1 JATCO Best in France Case Study ES2 Group F Y.Fukui, K. Datchimoorthy A. Fremy, T. Wainwright

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice 2 1. The JATCO Company Core business: –Development, production and sales of Automatic Transmission (AT) systems to automotive manufacturers –Sales: Yen 401,109 million (FY 2002) –Employees: 7,831 (Sept. 2003) When it started French operations? –April 1, 2002 –To date activities have been limited to gathering information –Currently opening European Marketing HQ in Paris

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice 3 2. The Global Automotive Market Daihatsu Hino Mazda Isuzu Fuji Jyuko Suzuki Ford Nissan MitsubishiDaimler Chrysler Opel Peugeot BMW Seat Rolls Royce AudiV WG M Toyota Volvo Jaguar Renault Nissan D Honda 51.1% 33.4% 22.5% 49% 51.1% 21% 36.8% 33.3% 34% 22.5% 99% 100% JAPAN USA EUROPE JATCO 80% of JATCO shares haved been purchased by Nissan

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice 4 2. Global Automotive Market - Consolidation Consolidation on a massive scale has produced “Super League” 6 groups now provide > 85% of worldwide sales Consequently, Automotive Suppliers have had to respond Production Volume in ‘ 000 ’ s Cars 2002

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice 5 2. Global Automotive Market – Consolidation (2)

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice 6 3. Why France (i)? The merger of Renault and Nissan –1998 Renault gained 36% of Nissan –JATCO forced to respond Global change of business structure –Automobile Industry consolidation –Six major groups emerging –Global manufacturers need global suppliers –JATCO need to globalize fast to serve this new “Super League”

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice 7 3. Why France (ii)? Growth in outsourced AT Market –Until recently, automobile manufacturers produced transmissions in-house –However: (i) new requirements to develop ever more advanced technologies (fuel efficiency, exhaust emissions and new intelligent transport systems), and (ii) globalization and new types of transmissions being rapidly developed –Result: No longer viable for automobile manufacturers to produce transmissions by themselves AT Penetration in Europe –AT is not major in France or Europe –However, AT sales are growing fast …

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice 8 3. Why France (iii)? Potential growth in the future –Potential growth in Europe –JATCO plan to sell AT in France & Europe to ‘French’ manufacturers –JATCO do not intend to produce here Source:

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice 9 4. Company’s Clients (i) European clients? –Renault –Peugeot (potentially) –In addition, in Europe JATCO also supply: –Nissan Motor Co Ltd –BMW AG –Land Rover Group Ltd –MG Rover Group Ltd –Jaguar Cars Ltd –London Taxis International –Ford-Werke AG –Ford Motor Company Ltd –And, in reality, dealerships and end users are also clients.

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice Company’s Clients (ii) Clients expectations –Excellent quality –Excellent service Plus: –New technology such as Continuously Variable Transmission (CVT) or Step AT that deal with environmental issues –Timely development and provision of products; development, production and distribution knowledge “Intelligent Powertrain System, responding to the diverse needs of our customers worldwide”

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice Company’s Clients (iii) Obstacles to serving clients –Language: Key obstacle for JATCO to satisfy clients demands French is a hurdle for a Japanese –Communication Communicating with dealerships providing technical services.

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice Objectives & Values (i) Source:

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice Objectives & Values (ii) “Provide the highest satisfaction to customers, contribution to shareholders, and good relationships with society (global environment and communities) and materializing growth and prosperity with our clients” Technology –JATCO will develop advanced technologies to comply with potential customer demands and create and propose new values. Quality –JATCO will pursue the highest quality to the satisfaction of customers. Cost –JATCO will offer competitive and appealing prices. Trust –JATCO will provide customers with products to meet their potential demands and attentive service to gain customers' confidence Source:

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice Constraints in France French government –Treats foreign countries fairly, but provides no additional support to Japanese companies –In Asian countries, governments welcome investment, but not in France Visa issues –It takes more time to get working visa in France than in other countries (e.g. England, Germany, USA, and other Asian countries)

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice Adaptation to France (i) Expatriate system –According to the merger of Renault and Nissan, the expatriate system has been standardized. –JATCO intends to cut expatriate incentives for Japanese because transfer to foreign countries are becoming ‘normal’, and it seeks to align the incentive system with that of Renault.

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice Adaptation to France (ii) Human Resource Development –Working globally as an expatriate is a necessary condition for further promotion to top management –JATCO provides exchange programme with younger employees identified as excellent

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice Key Constraint Costs Language –Language is a key constraint because few Japanese command French –Language training will cost much and could be a key constraint in France Development of French managers –Developing managers locally is a key issue for their future growth –Technical Training costs would be a burden to JATCO

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice Key benefits of being in France Market potential –AT is not currently popular in France –Expected future growth is opportunity particularly in small / compact segments where there is increasing popularity of AT French Automotive Manufacturers

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice Essential Advice (i) Country or Region? –JATCO does not see market by country but by region –Paris and other French regions are totally different in terms of attractiveness to Japanese expatriates –Standards of living from expatriate’s point of view is very important –Education, culture, and local Japanese community are typical requirements

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice Essential Advice (ii) Local recruitment –Locality strongly affects recruitment of French employees –Paris is the best place for recruiting excellent employees, but labour costs are very high –Production cannot occur locally due to cost constraint. –Even sales office in Paris is high cost

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice Essential Advice (iii) French Government or Ministry –From experience in England and Germany, there is no strong difference between France and other countries. –However, French bureaucracy takes more time…

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice 22 We thank Name: Ryota Charlie Arai Title: Director, Sales & Marketing Company: JATCO France SAS Address: 57, Esplanade du General de Gaulle Paris la Defence cedex Tel: +33 (0)

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice 23 Other Appendix - Questionnarries

1. Company 2. Market 3. France 4. Clients 5. Objectives 6. Constraints 7. Adaptation 8. Costs 9. Benefits 10. Advice 24 Our Team Yasumitsu Fukui Tim Wainwright Alain Fremy Kamal Datchinamoorthy HEC class of September 2003