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General Mills in France Best in France Case Study, 2003 - 2006

General Mills in France Best in France Case Study, 2003 - 2006. HEC MBA Program, Jan. 2005. Mark Bryce - July 2002. General Mills. Overview. Overview General Mills Company Product and clients Why General Mills came to France Company values and adaptations to France

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General Mills in France Best in France Case Study, 2003 - 2006

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  1. General Mills in FranceBest in France Case Study, 2003 - 2006 HEC MBA Program, Jan. 2005 Mark Bryce - July 2002

  2. General Mills Overview • Overview General Mills • Company Product and clients • Why General Mills came to France • Company values and adaptations to France • Key Constrains and costs • We thank General Mills France 20 Min. HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  3. General Mills • Overview of General Mills HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  4. Overview General Mills • Overview • World's 6th largest food company • $12.3 billion net sales in 2004 • Profits of $1.05 billion world-wide • 27'000 employees globally • Strong Brands and marketed in more than 100 countries • Global Headquarter is in Minneapolis • Located in France since 2001 HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  5. Overview General Mills • Global Food & Beverage Companies, ranked by sales Source: Companies’ most recent Annual Reports Sales figures reflect EITF accounting changes Nestlé, Sara Lee, Unilever, ConAgra figures reflect only packaged food sales; non-packaged food sales (i.e. Hanes, meat processing etc.) not included. HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  6. 76-year Compound Annual Growth 250 General Mills: 7.5%* Dow Jones Industrials: 4.8% 200 Inflation: 3.2% 150 100 General Mills Dow Jones Industrials 50 0 1933 1928 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2004 1938 1943 1948 Overview General Mills • Stock Price Performance, 1928-2004 * Adjusted for Stock Splits and Spin-offs Sources: Economic History Services (Inflation data) and Dow Jones & Company, Inc. HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  7. Berwick, UK Arras, France Weesp, The Netherlands Labatut, France San Adrian, Spain Inofita, Greece Nanjing, China Gunma, Japan Shanghai, China Guangzhou, China Nasik, India Batangas, Philippines Cagua, Venezuela Belo Horizonte, Brazil Brisbane, Australia San Fernando, Argentina Sydney, Australia Lanus (Buenos Aires), Argentina Johannesburg, South Africa Melbourne, Australia Auckland, New Zealand Overview General Mills • International Production Facilities HEC MBA, Jan. 2005 intake

  8. 1921 1924 1928 1951 1965 1990 1992 2001 1869 International Overview General Mills 1866 Acquired the PilsburyCompany Activities in France 1992 1960 Introduced snack food through JV with Pepsico Bought Biscuiterie Nantaise -leading sweet biscuit and sandwich cookie company 1990 Introduced cereals with joint ventures with Nestle HEC MBA, Jan. 2005 intake

  9. Overview General Mills - France • Overview France • $558 million net sales in 2004-> whole Europe • Important and growing French market • 175 people in France • Average age in France = 32 years • Staff stays 5.2 years in company in average • 58% female, 42% men ( in France) • European Headquarter is in Nyon, Switzerland • In France since 2001 HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  10. General Mills - Brand in France • Green Giant® premium quality vegetables • Sweet Corn • Asparagus. • Palm hearts. HEC MBA, Jan. 2005 intake

  11. General Mills - Brands in France • Old El Paso®-Mexican Food range • Fajita Kit. • Guacamole Seasoning Mix. • Flour Tortillas. HEC MBA, Jan. 2005 intake

  12. General Mills - Brands in France • Betty Crocker® Products • Chocolate Fudge Brownie Mix. • Blueberry Muffin Mix. • Devil's Food Cake Mix. • Vanilla Frosting. • Bac-O's bits HEC MBA, Jan. 2005 intake

  13. General Mills - Brands in France • Häagen-Dazs® American Ice cream. • Crèmes glace • Croustillante HEC MBA, Jan. 2005 intake

  14. General Mills • Company Products and Clients HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  15. Company Products and Clients • What products are produced in France? General Mills offers a wide range of premium products globally and in France. The following 4 are produced, packed and labelled in France: • Häagen-Dazs (Ice Cream) • Green Giant (Corn) • Chili Con Carnet • Asparagus (only labeled in France) (Géant Vert) HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  16. Company Products and Clients • Why are these products produced in France? • Häagen-DazsPillsbury the former owner of the brand, built a plant near Arras, France. High quality Eggs and Milk were widely available. Arras offered Pillsbury very attractive conditions for building its plant. Nowadays, the factory is an important source of employment in that region.From a logistics point of view, Arras is very attractive. HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  17. Company Products and Clients • Why are these products produced in France? • Green Giant (Géant Vert)South France offers one of the best places for corn production. The mix of earth and climate is unique.The corn plants were a joint venture between "Coop de Pau" and "Pillsbury" (the former owner of the the brand). Today, General Mills owns the whole production. The quality achieved is a realcompetitive advantage.The seeds come from USA.But only France can assure a 100%GMO free production during thewhole Supply Chain. This is a major criteria for French customers. HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  18. Company Products and Clients • Expansion plans for these production lines. • Häagen-DazsGeneral Mills increased the production plants in Arras with 4 new lines. Increasing sales and product range explain this extension • Green GiantGreen Giant plant in South France increased its labeling activity.The Green Giant plant labels products also from Spain. Since Spain increased its production, Green Giant had to increase its activity as well. HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  19. Company Products and Clients • Company Clients Retail Business • Super markets • premium stores Food Services • Restaurants • Hotels • Street Cafes • Cinemas • Food delivery services HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  20. Company Products and Clients • What are the clients expectations? • Professional Service • High Quality Product • Lowest possible price • Very fast and flexible delivery • People in France whom they can meet and call • Managers who can react quickly if issues arise • Traceability of the whole supply chainA new law in France since 1. Jan. 05, requires suppliersto pass all product information to the customer. HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  21. Company Products and Clients • How the French presence helps to satisfy clients? • Premium products in the food industry need local presence. Otherwise you do not understand the customers and hence, do not reach them. • Although General Mills is a global company, it plays in a multi-domestic market. • Customer preferences are different in France ->need adaptations • Laws are different in France (especially in the food industry) • General Mills is more successful in those countries in which it is locally present HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  22. General Mills • Why did General Mills come to France HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  23. Why General Mills came to France • Company approach to international growth • Buying Pillsbury in 2001, was a strategic move to grow internationally and in Europe. With Pillsbury, General Mills acquired important brands and locations. • General Mills plans to grow in Europe, ASIA, US and Latin America. General Mills invests in one country at a time, makes its business stable and then moves on. • General Mills will follow its international expansion strategy:-Product Innovation-Channel Expansion-International Market Expansion-Margin Expansion HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  24. (Taiwan) 1996 1997 1992 1995 1999 2000 2001 2003 Why General Mills came to France • International accusations HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  25. Europe Japan S. Korea Mexico Puerto Rico S. Africa Taiwan Greece Malaysia Morocco New Zealand Nordic Countries Guam / Pacific Islands Argentina Australia Venezuela China Colombia Hong Kong 1996 1997 Pre-1994 1994 1995 1998 1999 2001 2002 Thailand Brazil India Israel Philippines Lebanon Singapore Why General Mills came to France • International expansion HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  26. Why General Mills came to France • Why was France important? • With the acquisition of Pillsbury, Häagen-Dazs and Green Giant (Géant Vert), production facilities in France were acquired. • The climate and earth for corn is very favourable. The production is at its right place. • Arras (Häagen-Dazs production) is geographically very attractive. It is in the middle of Europe and has good Harbour, Airport and road access. HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  27. General Mills • Company values and adaptations to France HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  28. Company values and adaptations • Core Values of the company • Championship brand • Championship people • Championship innovations • Championship performance HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  29. Company values and adaptations • Core Values of the company • Brands - building leading brands that our consumers trust around the world – making lives easier, healthier and more fun… • People - diverse, talented, committed people – constantly learning and growing and contributing to our communities. • Innovation - developing and implementing innovative ideas to build our brands and drive our business • Performance - delivering outstanding performance for our investors, our customers, our consumers and ourselves HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  30. Company values and adaptations • How company managed to instil its value in the French unit? • In the US, the company is your family 24/7. People feel very attached to the company. Employees bring children to their workplace. • In the US, the company organises much more events to integrate private and business world. • In France, employees prefer more to distinguish between job and private life. • This request for more privacy is embedded in local activities and the work environment. HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  31. Company values and adaptations • Examples of adaptations through HR in France • What's on a chart, people follow • You can fire somebody quickly • Orders are stated straight forward • People get rewarded in front of their colleagues • Only what's in the contract must legally be followed • Legally, you need evidence to fire somebody • French do not like orders, wordings must be changed • For a French, it is sometimes strange to be rewarded in public HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  32. Company values and adaptations • Cultural Challenges between USA and France in general • Failures in US are seen as normal (you grow, so try out new things) • If you do well, you get rewarded • If you make mistakes, people motivate you to improve • Education is flexible, so people become flexible • French try to do no mistakes (hinders them sometimes to move on) • People expect you to do everything correct. Why a reward? • If you do mistakes, you get smashed by the others • Education is very uniform, everything is standardised HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  33. Company values and adaptations • Cultural Challenges between USA and France in general • General Mills tries more and more to profit from each country and combine the best(this counts not only for France) • HR executives are seen as key to achieve this goal. Hence HR members travel to different locations to exchange knowledge • Local reports are allowed to be written in the local language. Global reports are written in English. • Bonus, benefit and training are available everywhere HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  34. General Mills • Key Constraint Costs HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  35. Key Constraint Costs • The high cost factors in France • Labour cost is high for a company • Production limitations ->35h week • Taxes are very high in France • Hiring and firing policies are stricter in France • But all the key benefit presented in the previous chapters require local presence in France. And since the French market is profitable and strategically important, the trade-offs are acceptable HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  36. Nyon, Switzerland Key Constraint Costs • The high cost factors in France... BUT • For tax reasons, all European products belong to Switzerland until the physical sales gets done. Only after sales, the product gets officially "imported" to France. Marketing, R&D, Production and 20 top executives are based in Nyon, Switzerland since 2002. Infrastructure Presence HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  37. Key Constraint Costs • BUT... how does it work? • Called "The European Trading Model" • All European brands and products belong to Switzerland • R&D, Marketing, Logistics and 20 top executives are in Nyon • France has "only" factories and produces exclusively for Switzerland • Products do not get physically moved to Switzerland • But once a French customer gets invoiced, Nyon invoices General Mills immediately • The "European Trading Model" is an invoice and money transaction model HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  38. Key Constraint Costs • Example of The European Trading Model • France invoices $100 to a French customer • French Sales effort, administration and wages expenses are $20 • Nyon invoices France immediately for its services and expenses -> $75 • Profit for General Mills France = $5 (100-20-75). This profit gets taxed in France. • Nyon's Logistics, R&D and Marketing expenses ->$50 • Profit for European Headquarter General Millsin Switzerland = $25 (75-50) These are not real figures. They were just chosen for illustration purposes HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  39. Key Constraint Costs • Essential Advices for other food companies coming to France • French culture is different. You need to know your customers and hence, have local people in your company. • Don't just bring American Managers for negotiations. Even your global clients in France will be French. • Food quality standards in France are very high. Luxury market is a niche market. Know in which niche you want to play in France. • Several food products in France are protected. Do your "homework" before trying to import your product. • Chose a non English name for your food product. French prefer non American Food brands. HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

  40. General Mills • We thank: • Murielle SchultzHead of HR General Mills France Murielle Schultz@genmills.com • Renata De StefanoKey Account Manager Häagen-Dazs Food Service FranceRenata.DeStefano@genmills.com • Philippe RouviereLogistic Manager FrancePhilippe.Rouviere@genmills.com • General Mills FRANCEEnergypark 1 32 Avenue de l'Europe 78941 VÈlizy Cedex HEC MBA, Jan. 2005 intake Mark Bryce - July 2002

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