Business_Assessment_of_Opening_a_Wholly

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Marielle Dunavant & Kiani Lane Dr. Elloy International Management April 11, 2017 France Audrey Arden Photography 1

Table of Contents Company Description……………………………………………………………………………………..…… 3 Mission………………………………………………………………….…………………………………………… 3 Planned Entry Strategy………………………………………….……………………………………………. 3 Environmental Description Business……………………………..………………………………...….. 5 Environmental Description Political………………………………………………………………… .... 5 Environmental Description Legal………………………………………………………………….… ..... 6 Environmental Description Economic…………………………………………………………….…... 7 Cultural Profile……………………………………………………………………...………………………….. 7 Organizational Chart………………………………………………………..……………………………….. 12 Staffing Policy…………………………………………………………………………………….…………….. 14 Leadership Style…………………………………………………….…………………………………..…….. 16 Motivation Style……………………………………………………………………………………………….. 16 Communication Style ………………………………………………………………………………...…….. 17 Potential Communication Problems …………………………………………………...…………….. 18 Control Issues ………………………………………………………………………………………….…….. 18 Works Sited………………………………………………………………………………...………………….. 20 2

Company Description Audrey Arden Photography was founded in 1985 by world acclaimed fashion photographer, Audrey Arden. In the early 1980's Audrey realized that demand for her services among top designers in the fashion industry was too high to fulfill all shooting requests. Because of this, Audrey decided to create Audrey Arden Photography and opened up headquarters in Manhattan. Audrey's business operates similar to a staffing agency as Audrey employs other top photographers and assigns them to fashion photography jobs/contracts with Audrey Arden Photography clients. In 1995, ten years after opening business, Audrey opened a second location in Los Angeles. Due to high demand and success, in addition to market maturation experienced in New York and Los Angeles, Audrey Arden Photography is ready for expansion into another fashion capital. Naturally, the next move is to open operations in Paris, France. As Audrey Arden Photography has a well-established name and brand recognition in the United States, this strong reputation should follow the brand to Paris. Furthermore, Audrey’s work is known to Paris designers as she completed several fashion shoots for Parisian based fashion designers such as Prada, Yves Saint Laurent, Chanel, and Celine prior to opening launching her company. Consequently, Audrey already has eight signed contracts with high-end luxury designers and contacts with 15 top photographers who are based in Paris. Mission Provide a photography service that facilitates the connection between industry fashion leaders with top notch photographers in New York, Los Angeles, and Paris in order to produce high quality photographs. We strive to capture and convey the designer's intended vision and emotion of each creation. As a company we work to inspire and connect with our clients to put their best selves forward every day in an ethical and socially responsible manner. Planned Entry Strategy Audrey Arden Photography is going to expand internationally into Paris, France. Audrey Arden has chosen to enter Paris because it is the fashion capital in the world. Moreover, it is one of the niche markets that has a demand for this photographer- designer staffing service. She has chosen to enter now because both the New York and Los Angeles offices are saturated. Also Audrey believes the small business model contributes to their success, so she doesn’t want any of her offices to become too large. The intimate environment assures quality and devoted personal relationships that make both the designers and photographers feel valued. However, she still wants to build her brand and grow as a company so Paris is the natural next step. Moreover, many designers in Paris have expressed a desire to use their services. So Paris has the market and the demand Audrey is looking for, and this market is currently very receptive. In terms of timing Audrey Arden is going to use a waterfall approach. It is best for the company to enter one new market and just open one office at a time. It would take too much time, energy, and resources to enter multiple international markets, 3

like Tokyo and London, all at once. This allows the company to take its time to understand the new setting and make appropriate adjustment to its marketing mix in order to satisfy the specific needs of each market. Moreover, in this approach managers can maximize the use of available resources and leverage their experience from the first market to make necessary improvements or changes. In this companies case by just expanding to Paris at first it can transfer managerial and design skills from the US since the target market is similar. For the waterfall strategy to be successful, ideally the first market expanded to should be one that has characteristics similar to those found in the home market. For all these reasons Audrey Arden will focus on entering Paris, France to start. Audrey Arden will open this location in Paris as a wholly owned subsidiary. This strategy is preferred in service industries where there is close contact with end customers, high levels of professional skills, specialized know how, and customizations are required. Also this entrance demonstrates a visible sign of commitment from Audrey and the company to maintain the same standards and company culture. These are all essential elements that help give quality assurance from the company. Also another source of competitive advantage is Arden’s brand equity. Thus a joint venture or strategic alliance would lessen the value and reputation. Plus this strategy would allow for a more rapid entry since the brand is established and there is already a present interest in their services. Additionally, there are not any services like Audrey Arden’s in Paris to make a partnership with. Most importantly, Audrey Arden does not want to relinquish power or control over her company. This is because she wants and needs to be able to maintain the same culture, ethics, and practices that have brought her so much success in the past. Her strong presence in the company is a necessity and thus she is employing the strategy of a wholly owned subsidiary in establishing her Paris office. While this is the best entry strategy there are some down sides and possible issues that Audrey and Arden photography will have to cope with. For one a wholly owned subsidiary takes more capital and managerial effort. However, Audrey Arden has made enough excess capital from the past 30 years of business to be afford starting their own office in Paris. The company will also hire an extra manager in the Paris officer to help with the added logistics, flow of communication back to the US offices, cultural hurdles, and greater workload. Additionally, it will take more time establishing the location since the company is not partnering with any local businesses. However Audrey is willing to take more time in order to better establish this branch in the manner she desires. Another added responsibility the company will have to take on by entering as a wholly owned subsidiary is it must assess customer demand, gain legal and accounting assistance, protect intellectual property and obey regulations. Lastly and most importantly, the main down side to entering this market alone is that Audrey Arden must independently assess all cultural risks. This includes; differences in customer service and pricing, hiring the most qualified expatriates and providing them enough support, and learning how to run an office with employees from two different nationalities. Audrey has planned how to cope with the hurdles that come with being a wholly owned subsidiary, and overall it is still the best strategy to use to enter the Paris market. 4

Environment (Business) In France there are a handful of business customs that Audrey Arden Photography will need to be aware of and operate in accordance with. In terms of structure arriving for business appointments 10-15 minutes after the scheduled time is seen as impolite. Lunch is one of the best places to create business relationships in France, this also means one shouldn’t call anyone during their lunch break, general between 12 till 2pm . Commonly initial meetings are often dedicated to information sharing and discussion, rather than reaching final decisions. Also deadlines are open to negotiation and flexibility is appreciated. One reason for that is there a strong distinction between business and personal life in France. However, it is a highly organized and well-structured system where rules and administrative practices are desired. For example, in French business culture the highest individual in authority still tends to be the only one who can make the final decision. Below are some business etiquette rules in France: FRENCH BUSINESS ETIQUETTE DO’s DON’T’s  Maintain an air of formality  Wear formal business attire  Make direct but moderate eye contact  Try to learn a few basic French phrases and use them whenever possible.  Make direct but moderate eye contact  Greet with a quick hand shake with some pressure in the grip  Discuss your family or other personal matters during negotiations.  Be put off by frequent differences in opinion and rigorous debate during business negotiations.  Rush or display signs of impatience with your French counterparts. The French take their time before arriving at a decision. Environment (Political) France is a Republic, specifically it is a parliamentary democracy combined with presidential power. The President of the Republic, currently Francois Hollande, has Executive power and is Head of State. She/he is elected by direct universal suffrage for five years. The President also appoints the Prime Minister, currently Bernard Cazeneuve, and his/her Government at the suggestion of the Prime Minister. The Prime Minister is responsible for setting the amount of the State's expenses and revenue, and prepares some bills. The countries Legislative power is held in parliament, which is composed of the Senate and the National Assembly . Senators are elected by indirect universal suffrage for nine years, renewable by a one-third majority vote every three years. The deputies (MPs) are elected by direct universal suffrage. They examine bills and private bills successively, vote laws and monitor the Government. Overall the French culture to disagree and argue is believed to 5

stem from their distrust in government during the French Revolution. However, since that time the system has been remodeled and fortified now supported by a strong sense of French nationalism. In today’s political scene there will actually be elections held in April and May of this year, 2017. The three main candidates are Hamon, Fillon, and Le Pen. The winner of this election will dictate the countries response to Brexit and how it affects France’s economy and business. For example, if Le Pen wins France could certainly undermine the EU by taking France out of the European Monetary Union (EMU). Another area that is under political scrutiny is how to handle and respond to terrorist attacks. This past year in November the coordinated attacks around Paris where devastating and eye opening. Recurrences could further damage tourism, which is Paris’s number one industry. However despite these unknown-unknown risks, the political environment in France is stable and operates similar to that in the United States. This is an area of confidence for Audrey Arden moving into this country. Environment (Legal) The French legal system is based on a civil code compared to America that operates on a common code. Since the French legal system is not only different but it is also extremely complicated the company will be hiring a lawyer to assure no laws or regulations are overstepped or broken. In all contracts the company must clearly define the both parties obligations, the methods of quality control, and expectations. There are a few elements of the French legal system that will work in favor of Arden photography. For one English is commonly spoken and there is equal legal treatment to nationals and foreigners. Additionally, intellectual property design is protected for 25 years and is renewable once. One area that the company will put a heavy focus on is the French labor law, which is known as ‘Loi travail’. Some important points for employee’s are getting above minimum wage, paid leave, maternity leave, medical cover, and working time. Currently the minimum wage is €9.67/hr and the workweek is 35 hours with 5 weeks off per year. The company plans to honor the shorter workweek and longer vacation, and all employees will be on salary except the photographers who will be paid far above the minimum wage hourly. Employees will get the accustom paid maternity leave and medical coverage will be provided to all employees. The company wants to hold and provide standards that are seen as common and necessary in France. Audrey wants her employees to be satisfied and feel supported by the company. Lastly, new legal provisions passed in parliament make the company-level agreements prevail over the national-level bargaining agreements to set the rules regarding working time. This legislation shows that the government is making steps to help companies have more independence in their policies. So while all the employees will have the usual 35 hour workweek, this law makes it easier for the company to send photographers and support staff out to work if it falls outside normal work hours. 6

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