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1. Nortel Networks in France
2. Nortel Networks When did they come to France
Nortel Networks, a Canadian Telecommunications equipment manufacturing company arrived to France in the late 80s.
Nortel Networks had a particular interest in GSM Technology that drew it to France.
In 1990 Nortel entered into a joint venture with Matra to form Matra Nortel Communications in France.
In 2001, Nortel gained 100% of MNC.
3. Nortel Networks A complex story
Nortel had already an office in France at the time it join-ventured with Lagardre (Matra) to build Matra Nortel Communication. MNC was composed of many entities in 2000 : MNE, MNCD (1500 people, sold to SPEE.com), NMC (Nortel Matra Cellular), Bay Networks (500 employees in Valbonne, 2000 global), NNSA, EDSN
There is therefore a mix of culture between quite French (MNE), very bay area cultured (NNE, Bay Networks), and mixed (NMC in 2000 = Nortel Matra Cellular). This case study focuses on NMC, now including the merged NN Europe, consisting of NNE Bay Network, the mixed group within NMC.
Physical consolidation has also been performed, with previous Guyancourt and Bois dArcy consolidated in Chateaufort, and smaller sites remaining (Guyancourt 100 people remaining, 40 in Sophia Antipolis Valbonne).
4. Nortel Networks What is their business
Mostly business to business, since they stopped their mobile phone manufacturing business unit a few years ago;
They sell to telecom operators equipment and services for fixed telephone, data communication, mobile networks (GSM, CDMA, UMTS).
Nortel Networks requires to be present close to its customers, either through permanent facility (in large countries) or temporary teams dispatching for telecom network setup.
5. Nortel Networks What are their key figures
6. Company products What products are produced in France?
Nortel were interested in the GSM Technology which was not available in the U.S.A. and Canada. France is the center of expertise for GSM R&D and operations, as well as a key player for UMTS.
Operations include very few standard plants of telecom equipment (Chateaudun): products and some part of the development (software) are produced outside France.
7. Company products Why are these products produced in France (and not elsewhere for example)?
Nortel Networks was interested in the GSM Technology which was not available in the U.S.A. and Canada.
Nortel also established an interest in the UK in the same period.
However France was and remains a key operation due to the developed French presence in the GSM technology and due to the abundant technical resources and the ability to replenish talent pools.
8. Company products Are there expansion/reduction plans for these product lines?
Evolution of product lines is done as required by the market:
no investment any more in GSM
develop UMTS and in general 3G expertise
value-add into data/broadband consumer markets
The French site equilibrium is maintained over the mid-term.
9. Company's clients Who are the company's clients?
Nortel Networks main clients are public and private telecoms operators (France Telecom, Cegetel, Bouyges in France).
How will a French presence help or hurt the company's ability to satisfy client demands?
Nortel Networks has to be present physically in France to better serve its market. Furthermore, adapting a more citizen approach to the market is detrimental to its success.
10. Why it came to France Company approach to international growth
Nortel Networks presence in France was directly related to serving the French market in a first stage.
Where else did it consider
Nortel Networks considered establishing a presence in Germany. However a number of difficulties, mainly HR-related (Labor Law and worker and union issues) made it difficult for them to continue.
11. Company values What are the core values of the company that may or may not fit with perceived French values?
Nortels core values are:
Customers are the driving force
People are our strength
Quality is in every aspect
Innovation fuels our future
Accountability brings clarity
Integrity underpins everything (*) (*) it is worthy to mention that the latest was added quite recently, to reflect the new focus on this topic in the business and financiel world, and after the financial US scandals, where Nortel has its share (resignment of CFO after personal benefit seaking in stock exercise)(*) it is worthy to mention that the latest was added quite recently, to reflect the new focus on this topic in the business and financiel world, and after the financial US scandals, where Nortel has its share (resignment of CFO after personal benefit seaking in stock exercise)
12. Company values Nortel consider these values to be good business objectives and they are not dependant on culture.
No adaptations were made for the French employees. Each manager is responsible for their implementation within his unit.
Although they are rather standard values, thus not very thrilling, their basic deriving conducts are minimum requirements that are enforced as official rules.
13. Company values How did company manage to instill its values in the French unit?
Nortel Networks faced no problems in applying these values in the French workplace. However the problem they faced was how to communicate these values, as the prevalent French work atmosphere was not used to the U.S. communication philosophy between management and employees.
The official poster communication, prevailing in the US, also has less effectiveness in France, where informal and personal communication is prominent.
14. Constraints in France What are the principle constraints the company foresaw before coming to France?
Nortel foresaw no major issues. The establishment period was characterized by a major financial backing thus easing the establishment of the subsidiary. The initial stage of presence (80s to 98 was characterized by resorting to the US style of company management).
Did they discover any others?
The major constraint that were discovered over time, where HR related: conflict between French and N.A. mindset and communication problems (the French staff perceived the company communication differently than the N.A. staff).
15. Constraints in France Which are the worst constraints?
HR issues: Labor law and union requirements
How do these constraints differ with their other locations?
N.A. Labor law and union requirements were much more loose
Did the local subsidiary lose projects to other countries because of these constraints?
No projects were lost to other countries
16. Adaptation to France What kinds of adaptations did/is the company making to its people management systems?
Recruitment/Selection: We can identify two stages (Pre and Post bubble burst). Before the bubble burst, Nortel Networks in France enjoyed financial backing which enabled it to outsource recruitment and to hire aggressively. After the bubble burst Nortel Networks had to resort to drastic downsizing policies (two social plans leading to 800 staff being laid off, 90% voluntary(*). (*) two volunteers currently taking part of HEC MBA !(*) two volunteers currently taking part of HEC MBA !
17. Adaptation to France Compensation: Compensation was different in the two types of companies that coexisted: subsidiaries that had a N.A. heritage and the pure French subsidiaries. In France there is a yearly negotiation with the unions which has to take place: this is an annual obligation. Equity program were implemented and a Plan dEpargne dEntreprise today makes much more sense: the company allows its employees to buy Nortel shares.
Management Development: After the execution of the social plans in 2001, Nortel Networks has turned to a number of management development techniques to foster employee performance: Business mentor, HR courses, international meetings, mobility to lead to employee development.
18. Adaptation to France
19. Adaptation to France
20. Key Constraints Although the issues related to French labor laws and unions are costly, they are manageable.
The competition for real business hosting, in Europe, is mainly UK and France.
Cost is nearly equivalent between UK and France because:
in France, statutory and mandatory cost (that include health care) are quite high (+50% from base salary)
in the UK, discretionary costs (salaries, bonus) are higher
Some countries in Europe could be interesting but still have too many drawbacks : Spain, Germany.
Cost of HR : all HR tools are used at Nortel (hi-potential selection by managers, surveys, mentoring, coaching, international mobility this is the most expensive)
21. Key Benefits Quality is similar between France and other advanced countries
Tax laws allow sharing profit with employees on a local basis.
The key benefit is to be in western Europe, where the most business opportunities can be found. France being central, and having a historical implantation of Nortel is preferred, but has no specific tangible benefit compared to competing countries.
22. Essential Advice The complex legislation and tax situation are not enough deterrents not to consider France as a destination, because there are financial compensations, typically lower average salaries than in the US or in UK.
Human resources issues are manageable (not that hard) although this requires specific knowledge of the French law and other pertaining factors.
France ranks average on all required features. Risk is considered to be low.
23. We Thank Laurent Papaix
EMEA Compensation & talent strategy (till Nov 2003)
(33) 1 69 55 44 44
(33) 1 69 55 44 44
24. Our Team Diego Benavides