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Best in Franceon
ITT FLYGT FranceMay 2005
By: Gilles RIVIÈRE, Christine LEMKE, Walid MALOUF, Bryan O’DRISCOLL, Antonio CELESTE
ITT FLYGT International
ITT FLYGT is the World Leader of submersible pumps, mixers, and accessories
• Founded in Sweden in 1901 ; bought by American conglomerate ITT in 1968
• French office created in 1960
ITT FLYGT International
ITT FLYGT has a large panel of activities
• Products for collecting and treating waste water
• Water accessibility and flood management• Large construction site management
… Also used in mining, industrial processes, agriculture and aquaculture
ITT FLYGT Operations
• Headquarters: Stockholm, Sweden• Partially or wholly owned subsidiaries in
130 countries worldwide• 4,000 employees (300 in France)
Headquarter Principal Factories Distributors Susbsidiaries
ITT FLYGT Operations
• Presence in France– Distribution Center– French headquarters in Nanterre– 12 sales offices in France
• No more than 200km from each customer
– Some product development done in France
ITT FLYGT France Performance
France is ITT FLYGT (Flygt)’s best performing country in Europe
• Twice the revenue of Germany, 30% larger than UK
• Revenue and Profit– 2004 Worldwide revenue: €873million– 2004 French revenue: €85.7million
• 2004 French profits: €7.3million
• Strong and consistent financial performance– No losses in history of company
Customer Profile
• 4 Main Customers Segments
– Municipalities & Water companies• Veolia, Lyonnaise des Eaux, …
– Construction and Mining• Bouygues, Vinci, …
– Industry• Nestlé, Shiseido, Rhodia, Renault, …
– Resellers & Distribution Network
Customer Expectations
French presence is necessary!• Critical for sales to municipalities in the
French market• Important for selling to large French
industrial clients that operate worldwide• Expectations
– Provide a global service– Provide maintenance, spare parts– Increasingly, provide solutions, not just products
Why France?
France was an attractive sales market for Flygt products
• Flygt believed in close and direct relationships with clients
• France had a large and growing municipal market in the 1960’s– Many municipal authorities and state-owned
public utilities that required water pumps• France chosen above several other
European targets, including Spain and Italy
Company Core Values
Core Values Integration
CustomersDirect Relationships,
Partnerships,Solutions
ProductsInnovation, Quality,
Technological Leadership
Operational ExcellenceTriple Crown Certification:
ISO 9000, 9001, 14000
Strong Fit
Strong Fit
No perceivedcultural
differences
French office perceived as
“very Creative”
PerceivedDifferences
Perceived culturaldifferences withSwedish office
Other Values
Based on Swedish and American values
Cultural DifferencesNot based on French values
Very Compatible with French culture
• Winner of Stockholm Water Prize• Sponsor of Sweden Jr. Water Prize• Protector of water for “future generations”
Environmental Sustainability
Code of Ethics
Overcoming Cultural Differences
Swedish/American Perceptions of French Culture
Hierarchical
Resistant to Change
Different ethics that seemed
incompatible
Language barriers
French Perceptions of
Swedish/American Culture
“Inflexible” structure
Constant Change
Different ethics that seemed
incompatible
Language barriers
“Tangible” ToolsIntranet Site (although in English)Free English Language Lessons
“Soft” ToolsConstant CommunicationUnderstanding, Tolerance
Ability to adaptFrench is working
language in French office
Perceived Constraints
Flygt did not perceive any major constraints when setting up
business in France• However, there were some initial
challenges– Understanding the market and the customers in
France (Municipalities & other agents in decision process)
– Securing autonomy and flexibility from parent company
• These challenges are similar in other markets
Adaptation to France
• Management Development and Motivation
– Managers trained in Sweden or USA– Well developed internal training school– Employees have access to generous external
training programs– Job switching and promotion from within– Annual performance appraisals– Regular meetings with Human Resources
Adaptation to France
• Most employees are French– Current France CEO is Swedish with extensive
international work experience– However, previous CEO was French– No non-European employees
• Workforce Planning– Elimination of under-performing employees– Layoffs rare and “difficult” in France
Major Costs in France
• Direct relationships with customers– Need to support many regional sales offices
• More expensive to hire and fire in France– Strong labor protections
• Language training for all employees– Some resistance from French employees to
speak English– Training facilitates more effective communication
with Sweden and USA headquarters
Key Benefits
• Close proximity to critical market for Flygt– Solidifies relationships with clients– Helps Flygt better understand changing
customer needs
• High Quality of Life– Location in Nanterre is seen as particularly nice
for employees (no commute)
Key Benefits
• France Metrics:– €285,000 revenue per French employee– €24,000 in profit per French employee
• Growing market– Expected growth of 5% per year, which is high
for the industry & waste water segment– Market is somewhat insulated from economic
fluctuations
Essential Advice• Before coming to France
– Find a good French consultant for integration! – Know your market very well and the decision process for
business with French administration, if applicable– Decentralize sales force
• There are many differences between the regions of France
• Adaptation while in France– Be very flexible– Hire French people, but good to have outside leadership,
too• French people know the market, but an outsider can guide
change when needed
Future Investments in Europe
• Growth potential in emerging Eastern European economies
• Caution needed to protect against financially troubled countries
We Thank …
• Paul DIETRICHSON, Président Directeur Général
[email protected] • Laurent CHAIGNE-BERTHOLET, Directeur Marketing
• Frédéric LOFFREDO, Directeur Financier [email protected]
• Frédéric MAIRET, Directeur des Ressources Humaines [email protected]
all located at: ITT Flygt SAS29, Rue du Port - Parc de l'Ile92729 Nanterre cedex+33 146953333
Bibliography
• ITT FLYGT Annual Report 2004• ITT FLYGT France Marketing presentation
• www.flygt.com• www.flygt.fr
Our Team
• Gilles RIVIÈRE4, Rue Michelet 92100 Boulogne-Billancourt
• Christine LEMKE1, Rue Humblot 75015 Paris
• Walid MALOUFCampus HEC (Résidence Expansiel) 78350 Jouy-en-Josas
• Bryan O’DRISCOLLCampus HEC (Résidence Expansiel) 78350 Jouy-en-Josas
• Antonio CELESTE105, Rue Haxo 75020 Paris
