Doing Business in France - Essay Example

Name: Professor: Institution: Course: Date: Doing business in France It is very important for organizations to manage their resources, operations, and personnel effectively so as to grow in profits and revenue (Sciammas P.1). In today’s uncertain economy, it’s becoming more difficult to achieve this especially due to the growing competition across industries. For international firms, this problem is compounded by both cultural and economic reasons, this is true for United States firms looking or doing business in France. Undertaking business in France fro the most part makes money, in fact, France is a large market; it is the 7th largest industrial power in the world. It has an attractive financial market, a pro business environment and it is ranked 5th in terms on spending on research and development. According to John F. Kennedy’s speech in 1962, “a global company not doing business in France is like a rainbow not having one of its core colors (Sciammas P.2).” France labour laws are one of the most bureaucratic and liberal in and the world in relation to workers rights and protections. An average French worker is capped at a 35 hours week with benefits averaging 47% of wages compared to 40 hours and 24% for American workers, every French full time worker has a contract and after probation which takes six month, it is a lengthy and difficult process for her to be fired (Sciammas P.2). According to the U.S Department of Agriculture Foreign Agricultural Service (2011), France has a large market opportunity for U.S food products especially beverages (including spirit and wine), seafood and fish, wild rice, vegetables and processed fruits, organic kosher, and fresh and dried nuts and fruits (U.S. chamber of commerce, p1). Due to demographic and social-economic changes, food trends have been altered and French customers now demand food products which have better taste and are more convenient as well as increased health benefits. 6% of the French population represents the young generation who have become more open to innovative and new products. Those living alone and the working customer represents 30% are increasing demand for easy-to-prepare foods (U.S. chamber of commerce, p1). There is arise for U.S exporter as they expand into the French market due to several advantages such as increased demand for international foods as the French population shifts from rural to urban regions and the relative equality of French and American per capital income. According to the U.S. Department of Commerce, France is the 8th largest trading partner of the U.S, trade between these two countries including imports and exports of services and goods was $191 billion in 2010 which is up by 79% compared to 2009 (U.S. chamber of commerce ,p1). However, there are several challenges which will mitigate against the U.S companies surviving in France. They include acute shortage of manpower (citizens lack technical and managerial skills), unfriendly business environment, huge cost of labour in France, and the problem of conflicting interest among the France government, the foreign companies and the general public. There are several strategies that an U.S company can use to enter the French market. To start with, U.S Company can introduce their products at a lower price than that charged by local company. This would make attract new customers who would not have bought the available products or those who will switch from the current producers (Kalyanaram & Gurumurthy, p2). These companies can also enter the market by introducing innovative products which are differentiated from the current products available in the French market. Customer will be so willing to buy products that yield more satisfaction. Innovation could either be incremental or radical. Incremental innovation involves enhancing an existing product, the improve product can attract new customers that are not the current target for the existing product or service (Kalyanaram & Gurumurthy, p2). Finally, the U.S can acquire locally established companies in France and use its distribution channels to sales its product or merge with locally established companies so as to start operating in the French market. In France, there are no restrictions on international investment. There is a well established legal structure for any kind of business thus making it easier for foreign companies to operate in France. Foreign investors can establish a temporary or permanent business and enjoy full legal peace of mind (Invest in France agency, p10). These are the steps for foreign investors to follow when setting up business in France; Fill a return with a credit institution for statistical reasons detailing transactions in which a foreigner acquires 10% or more of the equity or voting rights in a local company An administrative return should be filed with the ministry of economy, trade finance for transactions that result in the acquisition of all or part of a line of business, or the acquisition of a direct or indirect equity interest in a French company amounting to more than a third of its shares or voting rights To acquire a controlling interest (i.e. a majority of voting rights) and the direct or indirect acquisition of all or part of a business line by any foreign investor, For investors from countries outside the EU and the European Economic Area, authorization is also required for the acquisition of direct or indirect interests exceeding 33.33% of equity or voting rights (unless the investor has already been authorized to acquire a controlling interest), Authorization is given by the Ministry for the Economy, Finance and Trade within two months (Invest in France agency, p10) In conclusion, the benefits of doing business in France are many as compared to the challenges faced by companies. Legal, culture, and administrative challenges are some of the expensive burden faced by global companies. In order to eliminate or minimize these challenges/problems, U.S companies, whether setting up a business in France or already doing business there, they should move towards outsourcing personnel demands to projects management companies, but these company should still perform the required due diligence so as to make sure that they are getting the personnel provided by outsourced companies are consistent with the needs of their companies. Work cited Invest in France agency (2012) Doing Business in France, Retrieved on 5th June 2012 from http://www.invest-in-france.org/Medias/Publications/862/doing-business-2011.pdf U.S. chamber of commerce (2012) New Market Opportunities in France for U.S. Exporters retrieved on 5th June 2012 from http://www.facc-chicago.com/fr/vie-de-la-chambre/publications/les-dossiers-de-la-chambre/july-2011/new-market-opportunities-in-france-for-us-exporters.html Kalyanaram G & Gurumurthy R (2011) Market Entry Strategies: Pioneers Versus Late Arrivals Retrieved on 5th June 2012 from www.wright.edu/~tdung/entry.pdf Sciammas J (2003), Doing business in France? The Challenges Facing U.S. Companies Retrieved on 5th June 2012 from http://www.ergglobal.com/pages/publications/business_in_france.pdf Read More