1. HEC School of Management Boeing France Case study « BEST IN FRANCE » May 12, 2009 Santiago DI CIÓ Francisco Juan GRAMISU Sungho JEON

2. HEC School of Management Brief introduction to Boeing FASTEN YOUR SEATBELTS AND ENJOY THE FLIGHT!

3. HEC School of Management It’s business 1.Boeing Commercial Airplanes 2.Boeing Integrated Defense Systems 3.Boeing Capital Corporation 4.Shared Services Group Boeing first product came to France in 1955, when Air France became the first airline outside the US to fly the Boeing 707 Boeing France, as a permanent presence, dates from 2002

4. HEC School of Management Key Benefit Numbers Revenues in Europe were of 6B in 2008 Commercial Airplanes segment revenues were approximately 70% of total revenues in Europe in 2008 Only 4% of operating assets are located outside the US Market Share (2007)* -By units: 57% -By value: 63% *Figures published by AVITAS, the leading advisor to the aviation industry.

5. HEC School of Management Key Benefit Numbers

6. HEC School of Management Why did Boeing come to France? DESTINATION: PARIS

7. HEC School of Management The Creation of Boeing International Boeing International created in 2002 by Phil M. Condit, former CEO Objective: to create permanent presence in key markets – Europe: France, UK, Spain, Germany, Italy, Northern Europe and Eastern Europe – Asia: China, Japan, Australia, South Korea and South East Asia – Middle East: Israel and Turkey Markets selected based on: – Business Potential – Maturity of the local Air & Space industry

8. HEC School of Management The Role of Boeing France “…building and strengthening relationships with key stakeholders, including aerospace industry leaders, government and military officials” To form and take advantage of Business Opportunities To create relationships with potential local partners To give a visible presence to the Boeing Company in France

9. HEC School of Management Boeing‘s Clients in France Their expectations are: – Sales: low bidding price compared with competitors – MRO service: fast & direct service from national branch – Alliance with Boeing: for technology relationship (e.g. alliance with Air France) – Good product and service – Good relationship with airplane manufacturer French Companies Air France (72) Corsair (9) Europe Airpost (14) Blue Line (2) French Goverment The french army Ministry of Defense - Air Force KC 175 Tankers (14 of them) AWACS

10. HEC School of Management French presence A French presence helps Boeing in: - Support the Business Objective of the Boeing Company -Look at the local capabilities from an industrial standpoint -Fast service to the clients (e.g. MRO) -It makes Boeing more competitive in sales (specially, vs. Airbus) Having a French Branch does not hurts the Boeing company in any way

11. HEC School of Management Direct production in France? Historical reasons: They have always produced inside the US. Main plant in Seattle, WA Partner’s Previous Experiences: McDonnell Douglas in China. Government cancelled project creating lack of confidence Strategic reasons: Joint Venture model – “Best of Industry Approach”. Boeing 787 model

12. HEC School of Management Indirect production in France? Since 1974, when GE and Snecma (now Safran) made a joint company called CFMI to make aerospace engines, Boeing relies on French suppliers. Nowadays, more than 100 French companies serve as providers to Boeing, where the most relevant are CFMI, Thalès, Dassault Systèmes, Michelin. France offer a competitive advantage not only with the quality of its enterprises but also because: “the infrastructure is wonderful in terms of roads and trains, it’s very important when you travel to visit suppliers”

13. HEC School of Management Constraints in France A LITTLE BIT OF TURBULENCE…

14. HEC School of Management Constraints in France Politics: Relations strained between the French and U.S. governments because of disagreements over the Iraq conflict in 2004 Government Sponsored Competitors: Airbus: In France and in Europe, a national industry and symbol. European Aeronautic Defense and Space Company (EADS) Country Values: "France is still a country where there is a strong nationalism“ (Yves Galland, Boeing France President)

15. HEC School of Management Adaptation to France CROSSING THE ATLANTIC

16. HEC School of Management Boeing´s Culture and Values A very “American Company”. American values and culture “The American Way” is an easy way Big focus on OPENNESS and ETHICS: - French Corporate Culture -Transparency and Openness: not always easy to implement

17. HEC School of Management Transition towards Flexibility (2002) Follow “the voice of America” Not possible to replicate 100% what it’s being done in the US Some departments and issues started to be managed locally (either at country or regional level): HR, Ethic related issues Boeing International’s head is a member of the Board: interaction at the same level

18. HEC School of Management Interaction between Boeing France and HQ Sales Campaign: US DRIVEN. “They know what they are doing, they’ve been selling their planes for years… so they are taking the lead.” Leveraging the company’s presence in France: LOCALLY DRIVEN. “It’s a simple and easy system, and works very well that way” (Jean Marc Fron, Strategy Director Boeing) There are still some things to improve…

19. HEC School of Management Essential Advise HOW TO LAND SAFELY IN FRANCE

20. HEC School of Management Essential Advise

21. HEC School of Management We Thank Jean Marc Fron Deputy, Strategy Director Boeing International jean-marc.fron@boeing.com Fatima Merah fatima.merah@boeing.com Caroline Hugon caroline.b.hugon@boeing.com Michael Segalla, Ph.D. segalla@hec.fr HEC School of Management, Paris Boeing France 75, rue du Faubourg Saint- Honoré 75008, Paris. Phone. 01 70 37 07 47 HEC Paris 1 Rue de la Liberation 78351, Jouy-en-Josas, France

22. HEC School of Management Bibliography www.boeing.fr www.boeing.com The Boeing Company 2008 Annual Report www.airfrance.fr Air France – KLM Annual Report 07-08 www.avitas.com AVITAS Boeing Frontiers Online Magazine “Boeing France president working on EADS and Airbus home turf”

23. HEC School of Management Our Team Santiago Di Ció 1 Rue de la Liberation B2 211 Juncal 945, 2º (1062) Buenos Aires, Argentina Francisco Juan Gramisu 1 Rue de la Liberation B2 125 Callao 1330, 1B (1023) Buenos Aires, Argentina Sungho Jeon 1 Rue de la Liberation BI 043 Da-203, Il-Sung Ju-taek, 963-8, Hogye 1-dong, Dongan-gu, Anyang-si, Gyeonggi-do, Korea. (431-081)

24. HEC School of Management Thank you very much for your time and attention Q&A WE HOPE YOU ENJOYED THE FLIGHT!