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The Best in France Case Study Project

The Best in France Case Study Project. COTE Commercialisation d’Ouvrage et de Techniques pour l’Environnement. Sixte CAMBRA Audrey FRANC Pedro MAQUEDA. Framework.

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The Best in France Case Study Project

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  1. The Best in France Case Study Project COTE Commercialisation d’Ouvrage et de Techniques pour l’Environnement Sixte CAMBRA Audrey FRANC Pedro MAQUEDA

  2. Framework “To discover and document how foreign firms operating in France succeed in their chosen marketplace by adapting to the French context.”

  3. Our method • 1. Activity : The product ( R&D ) ? corporate organization ? corporate strategy ? goals ? competitors ? • 2. Historic overview: parent company? Why chosing the French marketplace? Any prejudices? • 3. Settling : operationnal aspects • 4. Settling / RH strategy: recruitement? expatriates? cultural background of the firm? • 5. Key factors of success • …what would you recommend to a form wishing to operate in the French marketplace?

  4. COTE: general overview • 53000 € capital company originally controlled by Générale Routière • Today controlled by APPIA (Eiffage group) through the acquisition of Générale Routière and consequently COTE COTE main activity: Application of slurry surfacing, ECF (Enrobés Coulés à Froid) · Eiffage ranks n°5 among the five top European groups for Construction and Concessions. · Turnover (2002) = 6.94 bn Euros · 46000 employees within 500 subsidiaries, among them APPIA · Appia is Eiffage’s road pole · Comes from the merger of 3 large entities: SCR-Beugnet, Gerland et la Générale Routière. · 15 000 employees in 260 centers, 57 quarries, 30 binder plants, 171 coating units. · 1,9 bn euros turnover (2001)

  5. What are the ECF? • A mix of granule (eventually other materials)and latex-modified hydrocarbon emulsion • Very thin coats that are: • waterproof • rugged, non-skid • strongly resistant • Producing and implementing are done simultaneously by specific machines which mix the components in situ • Drying time: between 15 and 20 minutes • Use: renovation / new sites, cities and country • Can be colored : security (cycle tracks) & esthetics

  6. ECF French market • Departmental / national roadways. • 25 millions m2 of building sites for 2002 • 6 millions m2 for 1993 strong and regular growth

  7. ECF French market Localization of the activity: Most of the sites located in the Northern part of France

  8. Value added • Cheaper than classical products: • Less preparatory work • Lower amount of raw materials like gravel and petrol • Cold coating (35° instead of 170°C) does not require a large energetic expense • Easy to manufacture and transport • The technique improves acoustic environment • Easy to apply, rapid drying

  9. BOUGHT BY Générale Routière COTE 1997 RASCHIEG GmbH SPLIT KUTTER COTE: history COTE: a newly French company with German origins and close relationships with KUTTER Objectives: • To strengthen Générale Routière by acquiring a significant expertise in the ECF field • To penetrate the German market by buying assets of the RASCHIG Road Department • View to expand throughout the euro zone thanks to a strategically position (France as a pivot towards South / Germany towards Northern and eastern parts)

  10. COTE: history First strategy: To associate people from COTE and KUTTER, thus maximizing competencies and rotations: • Temporary workers hired by Cote + « available » people from Germany • French or German machines • Team leaders chosen for their ability and experience depending the type of work Drawbacks: • Cultural clashes: communication, authority, language • What to do with the 35 hours? • French taxation not so unfavorable, but the cost of French workers hired in France is high « French competitiveness on personnel costs is low » G. Hostier • French workers: lack of expertise concerning the ECF application

  11. Ensures marketing in France • Conducts the projects (managers) • Produces the Emulsion (France and Germany) COTE • Brings trained supervisors • Brings machines and technical means KUTTER COTE: final organization 1999: PARTNERSHIP

  12. Ensures marketing in France • Conducts the projects • Produces the Emulsion (France and Germany) COTE COTE/KUTTER: keys of success CEO (Gérald Hostier) COO (Vincent Ramousse) Project Manager (Frédéric Launay) Project Manager (Jean Marie Brendle) Organization chart

  13. Ensures marketing in France • Conducts the projects • Produces the Emulsion (France and Germany) COTE COTE/KUTTER: keys of success (I) • COTE is legally responsible for the project lead in France (marketing and sales) • Technical aspects are treated by KUTTER (outsourcing) • The invoicing is based upon: • The hiring of machines • Employees cost • Royalties per project CEO (Gérald Hostier) COO (Vincent Ramousse) Project Manager (Frédéric Launay) Project Manager (Jean Marie Brendle) Organization chart

  14. Ensures marketing in France • Conducts the projects • Produces the Emulsion (France and Germany) COTE COTE/KUTTER: keys of success • Project Managers are in charge of: • Preparatory work / contact with the French clients • Leading and coordinating KUTTER teams, e.g. German workers • They must be perfectly bilingual CEO (Gérald Hostier) COO (Vincent Ramousse) Project Manager (Frédéric Launay) Project Manager (Jean Marie Brendle) Organization chart (the most valuable criteria to be recruited)

  15. Ensures marketing in France • Conducts the projects • Produces the Emulsion (France and Germany) COTE COTE/KUTTER: keys of success · The main key of success for the ECF from COTE is the Emulsion used · Emulsion produced in France by Générale Routière using the German technology (laboratories and factory located in Ciry Salsogne) · Producing a high quality emulsion within the Group has several advantages: · low production cost · Optimization of distribution costs · Quality granted

  16. Partnership with COTE to: • Get some work for the teams • Get the ECF product (in France and Germany) COTE/KUTTER: keys of success KUTTER is the leading company in the German market of ECF... 70 000 implemented Tons per year 3.5 millions m2 60 % market share However, the market is clearly decreasing: 18 millions m2 (1993) 6 millions m2 (2002)

  17. Brings trained supervisors • Brings machines and technical means KUTTER COTE/KUTTER: keys of success • The teams have the know-how of the German technique, which is a competitive advantage towards the French (coating at 35°C instead of 80°C) • Usually COTE hires a bilingual worker to facilitate communication with Kutter • Usually the teams are paid on m2 implemented, and not on hours worked... • - Their work pace is much more intensive • - They remain in France over the weekends if the construction site is far from Germany to decrease travel costs

  18. Brings trained supervisors • Brings machines and technical means KUTTER COTE/KUTTER: keys of success · COTE reimburses Kutter based on the m2 implemented (cost known in advance with high accuracy) · The offer price is fixed by mutual agreement with the management of KUTTER depending on: - where the work is located - the characteristics and/or difficulties of the work - an estimation of the competitors' price - market interests COTE has neither maintenance costs, nor depreciation related to the equipment

  19. COTE: keys of success Competitive advantages: • The ECF mix (high quality and reliable product made in France using technology developed in Germany) German teams: · High specialization · High performance German equipment: · No maintenance costs · No depreciation costs French and bilingual management staff : · Awareness of the French market and how to move in it (ex. HEC diploma) · Managerial and engineering skills purely French • International partnership... international ambition: · Exporting the ECF mix · Promising future in third countries

  20. Future 2002: APPIA bought Générale Routière (COTE’s mother company)… 2003: COTE takes in charge APPIA’s ECF activity, which means that… APPIA implements the COTE management model for ECF Consolidation and growth of market share for COTE in France Recognition of the quality and success of the COTE – KUTTER partnership International expansion: · Searching for partnerships to enter new emerging markets (Switzerland, Belgium, Poland, Macedonia…) · And other countries with good climatic environment for implementing the product (Italy, Greece, Spain, Portugal)

  21. To conclude… That case illustrates some specific issues · France remains very attractive in terms of business: • A crucial market in volume and value • A pivotal role in the European expansion process · The quality of the upstream workforce is never questioned: managers are French, but… • The first teams were French made but the cost was too expensive for COTE and the ECF technical lack was evident… COTE preferred contracting with KUTTER (outsourcing) On the long term / in France Is that kind of partnership a threatening phenomenon in terms of jobs?

  22. Should France push for an harmonization of fiscal policies at a European level? How to find a way to eradicate negative stereotypes on the working conditions it offers? To conclude… Why did not KUTTER penetrate the French market itself ? • General complexity of the system: no visibility of the French system of taxes • Cost of personnel • Irrational « fears » about general conditions of work (35 hours, power of unions and tradition of conflict…)

  23. THANK YOU…

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