Remote External Environment of France

Study on remote environment of France

Introduction

France, officially the French Republic. Is a state in Western Europe with several overseas
territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans.
It is often referred to as l’Hexagone ("The Hexagon") because of the geometric shape of its
territory. It is bordered (clockwise starting from the northeast) by Belgium, Luxembourg,
Germany, Switzerland, Italy and Monaco; with Spain and Andorra to the south. France is linked
to the United Kingdom by the Channel Tunnel, which passes underneath the English Channel.

National Flag Geographical area National Emblem

           

Considering that performance is the major objective of an organization, it is generally accepted

that the structure and decision making in an organization is influenced by environmental
complexity and volatility. Furthermore, it is argued that the alignment of strategies of
organizations with the requirements of their environment outperform organizations that fail to
achieve such an alignment. Environmental scanning is generally accepted as being the first step
in the process of aligning strategy with environment. This is because environmental scanning
will help the organization to learn more about opportunities for taking competitive advantage and
threats referring to its survival.

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However, although "environmental scanning is the search mechanism by which managers

discover important events and trends outside their organizations", scanning the business
environment has been initially defined as the activity of acquiring information ", about events
and relationships in a company's outside environment, the knowledge of which would assist top
management in its task of charting the company's future course of action."

Major external and uncontrollable factors that influence an organization's decision making and
affect its performance and strategies. These factors include the economic, legal, political, and
social conditions, technological changes, and natural forces(Environmental factors). These
factors depend on the complexity and dynamism of the environment. Thus, business external
environment has been classified as being "stable", when it does not show any changes,
"unstable" when it shows relative changes, and "dynamic", when it shows changes continuously.
However, perceptions of the organizations about the type of the business external environment
may depend on their size and industry in which operate.

Facts:

 In January 2010, the International Living ranked France as "best country to live in",
ahead of 193 other countries surveyed, for the fifth year running, according to a survey
taking in account 9 criteria of quality of life: Cost of Living, Culture and Leisure,
Economy, Environment, Freedom, Health, Infrastructure, Safety and Risk and Climate
 As for the national anthem ‘La Marseillaise’, it was written in 1792 as a war song for the
French Army. The official motto of the French Republic, "Liberté, égalité, fraternité"
(Liberty, equality, brotherhood) also appeared during the French Revolution. Marianne,
unofficial symbol, is an allegorical figure of liberty and of the Republic and also
appeared at the time of the Revolution.
 A common and traditional symbol of the French people is the ‘Gallic rooster’. Its origins
date back to Antiquity, since the Latin word Gallus meant both "rooster" and "inhabitant
of Gaul".
 French cuisine is renowned for being one of the finest in the world. French cuisine is
extremely diverse and has exerted a major influence on other western cuisines.

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 Popular sports played in France include football, judo and tennis. France has hosted
events such as the 1938 and 1998 FIFA World Cups, and hosted the 2007 Rugby Union
World Cup.

1) Economic Factors

A member of the G8 group of leading industrialized countries, it is ranked as the fifth largest
economy by nominal GDP. France has a mixed economy which combines extensive private
enterprise (nearly 2.5 million companies registered) with substantial (though declining) state
enterprise and government intervention. The government retains considerable influence over key
segments of infrastructure sectors, with majority ownership of railway, electricity, aircraft,
nuclear power and telecommunications. It has been gradually relaxing its control over these
sectors since the early 1990s. The government is slowly corporatising the state sector and selling
off holdings in France Télécom, Air France, as well as the insurance, banking, and defense
industries. France has an important aerospace industry led by the European consortium Airbus,
and has its own national spaceport, the Centre Spatial Guyanais.

 Power generation:

France derives 79% of its electricity from nuclear power, the highest percentage in the world.

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 Export, Import & FDI

According to the WTO, in 2009 France was the world's sixth-largest exporter and the fourth-
largest importer of manufactured goods. In 2008, France was the third-largest recipient of
foreign direct investment among OECD countries at $117.9 billion, ranking behind Luxembourg
(where foreign direct investment was essentially monetary transfers to banks located in that
country) and the United States ($316.1 billion), but above the United Kingdom ($96.9 billion),
Germany ($24.9 billion), or Japan ($24.4 billion). In the same year, French companies invested
$220 billion outside of France, ranking France as the second most important outward direct
investor in the OECD, behind the United States ($311.8 billion), and ahead of the United
Kingdom ($111.4 billion), Japan ($128 billion) and Germany ($156.5 billion). With 39 of the
500 biggest companies of the world in 2010, Frances ranks 4th in the Fortune Global 500, behind
the USA, Japan and China, but ahead of Germany and the UK.

 GDP

The total agri-food industry made up 4.2% of French GDP in 2005. GDP per capita is
determined by

1. Productivity per hour worked, which in France is the highest of the G8 countries in 2005,
according to the OECD.
2. The number of hours worked, which is one the lowest of developed countries.
3. Employment rate. France has one of the lowest 15–64 years employment rates of the
OECD countries: in 2004, only 69% of the French population aged 15–64 years were in
employment, compared to 80% in Japan, 79% in the UK, 77% in the US, and 71% in
Germany.
 Unemployment rate

The unemployment rate decreased from 9% in 2006 to 7% in 2008 but remains one of the
highest in Europe. In June 2009, the unemployment rate for France was 9.4%. Shorter working
hours and the reluctance to reform the labour market are mentioned as weak spots of the French
economy in the view of the right, when the left mentions the lack of government policies
fostering social justice. Liberal economists have stressed repeatedly over the years that the main
issue of the French economy is an issue of structural reforms, in order to increase the size of the

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working population in the overall population, reduce the taxes' level and the administrative
burden.

 Capital Growth

Property in France is known as a stable investment both for capital appreciation of between 5 and
10% and high rental yields of around 7 to 10%. Meanwhile some mini hotspots such as prime
areas on the Cote d’Azur even saw growth of as high as 22% in 2005. As a general rule, buyers
look to investment property in France as a solid and stable source of reliable income to them for
the medium to long term.

 Leaseback Schemes.

Under this Government scheme, purchasers buy freehold property and then lease it to a holiday
company for a typical period of nine years. In return they get guaranteed rental income at
average yields of 3 to 6% (some schemes guarantee yields of 5.5%). Although owners pay
maintenance charges and management fees amounting to some 15% of rental income, they are
fully refunded their VAT of 19.6%. In addition owners can use their properties for periods of
between 2 and 8 weeks per year at reduced rates.

 High Rental Demand

Due to France’s popularity as the World’s most popular tourist destination, there is always high
demand for accommodation in tourist resort areas. The French, like many other continentals, do
not have the British preoccupation with owning property and the vast majority rent their homes
for average fixed terms of three years, allowing investors ample buy-to-let opportunities.

 Low Property Prices

Property prices are still lower than in many European locations, making property investment in
France still a very attractive option. In the remote areas of the country, you may still find a
renovation project for under GBP 30,000 while a typical two bedroom off-plan property in
Provence could set you back around GBP 80,000.

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 Capital Gains Tax

If your property was your principal residence, you will be exempt from capital gains tax.
However if the property is not your principal residence, tax will be levied at 16%, unless you
have owned it for more than 15 years.

 Excellent Infrastructure

France is a modern country and is well served by a top class transportation. As a result it is easily
accessed from the UK and mainland Europe via excellent air, rail and road links that give it the
ease of access that all modern tourist destinations need.

Some facts about transportation:

 The railway network of France, which as of 2008 stretches 29,473 kilometres (18,314 mi)
is the second most extensive in Western Europe after the German one.
 There are approximately 1,027,183 kilometres (638,262 mi) of serviceable roadway in
France, ranking it the most extensive network of the European continent.
 There are 475 airports in France.

Interpretation: This good transport facility indicates strong distribution network.

 Mortgages

Easy access to mortgage lending facilities both in the UK and in France are an added economic
factor that makes investment in French property so easy. Foreigners are able to obtain up to
100% finance for their purchase and interest rates can be fixed or fluctuating, while current rates
are a competitive 4%.

 Double Tax Treaty

The double tax treaty that exists between the UK and France ensures you do not pay tax twice.

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 Development aid

In 2007, France is the third largest donor of development aid in the world, behind the US and
Germany, but ahead of Japan and the UK. This represents 0.5 % of its GDP, one of the highest
rate of the developed countries. The organism managing the French help is the French
Development Agency, which finances primarily humatarian projects in sub-Saharan Africa. The
main goals of this help are "developing infrastructure, access to health care and education, the
implementation of appropriate economic policies and the consolidation of the rule of law and
democracy."

2) Social Factors

The French are very aware of their presence, and are extremely proud of their heritage. They
boast of their long history and their important roles in world affairs, as well as being known as a
world center for culture.

 Religion in France

Christianity is the largest religion in France, which is a secular country, and freedom of religion
is a constitutional right. The French government does not keep statistics on religious adherence,
nor on ethnicity or on political affiliation. However, some unofficial survey estimates exist:

According to Geert Hofstede Analysis France, the following data is collected.

* WORLD FACTBOOK 2002

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Appearance

  The French are very conscientious of their appearance.

  Dress conservative and invest in well-tailored clothing.

  Patterned fabrics and dark colors are most acceptable, but avoid bright colors.

  French businessmen do not loosen their ties or take off their jackets in the office.

  Women should also dress conservatively.  Avoiding bright or gaudy colors is recommended.

  Women should also avoid any glitzy or overpowering objects, such as flashy jewelry.

Interpretation: This data shows that there is lot of scope for textile industry. Less scope for
jewelry manufacturing companies.

Behavior

  Punctuality is treated very casually in France.

  France is a highly stratified society, with strong definition and competition between classes.

  The French handshake is brief, and is accompanied by a short span of eye contact.

  Always shake hands when meeting someone, as well as when leaving.  French handshakes
are not as firm as in the United States.

  The French have a great respect for privacy. Knock and wait before entering into a room.  
Additionally, do not "drop in" unannounced. Always give notice before your arrival.

  Business can be conducted during any meal, but lunch is best.

  Avoid drinking hard liquor before meals or smoking cigars between courses. The French
believe this permeates the taste buds, compromising the taste of the meal.

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  Gift giving is left to the foreigner’s discretion.

  Good gifts to present include books or music, as they demonstrate interest in intellectual
pursuits.

Interpretation: Gifts mainly include books and music, the industries of these types are at
advantageous side.

 Education

Education is of great importance to the French.  This is demonstrated by the fact that the
educational system is almost free of charge from the primary school through the Ph.D. level,  for
French citizens.

School system in France:

Nowadays, the schooling system in France is centralized, and is composed of three stages,
primary education, secondary education, and higher education. The Programme for International
Student Assessment, coordinated by the OECD, currently ranks France's education as the 25th
best in the world, being neither significantly higher nor lower than the OECD average. [228]
Primary and secondary education are predominantly public, run by the Ministry of National
Education.

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 Population:

With an estimated population of 65.4 million people (as of 1 Jan. 2010), France is the 20th most
populous country in the world. In 2004, population growth was 0.68% and then in 2005 birth and
fertility rates continued to increase. The natural increase of births over deaths rose to 299,800 in
2006. The total fertility rate rose to 2.02 in 2008, from 1.88 in 2002. Agriculture is an important
sector of France's economy: 3,5% of the active population is employed in agriculture. In 2004, a
total of 140,033 people immigrated to France. Of them, 90,250 were from Africa and 13,710
from Europe. In 2008, France granted citizenship to 137,000 persons, mostly to people from
Morocco, Algeria and Turkey.

 Ethnicity

It is illegal for the French state to collect data on ethnicity and race, a law with its origins in the
1789 revolution and reaffirmed in the constitution of 1958. Nonetheless, France is an ethnically
diverse nation with about six million North Africans and an estimated 2.5 million blacks.
According to the French National Institute for Statistics and Economic Studies, it has an
estimated 4.9 million foreign-born immigrants, of which 2 million have acquired French
citizenship.

 Language

According to Article 2 of the Constitution, amended in 1992, French is the sole official language
of France. Therefore, France is the only Western European nation (excluding microstates) to
have only one officially recognised language. However, 77 regional languages are also spoken,
in metropolitan France as well as in the overseas departments and territories. Until recently, the
French government and state school system discouraged the use of any of these languages, but
they are now taught to varying degrees at some schools. Other languages, such as Portuguese,
Italian, Maghrebi Arabic and several Berber languages are spoken by immigrants.

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 Culture and arts

 Painting: The origins of French painting were very much influenced by Italian art. The
two most famous French artists of the time of Renaissance, Nicolas Poussin and Claude
Lorrain, lived in Italy. Many museums in France are entirely or partly devoted to painting
works. A huge collection of old masterpieces created before or during the eighteenth
century are exposed in the state-owned Musée du Louvre, such as Mona Lisa, also known
as La Joconde.
 Architecture: Technically speaking, there is no standard type of "French" architecture,
although that has not always been true. Gothic Architecture's old name was French
Architecture (or Opus Francigenum). The term “Gothic” appeared later as a stylistic
insult and was widely adopted.
 Literature: The earliest French literature dates from the Middle Ages, when what is now
known as modern France did not have a single, uniform language. There were several
languages and dialects and each writer used his own spelling and grammar. The authors
of French mediaeval texts are unknown, such as Tristan and Iseult and Lancelot and the
Holy Grail.
 Music: Although the musical creation in France dates back to the Middle Ages, it knew
its golden age in the seventeenth century thanks to Louis XIV, who employed several
musicians and composers in the royal court.

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3) Political Factors

France is a unitary semi-presidential republic with its main ideals expressed in the Declaration of
the Rights of Man and of the Citizen. France is one of the most developed countriesand
possesses the fifth largest economy by nominal GDP and seventh largest economy by purchasing
power parity. France enjoys a high standard of living as well as a high public education level,
and has also one of the world's highest life expectancies. It is the most visited country in the
world, receiving 82 million foreign tourists annually.

French law is divided into two principal areas: private law and public law. Private law includes,
in particular, civil law and criminal law. Public law includes, in particular, administrative law
and constitutional law. However, in practical terms, French law comprises three principal areas
of law: civil law, criminal law and administrative law. France does not recognise religious law,
nor does it recognise religious beliefs or morality as a motivation for the enactment of
prohibitions.

 Foreign relations

France is a member of the United Nations and serves as one of the permanent members of the
U.N. Security Council with veto rights. It is also a member of the G8, World Trade Organisation
(WTO), the Secretariat of the Pacific Community (SPC) and the Indian Ocean Commission
(COI). It is an associate member of the Association of Caribbean States (ACS) and a leading
member of the International Francophone Organisation (OIF) of fifty-one fully or partly French-
speaking countries. It hosts the headquarters of the OECD, UNESCO, Interpol, Alliance Base
and the International Bureau for Weights and Measures. In 1953, France received a request from
the United Nations to pick a coat of arms that would represent it internationally. Thus the French
emblem was adopted and is currently used on passports.

French foreign policy has been largely shaped by membership of the European Union, of which
it was a founding member. In the 1960s, France sought to exclude the British from the
organisation, seeking to build its own standing in continental Europe. Since the 1960s, France
has developed close ties with reunified Germany to become the most influential driving force of
the EU.

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 Policies to combat unemployment

Keynesian economists have different answers to the unemployment issue, and their theories led
to the 35-hour workweek law in the early 2000s, which turned out to be a failure in reducing
unemployment. Afterwards, between 2004 and 2008, the Government made some supply-
oriented reforms to combat unemployment but met with fierce resistance, especially with the
contrat nouvelle embauche and the contrat première embauche which both were eventually
repealed. The current Government is experiencing the Revenu de solidarité active.

4) Technological Factors

Military

Being a permanent member of the Security Council of the UN, and a recognized nuclear state
since 1960, spending the third or fourth largest amount of money in military, France has one of
the most technologically advanced and powerful armies on Earth. Amongst members of the EU,
only the United Kingdom has an army equal to that of France in terms of size.

5) Ecological Factors

 Low carbon footprint

France is the smallest emitter of carbon dioxide among the seven most industrialized countries in
the world, due to its heavy investment in nuclear power. As a result of large investments in
nuclear technology, most of the electricity produced in the country is generated by 59 nuclear
power plants. In this context, renewable energies (see the power cooperative Enercoop) are
having difficulties taking off the ground.

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 Agriculture and agrobusiness

France has historically been an important producer of agricultural products. Large tracts of fertile
land, the application of modern technology, and EU subsidies have combined to make France the
leading agricultural producer and exporter in Europe (representing alone 20% of the EU's
agricultural production) and the world's third biggest exporter of agricultural products. Wheat,
poultry, dairy, beef, and pork, as well as an internationally recognized foodstuff and wine
industry are primary French agricultural exports. EU agriculture subsidies to France have
decreased for the last years, but still amounted to $8 billion in 2007. This same year, France sold
for 33.4 billion Euros of transformed agricultural products.

 Tourism

With 81.9 million foreign tourists in 2007, France is ranked as the first tourist destination in the
world. France features cities of high cultural interest (Paris being the foremost), beaches and
seaside resorts, ski resorts, and rural regions that many enjoy for their beauty and tranquillity
(green tourism). France also attracts many religious pilgrims to Lourdes, a town in the Hautes-
Pyrénées département, that hosts a few million visitors a year.

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