Post on 22-Feb-2016
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Monday 10th December 2007
Prof. Michael Segalla« BEST IN FRANCE »
Jamie Brownlee (UK)Daniela Sanchez Hernandez (Mexico)
Anne-Lynke Kikstra (Netherlands)Jaeyoun You (Korea)
Agenda Introduction
Capital One Analysis
Why France The French move Pulling out of France
Recommendation Advice for new companies Advice for France
Conclusion
Introduction
Analysis
Recommendation
Conclusion
Who is Capital One? Listed in NYSE for first time 1994 Headquartered in McLean, Virginia 40 million customers Products Other products Clients
Added value: credit card loans
Capital One: one of the America's largest consumer franchises with almost 50 million customer accounts worldwide
One of America’s most recognised brands. Now, the fourth largest customer of the United States
Postal Service
« What’s in your wallet »
Capital One vs. Dow Jones and NASDAQ
Capital One vs. CompetitorsAXP: American Express CompanyBAC: Bank of America CorporationDFS: Discover Financial Services LLCCOF: Capital One
Introduction
Analysis
Recommendation
Conclusion
Why move to France (Major points)?
France 1st country after UK (1997) French wealth (disposable income) Banking infrastructure Population History French GNP $1,550 billion (EU 20% larger than the
North-American market)
France appeared to be very attractive
Inflation remains very low Falling interest rates Highest rate of growth in Europe
Why move to France (Major points)? (3)
French financial setup seemed appealing
Why move to France (Minor points)?
Frontier and direct link (6 largest European markets) Human capital > Motivation, quality and productivity Balance of trade (20.3 billion dollars) Quality of life Strategic geographical position (370 million
European consumers) Company values that fit with French culture
Reasons for moving to France
Competitors
• Egg Banking• France 2002 - 2004 (ING, Netherlands)
• Barclaycard• France 1998 (1 million selling spots)
The French move
Joint Venture with Sofinco Paris Customer base and infrastructure. Bank branches 18 months negotiation
Ready to sign contract……BUT Crédit Agricole bought Sofinco
Decided to go alone Moved in 1997 Pulled out in 2002
The French move (2)
The move lasted 5 years
Why pull out of France?
Ancient usury laws
Labour laws (35 h/w and redundancy costs)
Key constraint costs
Lobbying : French Banks effectively blocked
changes
French financial companies seem nationalistic and they want to keep the French economy strong
Constraints by regulatory companies Inflexibility destroyed Capital One’s
international strategy Discrimination: Gender
Why pull out of France? (2)
Capital One did not feel welcome
What Capital One think they did well in France? Lived up to French expectations-culture,
language, consumer and law adaptation Call centres Marketing mix Worked to get their values ‘translated’ to
acceptability in France.
Key values are Fairness and Reward Inclusion of French associates Severe scrutiny to banks
What Capital One think they did well in France? (2)
PROCESS DIFFERENT SAME ADAPTABLERecruitment X (need experience in and outside of France)
Compensation X (flexibility to go for top quartile)Management Development
X (inclusion of French associates to learn Values of Capital One)
Workforce planning
X (working life)
Performance Appraisal
X
Job design X Motivation X (needed to communicate more)
Communication policies
X (more formal but translators used)
International Transfers
X (high calibre French nationals spent a year in USA to prepare them)
Hiring X Real Estate X (cheaper
than London)Language X (associates were usually bilingual)
Capital One’s views on similarities and differences in France
Regrets…
As said in the interview with the Former Managing Director of
Capital One France
Introduction
Analysis
Recommendation
Conclusion
Advice: What would Capital One have done differently? They should not have gone alone They would have looked at taking deposits to help
fund the lending on credit. Auto loans Partnership with a French financial services
company If they stayed… more and more credit cards
Advice: What Capital One suggest for other banking companies?
No production of products in France – Instalment loans
Have a Pan-European strategy Be conscious that France is not flexible:
NOT WILLING TO CHANGE
No Greenfield Operations
Advice: What Capital One suggest for other banking companies? (2)
Vary the interest rate Before coming – understand the extent of the
cultural differences Be prepared to adapt (local human investment) 4 years testing at low volume levels-crucial to
understand the market Base production outside France
Introduction
Analysis
Recommendation
Conclusion
Conclusion
France offers a lot of benefits to foreign companies Foreign companies need to be conscious of and
adapt to the French culture, norms and values It is true that certain modifications should be made
(e.g. French Banks should be more accepting to foreign banks entering the French Market)
And last but not least, DO NOT ENTER THE FRENCH MARKET ALONE!
With thanks to:
Alan Wolfson, Former Managing Director, Capital One France(7 Queen Alexandra Mansions,
3 Grape Street London WC28DX, UK)
Fergus Brownlee, Former Principal Managing Director and Executive Vice President, Capital One Europe
(Streatley House, Streatley-on-Thames, Berkshire, RG89HY, UK)
Capital One