MANESA International Regional Headquarters Project

1. MANESA InternationalRegional Headquarters Project Mark Foglesong January 30, 2014

2. Purpose • Gain experience analyzing the many factors affecting human resource management in regional structures around the world. • Work in a team environment to make a recommendation on where to create a regional headquarters in a part of the world you are not very familiar with.

3. Background Information • MANESA International is one of the five largest manufacturers and distributors of personal care products in the world. • MANESA is managed through a decentralized regional structure to enable product offerings that meet regional needs. • Today their regional headquarters are • Corporate HQ – Grand Cayman • Western Europe HQ – London • North America – Chicago • Eastern Europe – Prague • Asia-Pacific – Tokyo • Middle East / Africa – Istanbul • Latin America – Rio de Janeiro

4. Situation The cost (wages & rent) at several regional headquarters location are rising rapidly. In addition, newly implemented governmental regulations in these locations are posing new challenges & expenses to meet. GDP growth (and consequently MANESA’s business growth) is shifting to countries other than where our current headquarters are located. There is mounting pressure to evaluate whether the company should relocate some of these regional headquarters units – particularly while the job market is a buyer’s market & MANESA is likely to lose fewer employees during a transition. Western Europe and North American Headquarters have been recently evaluated. Plans are being made to move Western Europe HQ to Madrid. North American Headquarters will remain in Chicago.

5. Situation continued The Executive Committee has put together 6 Relocation Evaluation Teams to evaluate the situation for the region they have been assigned The relocation teams are to evaluate the following potential regional moves.

6. Relocation Teams • Team 1: Eastern Europe – Prague • ? Hungary, Albania, Slovenia, Poland, Russia, Georgia, Kazakhstan • Team 2: Asia-Pacific (A) – Tokyo • ? Singapore, Hong Kong, Taiwan, China, South Korea • Team 3: Asia-Pacific (B) – Tokyo • ? Philippines, Indonesia, Malaysia, India, Thailand, Cambodia, Vietnam • Team 4: Middle East / Africa (A) – Istanbul • ? Kuwait, Egypt, Morocco, Qatar, Jordan, Saudi Arabia, United Arab Emirates • Team 5: Middle East / Africa (B) – Istanbul • ? Zimbabwe, Namibia, Zambia, Nigeria, South Africa, Tanzania, Kenya • Team 6: Latin America – Rio de Janeiro • ? Ecuador, El Salvador, Bolivia, Brazil, Guatemala, Costa Rica, Venezuela, Mexico

7. Assignment Work in 6 teams of 5 people Evaluate potential headquarters options for cities in 2 other countries in your region and contrast them with the current headquarters location in that region. Make a recommendation on where to relocate or to stay at the current location using both financial and non-financial criteria. Be prepared to defend your recommendation with data.

8. Some Financial Factors to Evaluate Sales in HQ country location Expected sales growth in country location Who will be offered transfers, who will not Wages for local (nationalized) employees at the new location Office space lease expenses Severance expenses Retention bonuses (if necessary) Compensation & benefits for employees who will transfer to the new location as “expats” Transportation costs for business travel Recruiting & hiring of staff @ new location

9. Some Non-Financial Factors to Evaluate • Immigration favorability • Labor law favorability • Availability required talent in workforce • Corruption in the country • Employee turnover in the country • Legal favorability • Education availability for expat families • Cultural favorability • Pension portability • Reliability of infrastructure • Other appropriate factors

10. Regional Headquarters Profile Nationalized = a citizen or permanent resident of the country where the headquarters is currently located and paid on a local salary scale.

11. Deliverables – Paper • Executive Summary (1 page) (10pts) • 5 Year (itemized) Financial Estimate for each location (20pts) • Describe any data you are using or assumptions you are making for each financial estimate. • A summary table of location options compared with itemized financials • EBITDA is the metric • Comparison of evaluation of non financial criteria for each location (20pts) • Describe each criteria and any data you are using or assumptions you are making to support your ranking of each location • Use your own criteria & weightings --- don’t just copy example • Don’t let the numbers cloud your final judgment ! • A summary table(s) of location options compared to criteria • Your recommendation and the rationale to support recommendation (30pts)

12. Deliverables – PowerPoint Presentation 15 minute group presentation (20pts) 10-15 minutes Q&A

13. 5 Year EBITDA ($M) Improvement (vs London HQ)

14. Example - Western Europe Notes: * Each team should choose its own criteria and weightings. * 5 Year EBITDA must be one of the criteria & should be weighted heavily * One criteria could conceivably disqualify an option –regardless of score

15. Other Information Current Office Space Requirements – 60,000ft² (5,574m²) There is no intent to down-size the organization or change the office space requirements as a part of this exercise Sales - Assume current country sales are proportional to country GDP Business travel expenses are currently $4,000,000 per year. Travel is distributed between countries proportional to country GDP It is not a requirement to move everyone to the same location.

16. Information to Complete Analysis • Data sources • Internet data sources • Your company data sources • Interviews of HR or other senior managers with regional experience • Cite all data sources • List assumptions • Show detailed EBIT calculations for each criteria (appendix)

17. Relocation Teams • Team 1: Eastern Europe – Prague • ? Hungary, Albania, Slovenia, Poland, Russia, Georgia, Kazakhstan • Team 2: Asia-Pacific (A) – Tokyo • ? Singapore, Hong Kong, Taiwan, China, South Korea • Team 3: Asia-Pacific (B) – Tokyo • ? Philippines, Indonesia, Malaysia, India, Thailand, Cambodia, Vietnam • Team 4: Middle East / Africa (A) – Istanbul • ? Kuwait, Egypt, Morocco, Qatar, Jordan, Saudi Arabia, United Arab Emirates • Team 5: Middle East / Africa (B) – Istanbul • ? Zimbabwe, Namibia, Zambia, Nigeria, South Africa, Tanzania, Kenya • Team 6: Latin America – Rio de Janeiro • ? Ecuador, El Salvador, Bolivia, Brazil, Guatemala, Costa Rica, Venezuela, Mexico

18. Team Assignments Team 3 Asia Pacific (B) Anton Verbitskiy Amanda Hoff Jeremy Roell Heloisa Carlucci Team 1 Eastern Europe Ira Matter Troy Forston Gerold Schmidt Adrian Akin Jenn Truitt Team 2 Asia Pacific (A) Katasha Butler Chad Worland Phil Van Schaack Matt Dolder Mike MacDonald • Team 4 • Middle East Africa (A) • JLocklier • Nan Yung Lin • Branden Harbin • ShilpaRao • Duane Gibbs • Team 5 • Middle East Africa (B) • PresMaxson • Mike Schweiss • Juan Cardona • Rachel Irelan • Saylan Lukas • Team 6 • Latin America • Chris Burkhardt • Lloyd Stephen • Chris Day • Richard Ashe • Dan Kurdziel