biggest problems for entering as the business is spread out all over the country and the market is fragmented among a lot of small companies. The market is mature but the way people do business is not as mature as the rest of Europe. Spain Spain can be the perfect bridge to South America if you want to do business there as well. Nevertheless, C&W dont plan to expand a lot in South America. UK UK is the first country to go if a company needs to penetrate Europe because of its business similarities with the US. The communication style is very different, e.g. in regards to the way how to deal with conflicts.

18 Best in France Case Study HEC January 2005 General Advices For Opening a BU in France Size of Business Unit labour Be very careful of the headcount because of the flexibility problem. Try to keep the size of each B.U. below 49 to avoid influence of Unions and work councils otherwise be prepared to deal with them in difficult times. Carefully plan and budget the cost of labour that is very confusing for foreigners (pay to the employee, pay to the government, social security, retirement plan, cost of headcount reductions…) Mother company and subsidies in Europe Always make sure that the mother company understands that there is a difference between the individual countries within Europe and that the European market is heterogeneous. Europe can generally not be treated as the US for example! Acquiring local companies When generating global growth through local acquisitions, it is a mistake to appoint the management of the local company into group positions for integration reasons without ending the former local responsibilities.

19 Best in France Case Study HEC January 2005 Final Conclusion France is a good place to do business if local requirements are known and the mother company is properly educated. Local management is the key to success in any European country.

20 Best in France Case Study HEC January 2005 References C&W web site : Interviews from Mr Davoine and Mr Guiraud Mr Davoine did a presentation at Cambridge University about European business and its pluricultural environment and recommended us these 2 books: « We Europeans » from Richard Hill - Europublications « Euro Managers & Martians » from Richard Hill - Europublications


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