Best in France

1
Best in France

• on
• ITT FLYGT France
• May 2005

By Gilles RIVIÈRE, Christine LEMKE, Walid
MALOUF, Bryan ODRISCOLL, Antonio CELESTE
2
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

3
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

4
ITT FLYGT Operations

• Headquarters Stockholm, Sweden
• Partially or wholly owned subsidiaries in 130
  countries worldwide
• 4,000 employees (300 in France)

5
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

6
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

7
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

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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

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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 1960s
• Many municipal authorities and state-owned public
  utilities that required water pumps
• France chosen above several other European
  targets, including Spain and Italy

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Company Core Values
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Core Values Integration
Customers Direct Relationships, Partnerships, Solu
tions
Strong Fit
No perceived cultural differences
Products Innovation, Quality, Technological
Leadership
Operational Excellence Triple Crown
Certification ISO 9000, 9001, 14000
Strong Fit
Perceived Differences
French office perceived as very Creative
Perceived cultural differences with Swedish office
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Other Values
Environmental Sustainability
Very Compatible with French culture

• Winner of Stockholm Water Prize
• Sponsor of Sweden Jr. Water Prize
• Protector of water for future
• generations

Code of Ethics
Based on Swedish and American values
Cultural Differences Not based on French values
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Overcoming Cultural Differences
French Perceptions of Swedish/American
Culture Inflexible structure Constant
Change Different ethics that seemed
incompatible Language barriers
Swedish/American Perceptions of French
Culture Hierarchical Resistant to
Change Different ethics that seemed
incompatible Language barriers
Tangible Tools Intranet Site (although in
English) Free English Language Lessons
Soft Tools Constant Communication Understanding,
Tolerance Ability to adapt French is working
language in French office
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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

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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

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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

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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

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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)

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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

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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

21
Future Investments in Europe

• Growth potential in emerging Eastern European
  economies
• Caution needed to protect against financially
  troubled countries

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We Thank

• Paul DIETRICHSON, Président Directeur
  GénéralPaul.Dietrichson_at_flygt.com
• Laurent CHAIGNE-BERTHOLET, Directeur Marketing
  CommunicationLaurent.Chaigne-Bertholet_at_flygt.com
• Frédéric LOFFREDO, Directeur Financier
  Frederic.Loffredo_at_flygt.com
• Frédéric MAIRET, Directeur des Ressources
  Humaines Frederic.Mairet_at_flygt.comall located
  at ITT Flygt SAS 29, Rue du Port - Parc de
  l'Ile 92729 Nanterre cedex 33 146953333

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Bibliography

• ITT FLYGT Annual Report 2004
• ITT FLYGT France Marketing presentation
• www.flygt.com
• www.flygt.fr

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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 ODRISCOLLCampus HEC (Résidence Expansiel)
  78350 Jouy-en-Josas
• Antonio CELESTE105, Rue Haxo 75020 Paris