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Introduction to organizations

Introduction to organizations. Study on IBM France by Anne-Hélène LANDARET Stanislas GUERINI Malik LAKOUBAY François ROLAND. Main issue. France’s business background is very specific How do foreign companies adapt to it ?

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Introduction to organizations

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  1. Introduction to organizations Study on IBM France by Anne-Hélène LANDARET Stanislas GUERINI Malik LAKOUBAY François ROLAND

  2. Main issue France’s business background is very specific How do foreign companies adapt to it ? The IBM case : Why does Big Blue chose to become more American to adapt to France’s context ?

  3. History : from 1910’s until 1993 A totally French company : 99 % of French people working for IBM France An illustration of French typical capitalism An business hardware supplier Core business : production of electro-mechanic machines Customers : administration, Insurance and financial companies IBM Corp. wants every subsidiary to be specific to its country Every country has its own commercial department, factory and research laboratory.

  4. History : from 1993 to 2000 A time of trouble IBM starts to suffer from the Japanese competition and the economic crisis. A software designer IBM’s historic market is declining and the transition is difficult A new type of management Subsidiaries lose their independence and their specificity Lou Grestner suppresses all sources of extra costs Half of the French staff is fired for economic reason (the first time since the launching of IBM France)

  5. IBM today : from 2000 to 2003 A US company on the French territory American executives are sent in France A service provider IBM no longer produces hardware or software. IBM’s strategy is center on Business transformation and Added value

  6. Management The French pattern The company is like a family : paternalism Employees are the most important part of the company. (satisfaction polls every two years in the whole company) An independent company 4 factories and 2 research labs are settled in France. The production capacity of a country is proportional to its contribution to its sales 22,500 employees. Sureffectifs : 10 to 20 %.

  7. Management A bureaucracy IBM’s structure is as slow and heavy as a French administration ! A too French system ? The reason of the reengineering of IBM France Choice between a structure compatible with France’s social statements and financial efficiency

  8. Management Sales and Net profit in billion Francs Profit/Sales in %

  9. Management The US pattern The weight of the shareholders : IBM France says to keep the equilibrium between the satisfaction of the customers, the employees and the shareholders, providing value to the last ones appears to be the main objective. Development of a mutual fund : the American way to solve the issue of pension complementary system in France. Suppression of the wide offices built on behalf of the employees’ well being. Development of “Home Office”.

  10. Business Model Industrial Activity : business to business activity. Customers are administrations or big firms. Catalogue of products (standardization) The role of the sales engineer, the pillar of the firm. Incremental business Triple Sourcing Three production location for every component, in Europe, America and Asia. The factories around the world share their ideas

  11. Business Model The solution of the production issue in France is… relocating (in Asia, Eastern Europe…) The “Lou Grestner period” is a time where IBM wants to cut every cost A high-tech production IBM takes advantage of the high level of education of the French.

  12. Business Model Only remains the service activity : Purchase of a Price Waterhouse Coopers IBM still produces computers and basis software, but its goal is to give solutions that “add value” for the customers. The concept of Business or process transformation It is no longer a commercial and industrial activity, but consulting. The sellers do not deal with the system administrators, but with the chief executives.

  13. IBM in France The launching : Perfect adaptation to the country From the 1910’s to the 1980’s IBM corp. let its French subsidiary be managed by French people to suit the context The decline of IBM traditional activity The firm can no longer face the new economic context As an answer, IBM Corp. includes some US elements in the French management The American management IBM France makes profits again, after a complete transformation. It is organization is no longer different from IBM Corp.’s

  14. Credits Thanks to M. Jean Cordelle, Business Development Executive in IBM France. Challenges, 2002-03-07 n°173, Stiel Nicolas “Grestner se retire, IBM va bien, merci” Harvard Business Review, Nov 200, Richard S. Tedlow “What titans can teach us” Option Finance, n° 403 May 1996, Lucie Chevallard “IBM maitrise le cout de sa comptabilité” ; n°343 Feb 1995, Laure Berny “IBM, pionnier des fonds de pension” ; n°257, May 1993 Anne Feitz “IBM innove pour s’offrir CGI” Fusion et acquisition, n°46, MAY 1993 “IBM absorbe CGI-Informatique” Usine Nouvelle, n°2389, Dec 1992 “IBM sous-traite son informatique” Nouvel Economiste, n0 811, Sept 1991, Christine Baudelaire “IBM : la bataille de France”

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