Monday 10 th December 2007
Prof. Michael Segalla
« BEST IN FRANCE »
Jamie Brownlee (UK)
Daniela Sanchez Hernandez (Mexico)
Anne-Lynke Kikstra (Netherlands)
Jaeyoun You (Korea)

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Introduction
 Capital One
Analysis
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Why France
The French move
 Pulling out of France
Recommendation
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Advice for new companies
Advice for France
Conclusion

 Analysis
 Recommendation
 Conclusion

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Listed in NYSE for first time 1994
Headquartered in McLean, Virginia
40 million customers
Products
Other products
Clients
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 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

Capital One vs. Dow Jones and
NASDAQ

Capital One vs. Competitors
AXP: American Express Company
BAC: Bank of America Corporation
DFS: Discover Financial Services LLC
COF: Capital One

 Introduction
 Recommendation
 Conclusion

Why move to France (Major points)?
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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)

Why move to France (Major points)? (3)
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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
French wealth (GNP) -
Disposable wealth
Banking infrastructure
Population
History
EU-France's dominant position
Geography of France in
EU¡
Inflation and falling interest rates
High number of foreign banks in France

• Egg Banking
•
France 2002 - 2004 (ING, Netherlands)
• Barclaycard
•
France 1998 (1 million selling spots)

 Joint Venture with Sofinco
 Paris
 Customer base and infrastructure.
 Bank branches
 18 months negotiation

(2)
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Ready to sign contract…… BUT Cr édit
Agricole bought Sofinco
 Decided to go alone
 Moved in 1997
 Pulled out in 2002

 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

(2)
 Constraints by regulatory companies
 Inflexibility destroyed Capital One’s international strategy
 Discrimination: Gender

What Capital One think they did well in
France?
 Lived up to French expectations-culture, language, consumer and law adaptation
 Call centres
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Marketing mix
Worked to get their values ‘translated’ to acceptability in France.

What Capital One think they did well in
France? (2)
 Key values are Fairness and Reward
 Inclusion of French associates
 Severe scrutiny to banks

Capital One’s views on similarities and differences in France
SAME PROCESS
Recruitment
Compensation
Management
Development
Workforce planning
Performance
Appraisal
Job design
Motivation
Communication policies
International
Transfers
Hiring
Real Estate
DIFFERENT
X (working life)
X (cheaper than London)
Language
X
X
X
ADAPTABLE
X (need experience in and outside of France)
X (flexibility to go for top quartile)
X (inclusion of French associates to learn
Values of Capital One)
X (needed to communicate more)
X (more formal but translators used)
X (high calibre French nationals spent a year in USA to prepare them)
X (associates were usually bilingual)

Regrets…
As said in the interview with the
Former Managing Director of
Capital One France

 Introduction
 Analysis
 Conclusion

Advice: What would Capital One have done differently?
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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?
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 No production of products in France –
Instalment loans
Have a Pan-European strategy
Be conscious that France is not flexible :
NOT WILLING TO CHANGE

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
 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!

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