Transcript General Mills 2006

General Mills in France
Best in France Case Study, 2003 - 2006
HEC MBA Program, Jan. 2005
Group Members:
-Noriko Nakagawa
-Sachin Gupta
-Aviram Kalev
-Liem Nguyen
-Christian Frey
Mark Bryce - July
General Mills
Overview
 Overview General Mills
 Company Product and clients
 Why General Mills came to France
20 Min.
 Company values and adaptations to France
 Key Constrains and costs
 We thank General Mills France
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Mark Bryce - July 2002
General Mills
 Overview of General Mills
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Mark Bryce - July 2002
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
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Mark Bryce - July 2002
Overview General Mills
 Global Food & Beverage Companies, ranked by sales
Nestle
Kraft
Unilev er
Pepsico
Danone
General Mills
ConAgra
Sara Lee
Kellogg
Heinz
Campbell
Hershey
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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.
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Mark Bryce - July 2002
Overview General Mills
 Stock Price Performance, 1928-2004
76-year Compound Annual Growth
General Mills:
7.5%*
Dow Jones Industrials:
4.8%
Inflation:
3.2%
250
200
150
100
General Mills
Dow Jones Industrials
50
0
* Adjusted for Stock Splits and Spin-offs Sources:
Company, Inc.
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Economic History Services (Inflation data) and Dow Jones &
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Mark Bryce - July 2002
Overview General Mills
 International Production Facilities
Berwick, UK
Arras, France
Labatut,
France Spain
San Adrian,
Weesp, The Netherlands
Inofita,
Greece
Nanjing, China
Guangzhou, China
Nasik,
India
Gunma, Japan
Shanghai, China
Batangas, Philippines
Cagua, Venezuela
Belo Horizonte,
Brazil
Brisbane, Australia
Sydney, Australia
San Fernando, Argentina
Lanus (Buenos Aires), Argentina
Johannesburg,
South Africa
Melbourne, Australia
Auckland,
New Zealand
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Overview General Mills
1866
1869
1921
1924
1928
1951
1965
1990
1992 2001
International
Activities in
France
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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
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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
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Mark Bryce - July 2002
General Mills - Brand in France
Green Giant® premium quality
vegetables
—Sweet
Corn
—Asparagus.
—Palm
hearts.
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General Mills - Brands in France
 Old El Paso®-Mexican Food
range
—
Fajita Kit.
—
Guacamole Seasoning Mix.
—
Flour Tortillas.
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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
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General Mills - Brands in France
 Häagen-Dazs® American
Ice cream.
—
Crèmes glace
—
Croustillante
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General Mills
 Company Products and Clients
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Mark Bryce - July 2002
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)
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Mark Bryce - July 2002
Company Products and Clients
 Why are these products produced in France?
•
Häagen-Dazs
Pillsbury 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.
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Mark Bryce - July 2002
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 real
competitive advantage.
The seeds come from USA.
But only France can assure a 100%
GMO free production during the
whole Supply Chain. This is a major
criteria for French customers.
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Mark Bryce - July 2002
Company Products and Clients
 Expansion plans for these production lines.
•
•
Häagen-Dazs
General Mills increased the production plants in Arras with 4
new lines. Increasing sales and product range explain this
extension
Green Giant
Green 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.
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Mark Bryce - July 2002
Company Products and Clients
 Company Clients
Retail Business
•
Super markets
•
premium stores
Food Services
•
Restaurants
•
Hotels
•
Street Cafes
•
Cinemas
•
Food delivery services
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Mark Bryce - July 2002
Company Products and Clients
 What are the clients expectations?
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Professional Service
•
High Quality Product
•
Lowest possible price
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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 chain
A new law in France since 1. Jan. 05, requires suppliers
to pass all product information to the customer.
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Mark Bryce - July 2002
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
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Mark Bryce - July 2002
General Mills
 Why did General Mills come to France
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Mark Bryce - July 2002
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
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Mark Bryce - July 2002
Why General Mills came to France
 International accusations
(Taiwan)
1992
1995
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1996
1997
1999
2000
2001
2003
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Mark Bryce - July 2002
Why General Mills came to France
 International expansion
Europe
Japan
S. Korea
Mexico
Puerto Rico
S. Africa
Taiwan
Pre-1994
Argentina
Australia
Venezuela
1994
1995
Thailand
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Greece
Malaysia
Morocco
New Zealand
China
Colombia
Hong Kong
1996
1997
Brazil
India
Israel
Philippines
1998
Lebanon
1999
Nordic
Countries
Guam / Pacific
Islands
2001
2002
Singapore
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Mark Bryce - July 2002
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.
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Mark Bryce - July 2002
General Mills
 Company values and adaptations to France
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Mark Bryce - July 2002
Company values and adaptations
 Core Values of the company
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Championship brand
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Championship people
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Championship innovations
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Championship performance
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Mark Bryce - July 2002
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
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Mark Bryce - July 2002
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.
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Mark Bryce - July 2002
Company values and adaptations
 Examples of adaptations through HR in France
•
What's on a chart, people
follow
•
Only what's in the contract
must legally be followed
•
You can fire somebody
quickly
•
Legally, you need evidence
to fire somebody
•
Orders are stated straight
forward
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French do not like orders,
wordings must be changed
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People get rewarded in
front of their colleagues
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For a French, it is
sometimes strange to be
rewarded in public
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Mark Bryce - July 2002
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
•
(hinders them sometimes to move
on)
things)
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If you do well, you get
rewarded
•
If you make mistakes,
people motivate you to
improve
•
Education is flexible, so
people become flexible
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French try to do no mistakes
•
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
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Mark Bryce - July 2002
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
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Mark Bryce - July 2002
General Mills
 Key Constraint Costs
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Mark Bryce - July 2002
Key Constraint Costs
 The high cost factors in France
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Labour cost is high for a company
•
Production limitations ->35h week
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Taxes are very high in France
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Hiring and firing policies are stricter in France
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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 tradeoffs are acceptable
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Mark Bryce - July 2002
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
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Nyon, Switzerland
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Mark Bryce - July 2002
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
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Mark Bryce - July 2002
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 Mills
in Switzerland = $25 (75-50)
These are not real figures. They were just chosen for illustration purposes
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Mark Bryce - July 2002
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.
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Mark Bryce - July 2002
General Mills
 We thank:
Murielle Schultz
Head of HR General Mills France
Murielle [email protected]
Renata De Stefano
Key Account Manager
Häagen-Dazs Food Service France
[email protected]
Philippe Rouviere
Logistic Manager France
[email protected]
General Mills FRANCE
Energypark 1
32 Avenue de l'Europe
78941 VÈlizy Cedex
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Mark Bryce - July 2002