Wal-Mart: Global Expansion Strategy
France, the largest country of Western Europe (about four-fifths the size of Texas), is inhabited from about 58. 5 million people. Most of them are from Celtic and Latin origin with Teutonic, Slavic, North African, Indochinese and Basque ethnic groups as minorities. Traditionally, France has had a high level of immigration, especially from North Africa. At the end of 1994, about 4 million Muslims were living in France. Although the church is separate from the state, 90% of the French are Roman Catholic.
France has been a founding member of European Union, and also is an active member of the G-7 club of nations, the United Nations (one permanent seat in the Security Council), the World Trade Organization and the OECD, that way ensuring its influence is a leading player on the globe, both economically and politically. 60% of its trade is settled with the other EU member nations, then follows the U. S. In recent years France has been able to run an increasing current account surplus of US $ 1. 6 billion (as of 1998) [9, 10, 11].
Marketing products and services in France is much like marketing them in the U. S. , notwithstanding some significant differences in cultural factors and the legal framework. As reflected in the growth of supermarkets and hypermarkets, direct marketing and franchising, American sales concepts influence French marketing practices and distribution channels. While use of the Internet is rapidly increasing, electronic commerce in France is still dominated by the huge installed base of France Telecom Minitel units .
President names the Prime Minister who is the nominal head of the executive. The legislative consists of two houses, the National Assembly (deputies are elected for five year terms) and the Senate. The Assembly, however, has the last word in any disagreements. Various political groups build France’s political spectrum, the most important among them are the neo-Gaullist Rally for the Republic, the moderate Union for French Democracy and the Socialist Party.
The current President, center-right-winger Jacques Chirac (elected in 1995) cohabits with a government of the left, elected in 1997, under Prime Minister Lionel Jospin, due to a mixture of presidential and parliamentary elements in France’s political system. Nevertheless, both are strong advocates of the EU and support the EMU (European Monetary Union) which has implemented the new European currency, the EURO, for its eleven initial members on January 1, 1999 [9, 10, 11].
Economic Factors: By exploiting its vast agricultural resources, France is, behind the U. S., the number two exporter of agricultural products in the world. Similar to the U. S. , the two other important export sectors are defense products and services, which give France its rank as the fourth largest exporter worldwide. Furthermore, in terms of transportation and communications, France operates one of the most sophisticated infrastructures in the world. Among other factors, all this contributes to France’s position as the fourth largest economy with a GDP of US $ 1. 5 trillion as of 1998 (one-fifth of U. S. ), having grown at 3% in real terms compared to 1997.
The GDP per capita in 1998 was at a well off US $ 24,165 and the inflation rate of 1. 3% in 1998 was one of the lowest in the European Union (EU) [9, 10, 11]. 3. Effect of EURO on Economic Structure in France: The EURO, adopted on January 1, 1999, by France and 10 other European countries, is the new single currency of the European Union (EU). A major economic factor for its implementation was to create one single European market in order to ease the large trade among its member states and to end the competitive devaluation within the market.
The expected benefits are price stability, monetary stability, new trade opportunities within the single market and sound economic growth. However, companies, which operate in the member Wal-Mart: Global Expansion Strategy states, face some constraints. During a transitional period of 4 years the old currencies and the new EURO coexist and each company has to decide when and how to switch to the EURO. The modification or installation of computer systems, which are capable of dealing with the EURO, has to accompany that. Furthermore, commercial relations are to be redefined, as far as prices are concerned.
The benefits for those companies will be reduced financial costs due to fluctuations of exchange rates . Euro also posses difficulty for retail industry as it makes it difficult for consumers to see differences in prices and determine whether an item is expensive or not. Therefore, retailers needs to quickly take actions to clear their image and to make buyers feel that they are not been cheated . 4. Social and Culture Factors: France has rich heritage of art and culture, and is famous for its fashion, perfumes, and cuisine worldwide.
An average French consumer is quiet sophisticated and very brand oriented and believes in levish lifestyle. Lately, an increasing interest in American culture, younger consumers, and changing lifestyles are contributing to France’s import demand for food products from the United States. Generally, high quality food products with an American image can find a niche in the French market, particularly if they can gain distribution through stores and supermarkets that specialize in U. S. or foreign products . 5. Legal Factors: The tax system is higher in France.
France’s mandatory national social insurance system covers health, retirement, family allowances, housing benefits and occupational accidents and illness. The system is financed by employees (16% of gross pay) and employers (45% of gross pay) . 6. Labor Laws: Sources of Labor Law in France include statutes and regulations, most of which are included in the Labor Code which provides minimum legal protection for both employers and employees. Other sources are case law, custom, collective bargaining agreements and companies’ internal regulations.
Employment contracts are strictly regulated. Limited-term contracts are possible, but restricted. An employee may be dismissed for economic as well as disciplinary reasons but this Wal-Mart: Global Expansion Strategy includes obligatory negotiations involving the employee and the third party and sometimes it can be more expensive than firing US employee (Doing business in France. No. 1). There is also a significant difference about social charges between France and US. In US, the employer pays social charges, whereas in France social charges are paid by the government .
7. Labor: France has a diversified modern industrial landscape and a highly skilled 25 million labor force of which 66% are employed in services, 28% in the industrial and commercial sector and 6% in agriculture. Employees have 35 working hours in a week, and employers must pay overtime to non-executive staff for hours worked in excess of that. Full-time employees are entitled to five weeks vacation and up to four special vacation days each year. The legal minimum wage also applies [9, 13].