BSc Furniture and Wood Technology

Management & Economics

The Business Environment (Continuous Assessment)

Martin Scully

G00265662

26-11-2010

The Business Environment. Lecturer: Finian Sheridan

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Topics Included:
Brief account of Irish Economy since independence and identifying the main implications for Irish businesses in that development over that period. Identify major milestones influencing the development of business in Ireland, particularly over recent decades. Structured analysis of the business environment currently facing business in Ireland or Irish based businesses. Selection of an Irish based business that I consider to be a progressive business and examine how it has adapted to changes presented in its business environment.

The Business Environment. Lecturer: Finian Sheridan

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Irish Economy since independence

The idea, that the economy is the voter`s first priority and that it is a business of governments to look after it, was slow to take hold in Ireland. In the 1920s and 1930s for many political leaders the really important issue was independence. Economic issues did exist, especially in 1932 election but for most politicians it took second place. Of course once they were in office, political leaders did have to have an economic policy.

Agriculture was our main export, thus our main source of income. We paid for things we needed to import with the money we earned from exporting food like beef, butter, eggs and pork to Britain. Industries like Guinness and Jacobs could they felt, survive for themselves and they blocked moves to introduce protection for smaller, less competitive industries that were vulnerable to competition from abroad. In the 1930s this policy was reversed. The great worldwide depression made it essential that industry be protected. The government did this by putting tariffs on imported goods. This encouraged new industry to emerge and provide jobs and goods that were no longer being imported. Agriculture adopted a policy of `self-sufficiency` and that was one of the buzz words of the 1930`s. Self-sufficiency basically broke down to farmers growing more wheat and sugar beet to replace imported flour and sugar.

The dispute with the British about our non-payment of land annuities to the crown for the land of English had given up, escalated into an economic war as we were unable to export agriculture produce at all and this caused severe economic problems for both countries; it eventually was sorted out in 1935 coal-cattle pact and the 1938 AngloIrish economic agreement. On one hand, agriculture had resumed the place as our main earner of national income, and on the other hand there was a new industrial base, consisting of many small companies that supplied a protected home market with shoes, textiles, carpets, furniture and so on. (http://test.scoilnet.ie/Res/maryodubhain100899230912_2.html)

A country is like an individual, to spend money, you have to earn it. A country earns money by exporting goods. With that money, it pays for its imports. This is called the The Business Environment. Lecturer: Finian Sheridan Page 3

balance of payments. If it is exporting more than importing, the balance is in surplus, this is great. If it is importing more than its exporting, this is deficit and that bad. In 1939 our exports were not earning enough to meet the bill of our imports, e.g. fuel, raw materials and tea etc. when you hear about the war in Ireland you hear about people talking about the shortages of tea and fuel and of course these were imports. Sean Lemass in 1943 gave a speech in which he had suggested that there should be a discussion of post war economic policy. When the war is over should the economy continue in its established pattern? Sean McEntee opposed any change in the protectionist policy and most of the party supported him rather than Lemass. Lemass gave up on this issue and did not raise it again until the 1950s. in 1945 a state investment was made in areas of

Rural electrification Development of bogs to produce electricity House building- council houses Health care

In 1948 to 1950 the economy grew by 5% that meant more jobs, better wages and less emigration. This all meant that there was more demand for luxury items which put up the import bill and meant we now had a problem. In 1951 to 1957 the economy shrank by 1% each year. Throughout the 1950s, an average of 40,000 people emigrated each year, the worst year 1957, almost 60,000 people left. In 1956 a young secretary was appointed to the department of finance, Thomas K Whitaker, he began as an economic conservative, but the depth of the recession shocked him into supporting change. He drew up a plan for new economic approach. In 1957 Lemass got the support of the party and first step was to introduce Whitakers plan. With this plan the economy grew by 3% from 1959-64. In 1969 free education was introduced into Ireland. This was a massive step forward for the country and for future generations to come. In 1973 Ireland joined the ECC (EUROPEAN ECCONIMIC COMMUNITY). Finally Ireland had arrived. This brought on the free trade with all other ECC countries. Industrial estates established in smaller towns or cities. Free 3rd level education in the 1990s. (http://test.scoilnet.ie/Res/maryodubhain100899230912_2.html)

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Major milestones influencing the development of business in Ireland:

1922- Irelands independence from Britain 1937- a new constitution, the constitution of Ireland came into force 1948- the republic of Ireland act 1955- Ireland became member of United Nations (UN) 1960s- free primary school 1960s- 450 foreign companies set up here 1967- free secondary school 1973- joined the ECC now the EU 1970s- emigrants returned home, caused a building boom and expansion of towns where multinational companies set up 1980s- miss managed governments put country into debt 1980s- recession, unemployment reached 18% 1990s- saw the arrival of the Celtic tiger 1995-2007- Celtic tiger was roaring 2002- joined Europe on single currency, the euro 2008- saw massive downturn, construction at 14% and unemployment at 13%

Post 1973 & EEC membership many MNC`s located here bringing with them employment & technical knowhow. These milestones all helped the development of Irish business due to the fact that we are now a well-educated, more skilful, English speaking workforce. In the late 1960s foreign companies set up base here and by 1972 they employed almost 35,000 people. This made us as a nation more competitive on the international markets, and emigrants began to return home and thus creating more jobs in the housing sector. Major boom in the late 1990`s 2008 heavily weighted in the construction sector followed by significant recession. 2010- November IMF(International Monetary Fund) give 85 billion rescue package

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Structured analysis of the business environment currently facing business in Ireland or Irish based businesses.
A business environment is a social, economic, technological and political environment in which a business functions. The general environment depends on basically the same principles, interest rates, private sector pay, public sector pay and availability of debt finance. As a country as a whole today we have to be competitive, competing on a global market is not easy especially when we have one of the highest wage bills in Europe. The reason we are still competing is simple because we have had to work smarter. Efficiency is the key, if we can work hard as a country and export our products on a global market while still been competitive and making the same wage then we are up to standards. In order to be efficient in a company you have to be effective. This simply means breaking down a job in to its simplest form and doing it better and quicker. (http://learnonline.gmit.ie/mod/resource/view.php?id=8754)

A company that I have researched C&F Tooling have done this and it is working to their advantage day in and day out. This Galway based company, producing products from its Athenry base, started up back in 1989 to design and manufacture jigs and pressing tools. Since then, C&F has gone from strength to strength and expanding its business into the pressing of sheet material components in 1995. In 1996 C&F received ISO 9001 approval, ISO standards offer complete end to end management systems to ensure your business can consistently deliver on your customers requirements both effectively and efficiently every time. In 1997 and 1998 the company begins exporting to USA and also set up a hubbing facility in the US, along with extending the existing building in Athenry by 2,600 square meters to facilitate a pressing facility. In 1999, the company extended once again by a further 2,600 square meters, and extended again in 2000 by a further 2,600 square meters. (http://www.cftooling.ie/about-us-our-story.php)

In 2002 C&F went global and officially opened a new Manufacturing Facility in the Czech Republic and the next year extended this by a massive 90,000 square feet for manufacturing. In 2004 a new manufacturing facility in the Philippines to service the Asian markets and the following year expanded manufacturing facility by 30,000 square feet. In 2006 the Galway Company invested 1,200,000 in new state of the art paint plant facility, also invested The Business Environment. Lecturer: Finian Sheridan Page 6

$950,000 in a second paint plant in the Philippines. In 2008, C&F expanded all there facilities by 20,000 square feet in Galway, 30,000 square feet in Czech Republic and 40,000 in Philippines to facilitate the CTO rack assembly. Later that year C&F officially opened its China plant in DongGuan, China. Also purchased struggling Irish company Iralco, a car parts manufacturer that designs decorative and functional trim for major automotive brands such as Audi, Volkswagen and Volvo. (http://www.cftooling.ie/about-us-our-story.php) (http://www.cftooling.ie/) This company has expanded so quick in recent years its hard to keep up with them; I have put in some of the major activities that have happened in C&Fs development over the past 15 years. C&F started life 20 years ago as a tool making company but has expanded over the years into a global contract manufacturer. According to the Irish times newspaper on 17th September 2009 an article read said that profits at manufacturing group C&F Tooling increased by 21% in 2008 to almost 5 million. Galway based C&F manufactures server racks, computer casings and other products for high tech multinationals and clients include IBM and EMC. Accounts for 2008 show that sales in Ireland grew by 3% that year to 35 million from 34 million in 2007. Operating profits were up almost 25% to 5 million in 2008 from 4.1 million the previous year. (http://www.irishtimes.com/newspaper/finance/2009/0917/1224254724946.html)

We will shortly announce a deal which will double the current business in The Business Environment. Lecturer: Finian Sheridan Page 7

China, and are also in an advanced stage of negotiations with existing customers. 2010 will be a growth year for existing customers and we expect four major new clients in the IT business, founder and chief executive John Flaherty said in an interview in the groups factory in Dongguan, southern China, which makes server racks for IBM. Mr Flaherty said moving to China was the best move C&F ever made. (http://www.irishtimes.com/newspaper/finance/2010/0126/1224263119549.html) At the time, Mr Flaherty said that the venture was the first involving products that the company has designed itself. It is planning to invest 20 million in the business. He is hoping to sell the turbines to both domestic users and farmers. Agreements have been signed for the groups fledgling wind turbine business the deals involve a global partnership with a telecoms installer. The group has spent 2.6 million researching and developing the wind energy products, using its own money. We are in a position to capture market share globally, due to our presence in Europe and in Asia and with our forthcoming factory in the US, said Mr Flaherty, We have the customer base to justify an immediate start up in the US, were not just going in green. In September last year CF bought JPB Prometall, a Frankfurt-based automotive manufacturing company of exterior trim components and a competitor of the Westmeath-based Iralco. The companies have been amalgamated into C&F Automotive and make components for some of Europes best-known carmakers. The government has a lot to answer for, said Flaherty. This country has become uncompetitive, out of touch, unrealistic. For the past decade, the state has been happy to sit back and pick up duties from property, oblivious to what was going on around them. In the world according to Flaherty, the government should run the country like an entrepreneur running a business. Committees should be culled, management structures should be streamlined and all staff should be accountable for their actions. There are too many layers of fat in this country, according to Flaherty. The government is closing down hospital wards, but there are people in offices a few levels above sitting around drinking coffee all day. There needs to be proper accountability and flat management structures - not one committee being held accountable to another committee. (http://www.sbpost.ie/post/pages/p/story.aspx-qqqt%3DNEWS%2BFEATURESThe Business Environment. Lecturer: Finian Sheridan Page 8

qqqm%3Dnav-qqqid%3D37559-qqqx%3D1.asp)

In Flahertys assessment, Ireland is now a much poorer country than it was a decade ago, with the Celtic tiger providing only a veneer of wealth. He believes the economy was on the right track ten years ago, when the government was aggressively courting multinationals to come to Ireland, while simultaneously trying to cultivate indigenous industry. (http://www.sbpost.ie/post/pages/p/story.aspx-qqqt%3DNEWS%2BFEATURESqqqm%3Dnav-qqqid%3D37559-qqqx%3D1.asp) Then the builders came along and everything changed, said Flaherty. From then on, it was all about false riches. People were borrowing money from the banks, flipping property and making millions. But no one was making anything tangible. All it actually did was destroying our competitiveness. We have effectively lost the last ten years. They should have been the good years, but we went backwards. Flahertys argument is simple - if you want to create wealth, you have to make an actual product and sell it. Over the past decade, his views were regarded as old-fashioned, but in the new economic climate, his manufacturing mantra has a renewed relevance. (http://www.sbpost.ie/post/pages/p/story.aspx-qqqt%3DNEWS%2BFEATURESqqqm%3Dnav-qqqid%3D37559-qqqx%3D1.asp)

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John Flaherty: "revolutionary new technology in wind power" (http://www.irishtimes.com/newspaper/finance/2009/0515/1224246567019.html) Assessment of work: My work has been checked for spelling and grammatical errors. The strengths of my submitted work are the thorough research and planning of my work, the knowledge I acquired of the history of the Irish economy, the business sector today and the different ways in which a business can be run even if it is just a small business to start it can grow into a multinational competitor. The limitations would have been the guideline of 1500 words, I have gone over it but honestly I could have produced another 1500 words. I feel that my work deserves a percentage in the region of 70-80%, I feel if anything my referencing let me down.

References:
www.cftooling.ie http://www.qmssolutions.ie/index.php http://www.irishtimes.com/newspaper/finance/2009/0515/1224246567019.html http://truerenew.blogspot.com/2009/05/c-tooling-moving-into-micro-wind.html

http://www.sbpost.ie/post/pages/p/story.aspx-qqqt%3DNEWS%2BFEATURES-qqqm%3Dnav qqqx%3D1.asp http://www.businessandfinance.ie/index.jsp?p=612&n=617&a=2938 http://learnonline.gmit.ie/mod/resource/view.php?id=8740 http://learnonline.gmit.ie/mod/resource/view.php?id=8741 http://learnonline.gmit.ie/mod/resource/view.php?id=8753 http://learnonline.gmit.ie/mod/resource/view.php?id=8754 http://learnonline.gmit.ie/mod/resource/view.php?id=8745 http://learnonline.gmit.ie/mod/resource/view.php?id=8746 http://en.wikipedia.org/wiki/Economic_history_of_the_Republic_of_Ireland http://www.irishtimes.com/newspaper/finance/2010/0126/1224263119549.html

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