group members: -noriko nakagawa -sachin gupta -aviram kalev -liem nguyen -christian frey general...

Group Members:

-Noriko Nakagawa-Sachin Gupta-Aviram Kalev-Liem Nguyen -Christian Frey

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

HEC MBA Program, Jan. 2005

Mark Bryce - July 2002

HEC MBA, Jan. 2005 intake 2

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

General Mills

20 Min.


Overview of General Mills


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



Global Food & Beverage Companies, ranked by sales


Hershey

Campbell

Heinz

Kellogg

Sara Lee

ConAgra

General Mills

Danone

Pepsico

Unilever

Kraft

Nestle

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.



Stock Price Performance, 1928-2004



General Mills

Dow Jones Industrials

76-year Compound Annual Growth

General Mills: 7.5%*Dow Jones Industrials: 4.8%Inflation: 3.2%

0

50

100

150

200

250

1933

1938

1943

1948

1953

1958

1963

1968

1973

1978

1983

1988

1993

1998

2004

1928

* Adjusted for Stock Splits and Spin-offs Sources: Economic History Services (Inflation data) and Dow Jones & Company, Inc.


Guangzhou, China

Nanjing, China

Berwick, UK

Weesp, The Netherlands

Inofita,Greece

San Fernando, Argentina Brisbane, Australia

Melbourne, AustraliaJohannesburg, South Africa

Sydney, Australia

Auckland, New Zealand

Shanghai, China

Nasik,India

Batangas, PhilippinesCagua, Venezuela

Arras, France

Lanus (Buenos Aires), Argentina

San Adrian, Spain

Labatut, France

Gunma, Japan

Belo Horizonte, Brazil


International Production Facilities


18661866

19901990

19921992Activities in France

19241924 1951195118691869 19211921 1990199019281928 200120011992199219651965

International

1960

Bought Biscuiterie Nantaise-leading sweet biscuit and sandwich cookie company

Introduced cereals with joint ventures with Nestle

Introduced snack food through JV with Pepsico

Acq

uir

ed t

he

Pilsb

ury

Com

pany



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

Overview General Mills - France


Green Giant® premium

quality vegetables

—Sweet Corn

—Asparagus.

—Palm hearts.

General Mills - Brand in France


Old El Paso®-Mexican Food

range

— Fajita Kit.

— Guacamole Seasoning

Mix.

— Flour Tortillas.

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



Häagen-Dazs®

American Ice cream.

— Crèmes glace

— Croustillante



Company Products and Clients


General Mills


What products are produced in France?



• Häagen-Dazs (Ice Cream)

• Green Giant (Corn)

• Chili Con Carnet

• Asparagus (only labeled 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:

(Géant Vert)


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.


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.


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.


Company Clients



Retail Business

• Super markets

• premium stores

Food Services

• Restaurants

• Hotels

• Street Cafes

• Cinemas

• Food delivery services


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.


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


Why did General Mills come to France


General Mills


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


International accusations



(Taiwan)(Taiwan)

19921992 19951995 19961996 19991999 20002000 20012001 2003200319971997


International expansion



EuropeJapanS. KoreaMexicoPuerto RicoS. AfricaTaiwan

Thailand

ArgentinaAustraliaVenezuela

BrazilIndiaIsraelPhilippines

ChinaColombiaHong Kong

Lebanon

GreeceMalaysiaMoroccoNew Zealand

Singapore

NordicCountriesGuam / Pacific

Islands

Pre-1994 1995 1996 1997 1998 1999 2001 20021994


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.


Company values and adaptations to France


General Mills



Company values and adaptations

• Championship brand

• Championship people

• Championship innovations

• Championship performance

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

Core Values of the company


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.


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


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


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


Key Constraint Costs


General Mills


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


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.

InfrastructureInfrastructure

PresencePresence

Nyon, Switzerland


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


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


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.


We thank:


Murielle SchultzHead of HR General Mills France Murielle [email protected]

Renata De StefanoKey Account Manager Häagen-Dazs Food Service [email protected]

Philippe RouviereLogistic Manager [email protected]

General Mills FRANCEEnergypark 132 Avenue de l'Europe78941 VÈlizy Cedex

General Mills

group members: -noriko nakagawa -sachin gupta -aviram kalev -liem nguyen -christian frey general...

Documents

hec mba program

france best

france key

france european

france company values

sales mark bryce

france average age

intake1 overview mark