El AL in France Best in France Case Study September 2004 Group BS2: Sylvie Hellmann, Astrid Enge, Andres Weil, Rick Banerjee The Company What is El Al’s business? It is an Israeli airline linking Israel to several key destinations around the world.
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Best in France Case Study
Group BS2: Sylvie Hellmann, Astrid Enge, Andres Weil, Rick Banerjee
It is an Israeli airline linking Israel to several key destinations around the world.
El AL came to France in 1948, date of creation of Israeli state
From France, flights are only to Tel Aviv: 3 flights a day from Paris and 2 flights a day from Marseille.
Because of the importance of the Jewish community in France.
Over the past years El Al has expanded its schedule to 38 weekly flights between North America and Israel, its biggest market, from 31 flights. El Al accounts for almost half the country's air travel, the rest divided among Continental Airlines Inc. and several other U.S. and European carriers.
However, nowadays no more modifications are forecasted (good frequencies, time table and on-time schedule).
El Al plans to reopen offices in Scandinavia and further wants to develop the Italian and Spanish market
Jewish community, business men, tourists, pilgrims, non-
Jewish (2-3%) travelers.
Security: Many controls and interviews, checking all bags (pilots and technicians graduated from Israeli air force, each flight carries an armed air marshal, the cockpits are sealed to protect against attempted intrusions…)
Belonging: Feeling of already being in Israel as soon as they board the plane (white jets with the blue Jewish stars emblazoned on their tail)
Service: Kosher food, the flight crew speaks Hebrew, it is forbidden to smoke on board
Price: Competitive with Air France.
French presence helps to satisfy clients’ demands: The ADP, civil aviation, Ministry of Transport collectively helped to bring the level of service requested by passengers by working together with El Al. They ensured that the airports provide adequate requirements requested by El Al as well (especially for security).
Consequently, other airline companies are actually reassured when El Al is at the airport because it is an indication that the level of security is high (meeting El Al’s extremely high standards).
El Al’s policy is to always evaluate international destinations in which demand is sufficiently high, and flights will be profitable.
El Al is everywhere in Europe but recently closed some offices in Scandinavia because of low demand. To answer the demand in these countries, El Al proposed vouchers through other companies to carry passengers towards another destination in which El Al has a Sales office and flights.
For El Al, the political situation between Israel and Arabic states affects selecting destinations, which is a unique situation compared with other airlines.
It is expected once a peace agreement is signed, passenger demand to Israel will certainly increase, resulting in additional destinations and/or frequencies to existing ones.
The French Jewish community is the largest in Europe.
It is very well organized in terms of communication through radio, newspapers, synagogues, consistory.
Paris is the most important destination after New York.
The core values that fit with perceived French values are:
The core value that may not always fit with perceived French values is:
By building good relationships with local actors such as ADP, civil aviation, other airline companies and explaining the needs for such decisions.
No specific constraints (they came in 1948)
Labor rules are very inflexible.
Labor law is specific to each location, however, The US is an example of a location with flexible labor laws, that are more favorable to the employer.
Recruitment: For managers, the recruitment process is managed by the Tel Aviv head office. For employees, the hiring process is specific to each country, but the final selection must be confirmed by the head office.
In Israel, it is possible to stay in CDD for many years whereas in France the maximum length is 18 months.
Compensation: Wages are adapted to comparable levels according to standard of living (expenses etc.) in each country. For example, wages in France are 40% higher than in Israel.
Management Development: To promote a manager, the head office must agree to it, and valid reasons and proof of performance must be presented to them. The final decision lies in the head office and not in the country office.
Workforce Planning: Each hiring or firing of employees (including CDD, interim and interns) must be validated by the head office.
Performance Appraisal: Each manager organizes an interview with his subordinates to evaluate performance.
Motivation: If objectives fixed by the Head office are reached, all countries receive a bonus. Therefore, it is a 100% fixed pay. Bonuses are linked to profits of the group and are distributed equally to all commercial agents.
Job Description and Assignment: Discussed with the head office for top management and decided by local managers for employees.
Communication Policies: Guidelines come from Tel Aviv head office but each policy is adapted locally.
International Transfers, Use of Expatriates: For each key managerial position such as Finance Director, Regional Director etc. people are sent as expatriates by Tel Aviv and remain for 5 years. Apartments and specific advantages are offered to them. If they do not achieve their goals, they are sent back to Israel immediately.
Training: Proposed only for a specific mission. E.g.: to work as a ‘chef d’escale’
Using an indexed reference, when launching a business in Europe, there are significant startup cost discrepancies among countries in the airline sector. It costs 100 units in Amsterdam, 167 units in Barcelona, 200 units in Belgium and 223 units in Paris.
Any or all HR related costs (hiring, paying, training, dismissing, etc.)
Hiring costs, dismissing costs, social security costs (congés maladie, etc.), vacations costs (CP) do not exist or are much lower in Israel.
Standard operating costs (real estate, travel, taxes, cultural consultants, etc.)
Communication constraints (language, infrastructure, communication costs, etc.)
No specific communication constraints. All employees in France speak 2 to 3 languages (English, French, Hebrew)
Integration of French managers into global organization
This is not an issue as French managers are not used as part of the global organization.
Primarily, increased market share and profitability
Product quality (defect rate, product cost, productivity, design, customer image, etc.)
Revenue/profit (revenue/profit per French employee)
69 employees: Average profit is 2000 Euros per employee
Lowest is 1600 Euros and the highest is 3400 Euros
Location benefits (transport, time zone, quality of life, employee satisfaction with France, etc.)
El Al was privatized last December and therefore does not receive any specific assistance from Israeli government. Nor do they receive assistance from the French government.
Market Potential (product penetration or growth potential, customer demands for cultural adaptation of product(s), launch platform for other European countries, etc.)
Market potential depends a lot on political stability in this area. Israel has strong potential and people are very enthusiastic about discovering it, but are still frightened of attacks. These days, market development is more towards South America. In Europe, El Al wishes to re-open Scandinavia and Denmark offices and boost sales in Spain and Italy.
Before going to France
Gather information about competitors and French regulations
Adapting to France
Develop good relationships with local contacts.
Future investments in Western Europe
32 Bd des Capucines 75002 Paris, Email: firstname.lastname@example.org, Telephone: 33 1 44 55 00 33
32 Bd des Capucines 75002 Paris, Email: email@example.com, Telephone: 33 1 44 55 00 07
32 Bd des Capucines 75002 Paris, Email: firstname.lastname@example.org, Telephone: 33 1 44 55 00 07