Established in 1782, Schneider Electrics began as an industrial equipment company. See appendix I. This global leader has 170 years experience in its industry. (Schneider Electrics, a, 2007) With a strategy of maintaining autonomous plants in host countries with shared global skills drawn from the company’s vast
network, Schneider Electric can customize innovations to fulfil customers’ requirements, whilst meeting the standards and practices applicable to individual countries through adaptation of products. (Schneider Electrics, b, 2007) This strategy coupled with other factors requires a strong Global Account Management system to ensure the company remains a leader in industry. See appendix II. Schneider Global Business Development (SBGD) was created in 1992 as a global sales organization and counterpart to individual country based sales force. (Bartlett, Ghoshal and Birkinshaw, 2004) See figure 1 & 2, appendix III.
Global Strategy Drivers of Schneider Electric’s Global Account Management.
Market Driver
The strongest driver for global account management is global customers. (Yip and Madsen, 1996) Consistent image and presentation; coordinated pricing, branding that is recognisable and of high quality, service that is of high standard throughout the world, all benefit the client and the company. (Johansson, 2003).
Customer satisfaction is a high priority for Schneider Electric therefore the means to fulfil this requires strategy, cooperation and a streamline operations system globally, within the corporation, with suppliers and customers. (Schneider Electric, d, 2007) See figure 1, appendix IV.
One example of customers being a GAM driver is Schneider’s relationship with the American company, Copiato. To anticipate and fulfil its client’s requirements, an in-depth understanding was required. Mutually beneficial measures were taken that resulted in global consistency in product offering and service quality. In 1995 the joint relationship was awarded the Arthur Anderson Best of the Best Award for Channel management. Subsequently, Copiato appointed Schneider as its only globally certified electrical supplier. (Bartlett, Ghoshal and Birkinshaw, 2004)
Client demand worldwide is constant as electrification is a common need. The company acknowledges this as a growth driver and works to fulfil demands. (Schneider Electric, d, 2007). See figues 2 & 3, appendix IV.
Cost Driver
Without GAM Schneider Electric would not maximise its potential for sales, manufacturing or R&D, which results in not fulfilling economies of scale. This is reflected in purchases made by Calchem prior to becoming a GSA. Merchandise purchases from the automation product line were worth SFr 3-4 million. Within a year of becoming a GSA, sharing information and working to common strategies with Schneider Electric, orders mounted to SFr10 million with a projected growth of SFr 20-25million for future transactions. (Bartlett, Ghoshal and Birkinshaw, 2004)
Despite the expense of organising global account management and client-led innovation as indicated previously in figure 2 of appendix III, the overall cost and expansion benefits ensure it a worthwhile venture. See appendix V.
Competitive drivers
The power and control industry is highly competitive with competitors utilising either a project approach or a stepping stone approach in business. Schneider responded by with various strategies to increase competitiveness. One tactic was the introduction of entry and exit barriers for its clients, which result in high switching costs making it difficult for conversion of clients by competitors and clients to competitors. (Bartlett, Ghoshal and Birkinshaw, 2004) (PTC, 2007) See figures 1-4, appendix VI
Strategies from SGBD enabled the company to set up strong mutually beneficial relationships with clients with long-term focus, optimized use of resources available locally and globally and ensured competitiveness. Actions that can be undertaken for successful implementation of GAM:
? Strength, increased value and growth through effective global teams (Distefano and Maznezski, 2000) See figure 1, appendix VII
? Clear, quick, easily accessible communication systems utilising English as a standard language. (Global English, 2005) See figure 2. Cross cultural training to support communication. (Bartlett, Ghoshal and Birkinshaw, 2004)
? Up to date training, especially IAMs and IACs.
? Clear strategy and vision for the company’s future, recognising the importance of SGBS to ensure maximum benefit for all concerned, increasing profitability. See figure 3.
? Provide financial assistance, if needed by regional offices, to uphold the GAM
Continuing globalization supported by extensive planning ensures maximum usage and benefits from internal and external resources and GAM. This ensures continuity as one of the leaders in its fields.(Yip and Madsen, 1996) (Schneider Electric, g, 2007) See figure 1, 2, 3 and 4 appendix VIII
References
? Bartlett, C.A., Ghoshal. S. and Birkinshaw, J. (2004) Transnational Management Text, Cases & Readings in Cross-Border Management, 4th Edition, McGraw-Hill/Irwin
? CRM Today (2004) Schneider Electric streamlines SRM with SAS, crm2day, accessed 12th March 2007.
http://www.crm2day.com
? Distefano, J.J. and Maznezski, M.L. (2000) Creating Value with Diverse Teams in Global Management, Organizational Dynamics, 29, 1, pp. 45–63.
? Frost & Sullivan (2006) Frost & Sullivan Commends Schneider Electric’s Outstanding Competitive Strategy Leadership,Frost and Sullivan, accessed 8 March 2007
http://www.frost.com/prod/servlet/press-release-print.pag?docid=74616675
? Global English (2005) Case study: Schneider Electric, GlobalEnglish, accessed 9 March 2007.
http://www.globalenglish.com/corporate
? HP (2005) Schneider Electric: A new regional logistics hub.A centralised data centre. A more adaptive IT platform., HP, accessed 13 March 2007.
http://www.hp.com
? Johansson, J.K (2003) Global Marketing; Foreign Entry, Local Management and Global Management, Third Ed, MCGraw-Hill, New York, NY
? Pinto, J. (2006) Schneider Electric – Aggressive French Giant, Automation, accessed 8 March 2007.
http://www.automation.com/sitepages/pid2247.php
? PR Newswire (2006) Strategic Account Management Association Announces Its New CEO, prnewswire, accessed 10 March 2007.
http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/10-18-2006/0004454084&EDATE
? PTC (2007) Schneider Electric Optimizes Its Global Product Development Processes With PTC Product Development System, PTC, accessed 13 March 2007
http://www.ptc.com/appserver/wcms/standards/textsub.jsp?&im_dbkey=44302&icg_dbkey=21
? Schneider Electric, a (2007) History, Schneider-Electric, accessed 12 March 2007
http://www.schneider-electric.com/wps/portal/corp/
? Schneider Electric, b (2007) Local Operations, Schneider-Electric, accessed 13 March 20007.
http://www.schneider-electric.com/wps/portal/corp/
? Schneider Electric, c, (2007) Group; Strategy, Schneider-Electric, accessed 13 March 2007
http://www.schneider-electric.com/wps/portal/corp/
? Schneider Electric, d, (2007) Finance; 2006 Annual Results, Schneider-Electric, accessed 13 March 2007
http://www.schneider-electric.com/wps/portal/corp/
? Schneider Electric, e (2007) Business; Markets, Schneider-Electric, accessed 13 March 2007
http://www.schneider-electric.com/wps/portal/corp/
? Schneider Electric, f, (2007) Group; Key Figures, Schneider-Electric, accessed 13 March 2007
http://www.schneider-electric.com/wps/portal/corp/
? Schneider Electric, g, (2007) Schneider-Electric, accessed 13 March 2007
http://www.schneider-electric.com/wps/portal/corp/
? Ultima Media. (2006) Automation Systems & Controls; Schneider Electrics, Automotive Manufacturing solutions, accessed 15 March 2007
http://www.automotivemanufacturingsolutions.com/ams/directory/schneider.shtml
? Yip, G.S. and Madsen, T.L. (1996) Global account management: the new frontier in relationship marketing, International Marketing Review, 13,
3, pp.24-42.
Appendices
Appendix I
A summary of the history of the Schneider Electric reflects early ventures of the 19th century in the iron and steel industry, heavy machinery, and ship building. The 20th century brought expansion into electricity and automation management. With 170 years of experience, Schneider Electric has grown and emerged to become one of the main players in its field.
Timeline of Schneider Electrics
? 1782: Established as an industrial equipment company
? 1836: Surviving the Napoleonic Wars and French Revolution, the Schneider brothers acquired the Creusot foundries.
Built the first French locomotive
? 1838: established Schneider et Cie.
? 1891: Expanded from armaments specialist by moving into innovation in the emerging electricity market.
? 1914: Prominent as one of France’s most important heavy industry companies.
? 1919: Installation of Schneider in Germany and Eastern Europe via the European Industrial and Financial Union (EIFU).
? 1929: Entered the electrical contracting business with associations with Westinghouse. Expansion into manufacturing of electrical motors, electrical equipment for power stations and electric locomotives.
? 1939-45 WWII: Company suffered with factories destroyed or commandeered.
The French government supported the company post WWII in its restructuring as a holding company. The company now had three subsidiaries; civil and engineering, industrial manufacturing and construction.
The restructuring opened the way for diversification and new
? 1950: last Schneider family member passes away
? 1966: Company goes public.
? 1969: Merger with Empian, forming Empian-Schneider Group. Production diversifies to include fashion, travel, publishing and ski equipment.
? 1980-1997: With minimal success in its diversification efforts the company underwent reorganisation between 1980 and 1993.
In 1992 Schneider Global Business Development (SGBD) was created with the objective of further expanding its business globally.
In 1993 it merged with its former parent company, Societe Parisienne d’Enterprises et de Participation. Merlin Gerin (acquired 1975) and Telemecanique (acquired 1988) were the Scheider Electric ‘s European operations and Square D (acquired 1991) became the North American operations. Individual brands, however, were maintained in favour of customer recognition
? 1996: 100% French owned company established in China.
? 1997: Spie Batignolles, the electrical contracting subsidiary was sold.
? 1999: Acquisition of Lexel, European N°2 in electrical distribution. Utilised to expand its household equipment base.
Global renaming as Schneider Electric, to more clearly emphasise its expertise in the electrical field. Engagment of accelerated growth and competitiveness strategy.
? 2000-2005: Growth and further acquisitions allow Schneider Electric to position in new market segments: man-machine dialogue, UPS – uninterruptible power supply, movement control, Voice Data Image, Sensing Technology, Building Automation and security, (Digital, Crouzet, Clipsal, MGE UPS Systems, TAC, Kavlico, Andover Controls …).
Developed from sources:
Barlett, Ghoshal and Birkinshaw (2004) Transnational Management Text, Case and Readings in Cross-Border Management, 4th edition, McGraw-Hill, New York, NY.
Schneider Electrics, a, (2007) History, Schneider-Electrics, accessed 12 march 2007
http://www.schneider-electric.com/wps/portal/corp/
Appendix II
Schneider Electric holds first position globally in Electrical Distribution and second position globally in Automation & Control. The company is comprised of:
? 88,670 employees in 130 countries
? 25 Research and Developments sites
? 206 manufacturing facilities
? 60 logistics centres
? 15,000 sales outlets
Source:
Schneider Electrics, b, (2007) Local Operation, Schneider-Electrics, accessed 12 march 2007
http://www.schneider-electric.com/wps/portal/corp/
Appendix III
Figure 1
Framework for global account management
This framework reflects the basis for Schneider Electric’s creation of Schneider Global Business Development.
Source:
Yip and Madsen (1996) Global account management: the new frontier in relationship marketing, International Marketing Review, 13, 3, pp.24-42.
Figure 2
The following factors were drawn from Yip and Madsen (1996) and Bartlett, Ghoshal and Birkinshaw (2004).
Challenges to utilising GAM:
? High costs of restructuring and implementation.
? Ensuring all levels of management and other human resources have the skills, knowledge and means to maintain efficient and effective GAM.
? Increased difficulty in pricing and contracting
? Regional differences
? Establishment of clear communication at all levels regionally and globally.
? Parochialism
? Extensive customization to fulfil clients needs
? Shift from standardized manufacturing to client-led manufacturing
? High involvement levels for all parties.
? Client demands lowest national price due to centralised demand.
Benefits of utilising GAM:
? Becoming sole provider on on-innovated products, guaranteeing business from Global Strategy Account client.
? Elimination of bidding process for both parties, reducing costs involved in projects.
? A united front in sales, eliminating intra business/ subsidiary competition.
? Co-innovation expands knowledge and skills base available for product creation.
? Enhanced reputation transferable across regions.
? Interregional links building relationships, therefore forming platforms for expansion.
Requirements of SGBD for clients to become a Strategic Global Account:
? Client must offer potential of sourcing a minimum of 50% of global business from Schneider Electric. This is to ensure Schneider Electric recoups investments made to fulfil client’s requirements.
? Client must assist Schneider Electric in understanding its needs, challenges and services to ensure optimal results for both parties.
? Compatibility of goals, values, style and time frames also a consideration.
Source:
Bartlett, Ghoshal and Birkinshaw (2004) Transnational Management Text, Cases & Readings in Cross-Border Management, 4th Edition, McGraw-Hill/Irwin
Yip and Madsen (1996) Global account management: the new frontier in relationship marketing, International Marketing Review, 13, 3, pp.24-42.
Appendix IV
Figure 1
Schneider Electric customer satisfaction as stated by Ultima Media (2006):
“To increase customer satisfaction and keep installations up and running, Schneider Electric has established call centres in 40 countries and deployed a wide range of web-based services, including a global e-catalogue and online information, training, diagnostics and technical support.
In addition, they work side-by-side with customers to enhance their performance. This means :
? Ensuring the sustainability of electrical installations
? Improving industrial process performance
? Enhancing energy performance.
Some clients in the automotive sectors :
? DaimlerChrysler – Engine manufacturing and assembly – USA
? DaimlerChrysler – Body shop – Germany
? Renault – Surface treatment workshop, assembly plant – Spain, USA
? Ford – Engine manufacturing and assembly – USA and UK
? PSA – Test and research centre, high storage facility, body workshop, paint shop
? Caterpillar – Powertrain – France”
Source: Ultima Media. (2006) Automation Systems & Controls; Schneider Electrics, Automotive Manufacturing Solutions, accessed 15 March 2007
http://www.automotivemanufacturingsolutions.com/ams/directory/schneider.shtml
Figure 2
Growth drivers as ascertained by Schneider Electric
Source: Schneider Electric, d, (2007) Finance; 2006 Annual Results, Schneider-Electric, accessed 18 March 2007
http://www.schneider-electric.com/wps/portal/corp/
Figure 3
Products, consumers and growth opportunities of Schneider Electrics as detailed on their website.
Energy & Infrastructure
Guaranteeing a safe, reliable power supply and controlling operating costs
Products and services solutions encompassed in the Energy & Infrastructure market:
? electric power generation and distribution,
? energy metering and quality,
? water transportation and treatment,
? public transportation and freight shipping,
? telecommunication infrastructure,
? oil and gas infrastructure,
? multi-site remote management.
Growth opportunities
Growth in this market is driven by the considerable development of infrastructure for water, energy, transportation and communication (notably via the Internet); privatization of public infrastructure; outsourcing; and growing security and environmental protection requirements.
Main customers
Public-sector investors, supervisory authorities, systems integrators, OEMs, electric companies, large industrial companies and service firms, end users.
Industry
Enhancing productivity, flexibility, security and traceability
In the Industry market, products and services solutions cover:
? machine control,
? process automation,
? electrical supply and distribution,
? single or multi-site production data management.
Growth opportunities
Servicing a wide range of sectors including food and beverage, packaging, automotive, pharmaceuticals, electrical components, and chemicals industries. Major growth paths include global partnerships with key accounts and OEMs as well as Transparent Ready solutions.
Main customers
Engineering firms, systems integrators, OEMs, large industrial companies, panel builders and electrical equipment distributors, end users.
Buildings
Reducing operating costs while offering greater comfort and safety
In the Buildings market, products and services solutions cover:
? electrical supply and distribution,
? utilities management (lighting, air conditioning, elevators, access control, etc.),
? data exchange (Voice-Data-Image, Power Line Communication technology, radio),
? multi-site remote management for office buildings, shopping malls and stores, industrial buildings, ships, hotels, hospitals and schools, etc…
Growth opportunities
Great potential in the areas of automation, maintenance, optimization of energy use, automated HVAC and lighting management, access control and security for industrial, commercial and service buildings are available.
Main customers
Developers, engineering offices, developers, engineering and design firms, systems integrators, contractors, panel builders, electrical equipment distributors, building operators and end users.
Residential
Ensuring comfort and safety while simplifying communication
In the Residential market, products and services solutions for single-family homes and apartment buildings cover:
? electrical distribution (protection and installation systems),
? monitoring and safety,
? home automation and data exchange systems based on advanced technologies (Voice-Data-Image landline, Power Line Communication technology, radio).
Growth opportunities
A dependable, steady market in which renovation accounts for 50% of demand. Substantial growth opportunities linked with the development of new technologies and the immense housing needs of emerging countries.
Main customers
Architects, building owners, developers, building contractors, electricians, electrical equipment distributors, DIY superstores and end users.
Source:
Schneider Electrics, e (2007) Business; Markets, Schneider-Electrics, accessed 13 March 2007
http://www.schneider-electric.com/wps/portal/corp/
Appendix V
Key figures of Schneider Electric.
On 5 years
2004 and 2005: IFRS standard
2001, 2002 2003: French GAAP
Sales as of December 31
(million euros)
2005 11,679
2004 10,349
2003 8,780
2002 9,061
2001 9,828
2005 Sales by business
62% 25% 13%
Electrical Distribution
Automation & Control
Growth Platforms
2005 Sales by geographic region
48% 26% 18% 8%
Europe
North America
Asia Pacific
Rest of the world
2005 number of employees by geographic division
Total: 88,670 people
(Average number of permanent and temporary employees)
Europe 49.2%
North America 24.5%
Asia Pacific 19.6%
Rest of the world 6.7%
Operating income as of December 31
(million euros)
2005 1,565
2004 1,286
2003 1,007
2002 1,040
2001 1,116
Source: Schneider Electrics, f, (2007) Group; Key Figures, Schneider-Electrics, accessed 13 March 2007
http://www.schneider-electric.com/wps/portal/corp/
Appendix VI
Figure 1
Main competitors of Schneider Electric:
? ABB
? Alstom
? Cuttler Hammer
? General Electric
? Rockwell
? Siemens
Source: Bartlett, Ghoshal and Birkinshaw (2004) Transnational Management Text, Cases & Readings in Cross-Border Management, 4th Edition, McGraw-Hill/Irwin
Figure 2
Example of the strategy used by Schneider Electric’s competitors.
Source: Bartlett, Ghoshal and Birkinshaw (2004) Transnational Management Text, Cases & Readings in Cross-Border Management, 4th Edition, McGraw-Hill/Irwin
Figure 3
Article from PTC (2007) detailing business partnership to ensure competitiveness:
“Schneider Electric Optimizes Its Global Product Development Processes With PTC Product Development System
Leading French manufacturer of power & control equipment partners with PTC Global Services to quickly realize value from its single PLM platform strategy .
NEEDHAM, MA – January 30, 2007 – PTC (Nasdaq: PMTC), the Product Development Company, today announced that the world’s leading power and control specialist Schneider Electric selected PTC as its technology and services partner to improve the efficiency of its globally distributed product development processes. Schneider Electric’s strategic business initiative includes the shift to a single Product Lifecycle Management (PLM) platform powered by PTC Windchill® and the deployment of processes to support key product development strategies such as product modularization and the implementation of a Web-based IT architecture in a distributed engineering environment. As a result, Schneider Electric chose PTC Global Services as the preferred partner to realize a fast roll-out and a return on investment for the PTC Product Development System (PDS) including Pro/ENGINEER® and Windchill.
“PTC is not only delivering best-in-class technology for our global PLM initiative but has also proven to be a important service partner for implementing and optimizing its solutions, based on a clear implementation roadmap .” said Michel Catry, EIS Manager, Schneider Electric. “The fast roll-out of a single and integral Product Development System will substantially support our organic growth and the capability to cooperate with Global Competency Centers based in Mexico, India and China”.
Schneider Electric has launched a global product development initiative to reduce time to market for new products while lowering product development costs. As a single, Web-based technology platform, the PTC Product Development System implemented by the Global Services team is well suited to support these initiatives and lower the total cost of ownership for Schneider Electric’s Research & Development IT infrastructure. The new PLM backbone will enable Schneider Electric’s global product development teams to work with common methods and processes, and share and reuse mechanical, electrical and software information more efficiently to free up product development capacity. The PDS replaces existing legacy systems in different departments and allows Schneider Electric to keep a single source of all relevant information, which can be shared internally and externally throughout the extended enterprise, including the suppliers, partners and distributed technical centres in China, India and Mexico. The overall change process is managed in Windchill PDMLink™, and the exchange of information with participants both inside and outside the company is provided by Windchill ProjectLink™ in a seamless, integral change management environment
“The power and control industry is under significant competitive pressure to reduce cycle times and costs by sharing and reusing more mechanical, electrical and software data on a global scale” said Barry Cohen, Ph.D., executive vice president, Strategic Services and Partners, PTC. “This requires a Web-based PLM infrastructure which can be easily rolled out on a global scale, but it also requires a deep knowledge about the product development process. Schneider Electric’s decision to partner with PTC demonstrates that we are providing leading technology combined with the services expertise to help our customers realize long lasting business value.”
About PTC Solutions for Electronics & High Tech
PTC solutions for electronics & high tech are designed to meet the product lifecycle management requirements of electronics manufacturers. These solutions include product development process and data management, electronic verification and collaboration, environmental regulatory compliance (RoHS, WEEE, etc.) and 3D mechanical design. PTC has over 3,000 high tech customers, including the top 30 electronics manufacturers across the globe.”
Source: PTC (2007) Schneider Electric Optimizes Its Global Product Development Processes With PTC Product Development System, PTC, accessed 08 March 2007
http://www.ptc.com/appserver/wcms/standards/textsub.jsp?&im_dbkey=44302&icg_dbkey=21
Figure 4
Schneider Electric’s Competitor Defence Strategy
Source: Bartlett, Ghoshal and Birkinshaw (2004) Transnational Management Text, Cases & Readings in Cross-Border Management, 4th Edition, McGraw-Hill/Irwin
Appendix VII
Figure 1
Distefano and Maznezski (200) state that there are three steps to creating value in a global team: Map, Bridge Integrate.
Successful teams interact according to the three principles of mapping, bridging, and
integrating (MBI). To map, they describe the differences among members and the impact of those differences in objective, measurable ways. To bridge, they communicate in ways that explicitly took the differences into account. Integrating directs them to create team-level ideas by carefully monitoring participation patterns, resolving disagreements, and creating new perspectives.
By applying these principles in a dedicated and committed way, any global team can be successful.
Mapping to Understand Differences
The principle of mapping requires a commitment to understand the underlying characteristics
affecting each member’s approach to the team. In a multinational team it may seem obvious that members will have different perspectives, but deliberately mapping these differences develops an appreciation of how they affect teamwork. There are three steps to the mapping principle: selecting
which characteristics to map, describing members’ characteristics, and identifying
their impact.
Bridging to Communicate Across Differences
Bridging, or communicating effectively across the differences to bring people and
ideas together, is the next important principle in the MBI approach. Effective communication is “sending and receiving meaning as it was intended.” We are all too familiar with miscommunication, especially in situations marked by diversity. Those stories can be humorous, but they tend to have unfortunate endings. The key to bridging is to prevent miscommunication. There are three steps to building a strong bridge in a diverse team: Prepare, Decenter, and Recenter.
Integrating to Leverage Differences
Although good bridging is critical, understanding each others’ perspectives doesn’t
guarantee that the group can bring everything together and come up with good decisions. For that, the team needs to integrate, our third principle of managing diversity well. Integrating is where understanding (from mapping) and communicating (from bridging) get converted into productive results.
There are three important steps to integrating:
? managing participation
? resolving disagreements
? building on ideas
All three require good mapping and bridging.
Creating value in diverse teams: the MBI approach.
Source:
Distefano, J.J. and Maznezski, M.L. (2000) Creating Value with Diverse Teams in Global Management, Organizational Dynamics, 29, 1, pp. 45–63.
Figure 2
“Schneider Electric knows that it must increase the investment in the development of employees and their competencies in order to capitalize on opportunities Global communication is critical and a common language essential. At the heart of Schneider Electric’s human capital development program are communication skills. In a survey of employees, 81 percent said that English skills are “required” or “important” in their current jobs. Seventy-six percent of employees said they use English on the job at least once a week. In addition, Schneider Electric identified two key business drivers that required improved English communication skills globally. First, the company is a global organization and must be dedicated to global customers who demand consistent service around the world. Second, as a global company, Schneider needs to share and capitalize on expertise and best practices, regardless of where they operate geographically.
Schneider then closely examined its communication capabilities. It found that 85 percent of “high-need” employees reported that they had been told by their managers to improve their English skills; their progress would be regularly monitored or evaluated during their performance reviews. Ninety-four percent said they needed to improve their English skills within two years. And 70 percent said that English skills were “required” or “important” in order for them to get a promotion in the global organization.
The company also had explicit goals to achieve cost savings. Previously, English language training was purchased locally, with each region determining its own solution, vendor, and expenditures. With this decentralized approach, it was difficult to determine and control costs, ensure consistent quality of the training, and measure results to determine effectiveness. To overcome these problems, management directed that 80 percent of English learners should use e-learning. The global learning team knew that maintaining fewer vendors would mean fewer internal resources to manage. Also, a larger contract could provide significant cost savings.
More than 3,000 “high-need” and “high-potential” employees from all regions enrolled in the GlobalEnglish Corporate Learning Service™. The need for English training cut across all functions within the organization, and participants represented nearly all departments in the company, including R&D, HR, communication, sales, marketing, IT, client support, quality, manufacturing, finance and accounting, logistics, purchasing, and legal.
Flavio Scuccimarra, Project Director, Schneider Institute of Management stated;
“Schneider measured the impact the program has had on strategic goals and money saved. What we discovered was that, with the GlobalEnglish program, we were able to train more people, our employees became more efficient and effective in communicating with each other and customers, and we have lowered our overall cost for training because we have better ways to learn and higher usage.” “
Adapted from source: Global English (2005) Case study: Schneider Electric, GlobalEnglish, accessed 9 March 2007.
http://www.globalenglish.com/corporate
Figure 3
Taken from Schneider Electric’s website.
Strategy
“new² in action”
In January 2005, Schneider Electric introduced its new² company program, which reaffirms their commitments to stakeholders and ambition to be:
? A great company to do business with
? A great place to work
? A great investment
? A great world partner.
new² focuses on three priorities for which have been identified to have significant potential for improvement:
? Speed growth and innovation,
? Enhance operating efficiency,
? Develop our people and promote employee involvement.
Our top priority: customer satisfaction
Understanding our customers’ needs
To stay fully abreast of our customers’ requirements, 60 centers in 25 countries have been set up, specializing in applications such as elevators, packaging, textiles and data centres. The goal is to develop the most effective solutions with customers to meet their specific needs.
Innovating for users
To get a handle on users’ expectations, we’ve re-created their daily environment in the laboratory. Thanks to these innovation platforms, we are able to respond much faster with solutions based on observation that are often very simple, but always effective.
Spreading the word
To forge close contacts with customers and present the extremely diverse range of solutions offered by Schneider Electric and its partners, private professional trade shows called Initi@tive were launched in 2005. The shows feature main products and solutions, as well as those of partners, and an “à la carte” schedule of conferences. In 2005, Initi@tive shows were held in Seville, São Paulo, Mexico City, Santiago, Istanbul and Bangkok.
Promoting growth
Targeted acquisitions and new businesses
Schneider Electric have brought in a number of new activities that complement the core electricity and automation management business and provide new momentum.
During the year 2005, five acquisitions were made in five strategic areas:
? Energy management, with Canada’s Power Measurement Inc., a leader in comprehensive systems for managing energy consumption.
? Building automation and security, with ABS EMEA (Advanced Building Systems Europe and Middle East), which is now part of TAC, Schneider Electric’s skills centre for building management and monitoring systems.
? Industrial automation with Germany’s Elau, the world leader in automation solutions for packaging machines.
? Customized sensors for application positioning and monitoring systems, with US-based BEI Technologies.
? Ultra terminal electrical distribution, with Juno Lighting, America’s leading manufacturer of track and recessed lighting.
Over a full year, new activities represent revenue of around €5 billion.
Promoting efficiency
Rebalancing and globalizing
Schneider Electric has initiated more than 700 projects to rebalance and optimize purchasing, as well as the manufacturing base and supply chain. Productivity enhancement measures were stepped up in all countries. A major project was launched to optimize and unify their IT systems at the global level so they could be even more efficient and effective.
Cultivate commercial excellence – Provide exceptional customer service
All Schneider Electric team members, at all levels and in all functions are encouraged to become partners in enhancing customers’ growth and performance. Satisfaction surveys are conducted in all countries to measure the progress.
Promoting our people
new²’s three paths for promoting employee growth and commitment are enhancing workplace safety, developing talent and unleashing entrepreneurship.
An aim has been set to reduce the number of days lost due to work accidents to 20%. To achieve these goals, three-year competency plans have been implemented in each unit, collecting 360 degree feedback for all managers, and enlarging Schneider Electric University’s curriculum to new areas.
A promise has been made to inform all employees quarterly about the progress plans put into place in response to employee satisfaction surveys. In addition, the company has promised to spotlight corporate social responsibility by reviewing social and environmental performance every three months.
Source:
Schneider Electrics, c, (2007) Groups; Strategy, Schneider-Electrics, accessed 13 March 2007
http://www.schneider-electric.com/wps/portal/corp/
Appendix VIII
Figure 1
Three of Schneider Electric’s partner’s in ensuring its resources and Global Account Management is utilised optimally:
? PTC – product development system. Refer to figure 3 appendix VI for details.
? HP – SAP Solutions and Services for manufacturing utilized for Schneider Electric’s Enterprise Resource Planning at its new Hong Kong logistics hub.
? SAS – supplier relationship management
Sources:
? PTC (2007) Schneider Electric Optimizes Its Global Product Development Processes With PTC Product Development System, PTC, accessed 08 March 2007
http://www.ptc.com/appserver/wcms/standards/textsub.jsp?&im_dbkey=44302&icg_dbkey=21
? HP (2005) Schneider Electric: A new regional logistics hub.A centralised data centre. A more adaptive IT platform., HP, accessed 13 March 2007.
http://www.hp.com
? CRM Today (2004) Schneider Electric streamlines SRM with SAS, crm2day, accessed 12th March 2007.
http://www.crm2day.com
Figure 2
A reflection on Schneider electric’s Global Account Management success
“Frost & Sullivan Commends Schneider Electric’s Outstanding Competitive Strategy Leadership
London, 10th July 2006….The 2006 Frost & Sullivan Award for Competitive Strategy Leadership is presented to French power and control giant, Schneider Electric. The company’s exceptional strategic thinking and creative vision have facilitated its rapid organic growth in the highly competitive European building automation and controls market (BACS).
“With sales growth of 13 per cent and a 22 per cent increase in its operating income in 2005 as against single-digit overall market growth, Schneider Electric has demonstrated its ability to grow in mature markets based on its sound strategy and innovative thinking,” says Frost & Sullivan Research Analyst Manoj Kumar S. “The company is currently positioned fourth in the overall European BACS marketplace and has emerged an important participant in many new markets across the world.”
A strategy based on selective acquisitions has enabled Schneider Electric to strengthen its core electrical distribution and industrial automation-related businesses, while broadening its product line and sales presence in many targeted regions including the emerging markets of Asia Pacific and Eastern Europe.
While the company generates nearly half of its sales in Europe, it has also been exploring new geographic opportunities and acquisition plans in contiguous industries as part of its strategy to achieve accelerated competitive growth.
The acquisition of TAC and Andover Controls has allowed Schneider Electric to consolidate its position in the building automation and control systems market. Moreover, the recent addition of Advanced Building Systems (ABS), which constitute United Kingdom’s leading Satchwell brand and other popular brands such as Atmostech, Controlli and Messner, has enabled Schneider Electric to boost its like-for-like sales in the BACS market by 30 per cent in 2005.
“Schneider Electric respects the culture of the acquired companies as well as their brand values,” comments Mr. Kumar. “It has around ten different brand names for its BACS solution, which is uncommon in the industry.”
Globally, the acquisitions of PMI, Elau, ABS EMEA, Juno Lighting and BEI Technologies in 2005 and that of Andover Controls and Kavlico in 2004 have contributed to sales worth $538.7 million, besides helping the company gain expertise in new areas. Driven by its acquisitions in Europe, the market share of Schneider Electric increased by 10 per cent in 2005.
“The structure of competitors in the European BACS market has been revolutionised by the Schneider group’s recent acquisitions,” notes Mr. Kumar. “By changing the competitive landscape, the company has dramatically increased the visibility of French companies in the previously neglected BACS market.”
In order to offer its customers innovative solutions, Schneider Electric invests 5 per cent of its sales revenues in R&D, which is a relatively high spend for an automation company. At the same time, it has also carried out innovative structural re-organisation aimed at facilitating new development strategies.
Frost & Sullivan’s Competitive Strategy Leadership Award is presented to the company whose unique competitive strategies have yielded significant gains in market share. Often, the recognised company has taken advantage of recent market changes to introduce unique methods of capturing and solidifying market presence or has executed an innovative strategy within the existing competitive landscape to gain the competitive edge.
Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global markets for demonstrating outstanding achievement and superior performance in areas such as leadership, technological innovation, customer service, and strategic product development. Industry analysts compare market participants and measure performance through in-depth interviews, analysis, and extensive secondary research in order to identify best practices in the industry.
About Frost & Sullivan
Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company’s industry expertise integrates growth consulting, growth partnership services and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community, by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics. For more information, visit www.frost.com.
Source: Frost & Sullivan (2006) Frost & Sullivan Commends Schneider Electric’s Outstanding Competitive Strategy Leadership,Frost and Sullivan, accessed 8 March 2007
http://www.frost.com/prod/servlet/press-release-print.pag?docid=74616675
Figure 3
Schneider Electric – Aggressive French Giant, an article by Jim Pinto
“With 85,000 employees, operations in 130 countries, and 13,000 distributor outlets, France-based Schneider Electric is high on the world list of major automation companies. 2004 revenue was about $14 billion, with growth of 18% (organic growth 8.5%) – significant growth in a flat world economy. For the first half-2005 (June 30, 2005) revenue increased by 6.4% and the 2005 outlook was revised upwards. All operating numbers showed significant growth over the comparable period of 2005. The strategy of selective acquisitions continues.
Here is a list of major acquisitions dating back to 1984. Several other smaller acquisitions have not been listed.
1984 Magrini Galileo
1987 Federal Pacific
1988 Telemechanique
1991 Square D, Federal Pioneer
1993 Merlin Gerin (note: year of acquisition differs to case study)
1996 AEG Schneider Automation, Modicon
1999 Lexel, Veris Industries, MITA, Infra+
2000 Crouzet, Bergher Lahr, Crompton Greaves, Conlog, Nu-Lec
2001 Prosyst, WA Brown, Inari, Think & Do, PDL
2002 Digital Electronics
2003 Clipsal, TAC, MGE-UPS, Hyde Park
2004 Andover Controls, Kavlico, Elau, Abacus, Magnecraft, Dinel
2005 (First half 2005): Power Measurement Inc, ABS EMEA , Juno Lighting, BEI Technologies
Strong growth objectives
Schneider has an ambitious corporate mission to support a strategy of faster, more competitive growth, beyond its own geographic and cultural limits. To stay competitive, R&D percentage is above 5%, relatively high for an automation company (most typically invest only 2%-3%).
Schneider operates in three sales regions: Europe (52%), North America (24%) and International (rest-of-world, which includes Japan and China) generates 24%. Electrical Distribution 63%; Automation 26%; Growth platforms 11%
Schneider Corporate Culture
According to senior managers, here is what makes Schneider’s business culture different:
? Diverse culture:
Schneider is very open to any type of culture. This is probably due to the fact that the group was built on acquisitions over the past 20 years. One way or another, all companies in the group share a common beginning – they were all acquired by Schneider. As a consequence, there is not such a thing as a predominant culture. It is very difficult to spot a real true Schneider original employee; there are not more than a few. The diverse cultures have probably been helpful in successful integration of very diverse companies such as Digital in Japan, and Clipsal in Asia.
? Local cultures:
Because of the many acquisitions, Schneider is very respectful of the local cultures of the countries where they work. They have far fewer “expats” (French transplants) than any similar companies, and rely more on the growth of local people in the operations. Schneider prides itself on being very “local”.
? Brand names:
Schneider recognizes the value of the business acquired. When it makes sense, they keep the brands in the company portfolio – there are 70 different brand names, unusual for any company.
? Sales Channels:
Schneider is more partner and distributor orientated than most of their competitors.
? Corporate focus:
Schneider is focused on Automation and Electrical distribution, by choice. It does not diversify into businesses such as Medical, Telecom, or Financial services.
? Management team:
Schneider’s 11-member executive management team includes 4 non-French members. Of the industrial automation majors, perhaps only ABB is more internationalized at the top. The corporate management program is designed by top management (about 100 people in various companies).
? New product development:
The R&D budget is decided at the corporate level. New products come from R&D centers located in France, US, UK, Singapore, China, Sweden, Japan etc.
? Incentive plans:
There are good bonuses for the management (approximately 40% of staff level employees), and stock options for the top managers.
Schneider is a focused, well-managed, growth-orientated, global corporation. Look for continued aggressive acquisitions of large and small companies that fit its focused strategy in target markets.
American Subsidiary (Modicon) view of Schneider
Many people are surprised at how so many acquisitions have not only survived, but thrived, as part of this giant French company. Well, here is the view from a well-known major US subsidiary – Modicon. Paul Hamilton [paul.hamilton@modicon.com] from North Andover, MA, USA provided this feedback:
“It’s important to get a sense of the people and the environment at Schneider, to understand how the company manages toward the future.
“Every 3 years the company organizes around a growth and productivity initiative that drives the behavior and objectives of all groups and divisions for the following 3 years. We are just starting the 4th such program that I am aware of. This one is a 4 year program as opposed to the previous 3 year programs.
“As this is the 4th generation of this type of program the company is becoming more efficient and more organized around developing and implementing goals and objectives. It is well organized and it strongly drives focused behavior and results. You can find this NEW2 program on the Schneider web site, finance section under new company program.
“Relative to the people and environment: Yes the 12 member executive team includes 4 non-French personnel as you mentioned. However, what is not so obvious is: 9 of these members are new to their positions in the last 1 to 2 years thus highly energized and motivated to achieve results. 8 have held senior expatriate positions in other countries prior to joining the staff. These assignments include China, USA, Africa, and other Asian and Europeans countries. This is a team with a real global view from personal experience as opposed to the typical fly-in-fly-out experience of many senior management teams.
“Moving a large company forward is about change. As you recognize, change is disruptive and creates some amount of discontent. I am sure, like every big company, we will have our share of people that are not happy as the company finds it way to the next level of results. However, there is a difference at Schneider.
“Management is engaged with the business and encourages people to express and act on their opinions if it brings real benefit to the company objectives. You can be an entrepreneur and you can make a difference if you choose. People are rewarded for this behavior.
“Management is clear and goal driven. Schneider’s NEW2 plan describes a simple set of objectives around people, growth, and efficiency that everyone in the company understands and has integrated into their own goals at a department or group level. These goals were not developed in a vacuum but developed with strong participation from the top 100 global managers.
“In 1Q05 NEW2 was cascaded to 600 top managers and subsequently to every employee in the company. The results, progress and issues are reviewed every month by the COO and cascaded down throughout the company. All this creates an environment of clear performance minded people focused on achieving results consistent with company goals.
“The company cares about people, the environment, and the community. Seldom have I seen a company that consistently encourages everyone to always try to make a difference in the places they live and in the world. Community programs are always in the highest level goals of the company.
“Schneider Electric employees expect this and respond to this though local programs or corporate programs such as our recent tsunami relief efforts. The company is always striving and driving to be at the forefront of Environmentally friendly behavior such as RoHS (reduction of hazardous substances) and Eco design programs.
“In summary: Schneider is a diverse company that thrives on and encourages local cultures to develop and grow in their own way in each country. Yet, at the same time, and without destroying this value, Schneider has been able to create an environment where everyone understands and is focused on the same goals for global growth and efficiency. This is the real value and culture of Schneider Electric. And that is why we will continue to succeed.”
Continued growth plans
In the fast-changing business environment of a new century, Schneider continues to adapt, change and pursue innovation with its own corporate governance. The companies Board of Directors will be proposing the transformation of its own corporate mode of governance at the Shareholders’ Meeting on 3 May 2006, to ensure the smooth succession of its leadership and the pursuit of its development strategy.
During the next years, look for Schneider to emerge as a clear leader in several key industrial automation target markets through strong organic growth, as well as a continued aggressive acquisition program. It’s interesting to note that Schneider made a strong ($60 million) acquisition offer for Australia-based CITECT in Oct. 2005. The offer was pre-empted by Thoma-Cressey, a US based venture capitalist, which acquired CITECT in January 2006. Clearly Schneider is now in the market to acquire another similar systems/software company for strategic reasons.
Schneider will continue to acquire key parts of ailing automation conglomerates, as well as strategic small and mid-sized companies that are poised for new growth. Right now, the aggressive French giant seems unstoppable. “
Source:
Pinto, J. (2006) Schneider Electric – Aggressive French Giant, an article by Jim Pinto, Automation, accessed 8 March 2007.
http://www.automation.com/sitepages/pid2247.php
Figure 4
Reinforcement of the success of Schneider’s GAM is reflected in the appointment of recently retired Senior VP/General Manager of SGBD Chicago, Bernard L. Quancard, as President and CEO of the Strategic Account Management Association, detailed in the following article.
“The Strategic Account Management Association (SAMA) today announced that its board of directors has named Bernard L. Quancard to serve as the association’s President and Chief Executive Officer. He comes to SAMA with significant Consulting, Senior Executive and Global Strategic Account Management experience.
Bernard started his career in 1969 with The Boston Consulting Group in
the Boston and Paris offices. He joined Telemecanique (Schneider Electric
Group) in 1975 as Vice President, Corporate Strategy and became VP/General
Manager of the Switch Gear division in 1978 and of the Uninterruptible
Power Supply (UPS) division in 1988. In 1994, he joined the management
board of AEG Schneider Automation (Schneider Electric Group) as Executive
VP, Worldwide Sales and Marketing.
Bernard moved to Chicago in 1997 for Square D/Schneider Electric as
Senior VP/General Manager of Schneider Global Business Development (SGBD),
the entity managing global strategic accounts (GSAs) for Schneider Electric
worldwide. That year, SGBD was managing 24 GSAs, driving $180 million of
consolidated sales. By 2001, the entity was managing 74 GSAs with over a
billion dollars of consolidated sales. The compounded growth of Schneider
Electric sales at GSAs was twice the average growth rate of the total
company. Strategic Account Management at Schneider Electric was recognized
by the organization and its competitors as a major competitive advantage.
“Bernard’s wealth of knowledge, experience and engaging style will be a
true asset to SAMA and under his leadership we look forward to a bright
future,” states Rosemary Heneghan, Chairperson of the Board.
Retired from Schneider Electric since March 2005, Bernard is president
of the French American Chamber of Commerce in Chicago, a permanent Chicago
resident and also a native of France. Bernard holds a BS degree in
electrical engineering from the University of Paris and an MBA from the
University of Chicago.
About the Strategic Account Management Association (SAMA)
Founded in 1964, SAMA is a non-profit organization devoted to
developing and promoting the practice of customer-supplier collaboration.
SAMA is dedicated to the professional development of the individuals
involved in the process of managing national, global and strategic customer
relationships, enabling firms to create greater customer value and to
achieve competitive advantage accordingly. Based in Chicago, the
association has earned a reputation for being the strategic account
management profession’s knowledge leader, providing members with the
high-quality resources, training and networking opportunities needed to
succeed.
Source: PR Newswire (2006) Strategic Account Management Association Announces Its New CEO, prnewswire, accessed 10 March 2007.
http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/10-18-2006/0004454084&EDATE
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