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WEBSITE COMPANY: C&C IRELAND SIZE: LARGE LOCATION: HQ DUBLIN SECTOR: FOOD AND DRINK SUMMARY OF C&C IRELAND KEY DIFFERENCES BETWEEN NORTHERN IRELAND & IRELAND About the Group C&C Group plc is one of the largest manufacturers, marketers and distributors of branded beverages in Ireland and Northern Ireland, and savoury snacks in Ireland. With headquarters in Dublin and employing over 2,200 people between Ireland and Northern Ireland, the Group owns several beverage and savoury snack brands, including Bulmers Cider, Magners Cider, Ballygowan Water, Club Orange and tribution operation only in Belfast. Tayto crisps (in Ireland only). It has both sales/distribution and manufacturing operations in Dublin, Tipperary, Limerick and Cork, and a sales/dis The Group’s operations on the island comprise a number of discrete business units as follows: Findlaters (Wine Merchants) Ltd – wine distributor, based in Dublin. Ballygowan Water – manufacturer of bottled water, with a plant based in Newcastle West (Limerick). Tayto Ireland – manufacturer and supplier of crisps and savoury snacks with a plant in Dublin and a number of distribution depots nationwide. C&C Wholesale - supplier of alcoholic and non alcoholic beverages to the licensed retail trade based in Thurles (Tipperary) with a number of regional distribution depots. Showerings Ireland – manufacturer of alcoholic and non alcoholic beverages, with a plant in Clonmel (Tipperary). C&C Ireland – manufacturer and supplier of soft drinks to the grocery sector directly, and indirectly to the licensed wholesale / retail sector through its sister company C&C Wholesale, with plants in Dublin and Cork. C&C Ireland is the focus of this case analysis.

All-Island Business Case Studies

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Page 1: All-Island Business Case Studies

WEBSITE

COMPANY: C&C IRELAND SIZE: LARGE

LOCATION: HQ DUBLIN SECTOR: FOOD AND DRINK

SUMMARY OF C&C IRELAND

KEY DIFFERENCES BETWEEN NORTHERN IRELAND & IRELAND

About the Group C&C Group plc is one of the largest

manufacturers, marketers and distributors of branded

beverages in Ireland and Northern Ireland,

and savoury snacks in Ireland. With headquarters in Dublin and employing over 2,200 people

between Ireland and Northern Ireland, the Group owns several beverage and savoury snack brands, including Bulmers Cider, Magners Cider, Ballygowan Water, Club Orange and

tribution operation only in Belfast.

Tayto crisps (in Ireland only). It has both sales/distribution and manufacturing operations in Dublin, Tipperary, Limerick and Cork, and a sales/dis

The Group’s operations on the island comprise a number of discrete business units as follows:

Findlaters (Wine Merchants) Ltd – wine distributor, based in Dublin. Ballygowan Water – manufacturer of bottled water, with a plant based in Newcastle West (Limerick). Tayto Ireland – manufacturer and supplier of crisps and savoury snacks with a plant in Dublin and a number of distribution depots nationwide. C&C Wholesale - supplier of alcoholic and non alcoholic beverages to the licensed retail trade based in Thurles (Tipperary) with a number of regional distribution depots. Showerings Ireland – manufacturer of alcoholic and non alcoholic beverages, with a plant in Clonmel (Tipperary). C&C Ireland – manufacturer and supplier of soft drinks to the grocery sector directly, and indirectly to the licensed wholesale / retail sector through its sister company C&C Wholesale, with plants in Dublin and Cork.

C&C Ireland is the focus of this case analysis.

Page 2: All-Island Business Case Studies

Island operational profile C&C Ireland, formed in 1994, manufactures and distributes soft drinks in Ireland. C&C Northern Ireland distributes alcoholic and soft drinks in Northern Ireland, and is part of C&C Ireland since 1997 when C&C Ireland and C&C Northern Ireland came together under a single senior management team. C&C Ireland’s senior management team manages the business on an all-island basis, with common management for all functions including distribution, marketing and finance. C&C Ireland operates separate entities in Northern Ireland and Ireland, each supplying customers in its own area, thus reducing the complexity of dealing with two currencies and also reducing the associated administrative burden. The Northern Ireland company distributes goods manufactured by C&C Group and third parties, including 7Up and Pepsi (which the Group also bottles). In addition to supplying finished product in both jurisdictions, C&C Ireland also purchases some raw materials on an all-island basis. It uses a bottler based in Northern Ireland (Norbev), which also carries out a significant amount of new product development for the company, and buys glass from Quinn Glass, the only indigenous manufacturer of bottles. Sales have increased in both Northern Ireland and Ireland in recent years, due to market growth and aggressive action through promotional campaigns, increased marketing spend and chilled asset placement by the company. Northern Ireland represents disproportionate sales (relative to market size) with approximately 28per cent of C&C Ireland’s business coming from this market, partly driven by its higher per capita consumption of soft drinks compared with Ireland. Third party forecasts have projected that the market in Northern Ireland will grow at 1-2per cent versus 0-1per cent in Ireland. This in turn will drive increased production – and employment – in Ireland. The company is poised to exploit such growth, based on its strong position in the market and its knowledge of it.

Financial performance C&C Ireland does not report financial performance separately. However, for the financial year ended 28 February 2003, C&C Group generated total revenues of €1,246m (£981.3m), and total profit for the year of €67.9m (£53.5m).

Operational differences between Northern Ireland and Ireland to top^ From its experience of trading on an all-island basis, C&C Ireland recognises differences between the two markets and manages them accordingly. Differences they have experienced are listed below:

1. Customer profile C&C Ireland’s customers’ profiles in the two markets are very different. In Ireland, the greater share of its business is sourced outside the multiples sector. This is primarily due to the development of the symbol group, forecourt and independent sector. In Northern Ireland, the influence of the UK multiples who dominate the grocery sector means that they hold a greater share of the soft drink category than in Ireland. As a result of this, the company must expend greater marketing resources focusing on relationships with multiples in Northern Ireland than in Ireland, where independent grocery retailing remains strong.

Page 3: All-Island Business Case Studies

While both Tesco and Sainsburys have head offices in Northern Ireland, C&C Ireland finds that it needs to deal with their UK-based offices to influence strategic decisions. In Ireland, with the weaker foothold by multiples generally, and the existence of indigenous multiples and symbol groups, relationships with multiples are more concentrated – both geographically and in terms of total numbers to deal with.

2. Culture Business relationships in Ireland and Northern Ireland are different and the company recognises and adapts to these, i.e. the method of building business and personal relationships differs in both markets but the company manages this through locating a management team in the business region adapted and trained to deal with the local business community. This is not a difficulty in an all-island trading context, but rather a cultural difference which must be acknowledged and understood.

Summary to top^ C&C Ireland sees no significant obstacles trading on an all-island basis, nor is it aware of any barriers impacting trading on a cross border basis. Growth is driven by the normal factors in any market, e.g. competition, the regulatory environment, customers, suppliers and company operations. The company feels that strategic management by a single senior management team for both North and South is not a major departure from strategic management when trading within one jurisdiction, which has the same rules and regulations. Overall, C&C Ireland has had very positive experiences of trading in both Northern Ireland and Ireland. Although market differences exist, C&C Ireland does not view these as obstacles to trading in an all-island context. Some of the differences have in fact been exploited as opportunities, e.g., the higher per capita consumption of soft drinks and the higher market growth forecast in Northern Ireland. C&C Ireland suspects that some organisations – probably smaller ones – are hesitant about trading on an all-island basis because of perceptions of the difficulties involved. Such perceptions, the company believes, are unfounded. Driven by its positive experiences, the company would encourage other firms not currently trading on an all-island basis to explore the opportunities that exist, given the proximity and accessibility of both markets, and the potential for growth. Its advice therefore to companies currently not trading on an all-island basis is ‘just do it’. There are no valid reasons for not pursuing cross border trade other than the standard considerations when expanding into a new geographical market. Effectively, C&C Ireland looks upon the Northern Ireland market as simply another geographical area, which happens to deal in a separate currency.

Page 4: All-Island Business Case Studies

WEBSITE

COMPANY: A & L GOODBODY SIZE: LARGE

LOCATION: HQ DUBLIN SECTOR: PROFESSIONAL SERVICES

SUMMARY ON A & L GOODBODY

OPERATIONAL DIFFERENCES BETWEEN IRELAND AND NORTHERN IRELAND

About the Company It has a total staff of approximately 500, including 59 partners and 215 legal

staff, based in its offices in Dublin, London, Brussels and Boston. The firm manages its business on the island from Dublin. Improved transport infrastructure and IT technology developments

allows it to effectively provide a quality legal service in Northern

Ireland from Dublin, without having to establish the need to have an office in Northern Ireland. However, the firm may open an office in Belfast as some stage in the future.

A&L Goodbody is one of Ireland’s largest legal firms. Its service portfolio comprises the entire spectrum of commercial law with a specialist focus on the key legal services that drive the local and international business sectors. The firm advises many international companies on investments in Ireland and regularly partners the world's leading international law firms on the Irish aspects of multi-national transactions.

Island Operational Profile Northern Ireland is strategically important to A&L Goodbody and its business there has grown over the past five years from an initial involvement in advising banks on certain structured finance transactions. Provision of an all island legal service is important in many key areas of its work such as mergers and acquisitions, strategic outsourcing of services, energy/utilities etc. Integration of the business infrastructure North and South over time will provide opportunities for it to leverage its cross border experience. Northern Ireland business now comprises an estimated 30per cent of the firms project/infrastructure legal practice. A&L Goodbody’s expertise in PPP (Public Private Partnership) projects in Ireland was instrumental to opening similar PFI (Private Finance Initiative) work in Northern Ireland. They have been involved in up to 90per cent of such projects there and they have sat on an advisory working group under the Department of Finance and Personnel dealing with PFI work. They were appointed by the Northern Ireland Strategic Investment Board (SIB) to work with Partnerships UK on a model for insurance provisions for Northern Ireland PFI projects. A&L Goodbody works with different Northern Ireland based legal firms on assignments depending on the need for specialist, (e.g. property, environmental etc), inputs and value

Page 5: All-Island Business Case Studies

for money considerations. Northern Ireland firms have high standards and co-operate very effectively.

Outlook A key business driver in Northern Ireland will be the huge need for development of health, education, waste treatment, roads, rail, etc infrastructure. The SIB has set out an aggressive plan for PFI driven investment in Northern Ireland which will create many opportunities. In the private sector advice to the foreign direct investment would be necessary to open up real opportunities. Northern Ireland’s low cost base and high levels of education are a real advantage. Growth on public private partnership driven work will be lower in Ireland due to less enthusiasm being shown for it by the Irish Government as opposed to the UK Government. Accordingly, the firm believes that Northern Ireland’s PFI Project market has more to offer than that in Ireland.

Financial performance As a private firm A&L Goodbody does not disclose details of its financial performance.

Operational differences between Northern Ireland and Ireland to top^ There are no major differences in practice North and South with high standards the norm in both jurisdictions.

1. Market demand The long history of foreign direct investment means that the large Dublin legal practices benchmark themselves against London and New York ones, with 24 x 7 service being provided if necessary. Northern Ireland firms can meet these requirements but probably have had less exposure to the same intensity of demand that has been experienced in the Republic of Ireland foreign direct investment.

2. Culture issues Northern Ireland’s talented and educated workforce has not been tapped into in terms of entrepreneurial development. The decline in manufacturing industry allied with the Government being the largest employer is an issue and ways need to be found to foster entrepreneurial skills and risk taking in Northern Ireland.

3. Regulatory environment If business opportunities exist they will happen – regulation per se is not an issue.

4. Tax and currency regimes The low corporation tax rate has helped open up business opportunities in Ireland for Northern Ireland service providers as shown by the number of companies setting up there (and the volume of passengers on the Enterprise train service). Implementation of the Euro would help by removing the hedging risk.

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5. Infrastructure Co-ordination of infrastructure investment and integration of policies North and South to mutual benefit would be a major boost, even if still funded separately. Opportunities exist in areas such as healthcare, electricity and gas.

Actions necessary At enterprise level, quality of service and value for money are critical to development of professional services businesses across the border. Key success factors will be:

A well considered Business Plan as a precursor; and

An understanding of the business environment and the level/quality of the competition.

Summary to top^ Northern Ireland business has proved very beneficial to A&L Goodbody. In strategic sectors (namely projects/infrastructure) A&L Goodbody is a dominant service provider. High quality of service is critically important to development of professional services businesses generally – “the work follows a good name, irrespective of the legal jurisdiction of the service provider”.

Page 7: All-Island Business Case Studies

WEBSITE

COMPANY: ANDRONICS LTD. SIZE: SME

LOCATION: DERRY SECTOR: ICT

SUMMARY ON ANDRONICS LTD

OPERATIONAL DIFFERENCES BETWEEN IRELAND AND NORTHERN IRELAND

About the Company Andronics, formed in 1996, specialises

in satellite, GSM, and radio

communications, developing web-based

applications for the remote management of

fixed and mobile assets. Andronics offers two main products – UtilityEye for

utilities management and LEOCATE for fleet control. The company is located in Derry within one mile of the Derry / Donegal border and in 1999 began working with Donegal County Council on the development of a utility management system. This led to the development of UtilityEye, the company’s asset management control system, offering benefits such as:

automation of water treatment and distribution;

monitoring of sewage treatment; and LPG tank monitoring.

European environmental legislation and deregulation in utility sectors across Europe are the main forces driving the success of UtilityEye. The system can be installed incrementally, thus enabling companies to install and test without full-scale, company-wide installation. The increased awareness of satellite communications and web-based business applications generally is contributing to the current growth. It also offers fleet management services through LEOCATE, an innovative, web-based, satellite solution designed to enable companies to locate and manage vehicle fleets of any size in a global market. Andronics now serves a wide customer base in Great Britain, Northern Ireland and Ireland. Its customers include transport companies, food companies, service contractors and utility businesses. It currently employs 26 staff – 25 in Derry, plus a Sales Manager for Ireland recently recruited in Dublin.

Island operational profile The company’s current sales profile is as follows:

Great Britain 60per cent; Northern Ireland 25per cent; and Ireland 15per cent.

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Following the recruitment of three Sales Managers, sales in Ireland are forecast to increase tenfold with a focus on fleet management and water / utility services. The company exhibits at trade shows in Dublin in partnership with CSL (Commissioning Services Limited) - a company based in Ireland which already supplies hardware and maintenance services to the water industry. Both companies also share technical expertise and work together to customise solutions for customers. Occasionally they have entered joint tender bids. In the market in Ireland, Andronics has worked closely in joint tenders with SUDMO, engineering consultants based in Ireland, with SUDMO focusing on the broader equipment requirements. These collaborative relationships have enabled Andronics to understand market differences in Ireland versus Northern Ireland and Great Britain markets.

Financial position The business has a turnover of approximately £1m (€1.4m).

Operational differences between Northern Ireland and Ireland to top^ Andronics does not recognise any barriers to cross-border trade. Its location within one mile of the border means that it has always traded cross-border. It attributes its success on the island to understanding the marketplace and the differences between Ireland and Northern Ireland. Specific operational differences between the two markets are as follows:

1. Currency The uncertainty surrounding currency fluctuations between sterling and the euro is an issue that must be taken into consideration in preparing tenders and costings. The company believes that the added complexity is more than justified by the opportunities available within the Ireland market.

2. Market profile Utility systems and fleet management are the primary focus for Andronics’s products. In both of these areas, the marketplace is quite different in Ireland and Northern Ireland. Water services in Ireland are controlled locally by County Councils independently of central control. This means that there are approximately 30 such customers versus only one in Northern Ireland where water services are centrally controlled by the Department of the Environment. County Councils in Ireland tend to make decisions easier and at a faster pace than the central body in Northern Ireland. The system for controlling reservoirs and top up / transfer processes is also different in Ireland, with more need for remote control of operations due to the greater number of reservoirs. The profile of transport fleets is different North and South. In Ireland the industry is more fragmented, with 85per cent of fleet companies having less than five drivers, while in Northern Ireland the industry is dominated by relatively few large players. Andronics plans to address the particular needs of the market in Ireland by the recruitment of Sales Managers.

Page 9: All-Island Business Case Studies

Summary to top^ While Andronics recognises a number of operational differences in cross border trade, it is unaware of any barriers restricting growth of this trade. Business growth in their experience has not been hampered by the border. The company has always traded on a cross-border basis and developed its initial UtilityEye products, now used by many County Councils in Ireland, in collaboration with Donegal County Council. Andronics now perceives significant growth opportunities in Ireland, as a result of EU regulations imposing changes in fleet operations (maximum 48 hour working week for drivers) and new environmental legislation for utilities management. Overall, Andronics attributes its success to understanding differences in the marketplace and the specific needs of customers, and to developing solutions to meet these needs. The company pursues opportunities on the island irrespective of geographical location. It would encourage other Northern Ireland companies not trading on a cross-border basis to understand how the marketplace in Ireland may differ and perhaps offer opportunities for development and growth.

Page 10: All-Island Business Case Studies

WEBSITE

COMPANY: BLUECHIP TECHNOLOGIES SIZE: SME

LOCATION: HQ BELFAST SECTOR: ICT

SUMMARY ON BLUECHIP TECHNOLOGIES

OPERATIONAL DIFFERENCES BETWEEN IRELAND AND NORTHERN IRELAND

About the Company Formed in 1998,

BlueChip Technologies is a

professional services company focusing exclusively on the

rapidly emerging technology of voice

recognition. This technology is forecast to play a major role in advancing mobile telephony services and automated call handling in the call centre sector. The product/service is set to yield benefits to both individuals, e.g. people with disabilities, and enterprises, e.g. automation of receptions.

BlueChip works with application developers, systems integrators and application users to integrate speech recognition technology into their product platforms, drawing on the most appropriate tools for the application, including its own development tools and those of other vendors. The company is based in Belfast, with close ties to universities through research and in gaining access to a stream of skilled personnel. Its customers are based in Ireland (40per cent), Northern Ireland (15per cent) and Great Britain (45per cent), and it is also pursuing opportunities in the US.

Island operational profile BlueChip began to trade in Ireland in 1999, initially targeting the legal services market. The company then hired some staff in Ireland and also participated in the FOCUS graduate placement programme run by InterTradeIreland which allowed it to further develop the business in Ireland. On the back of early success in Ireland, the company subsequently launched a mobile phone application (for lone workers, e.g. social services, etc) in Ireland with O2, working with it to identify the target market and jointly build the business. The company employs 23 staff, 3 located in Dublin and 20 in Belfast. The company is moving towards freelance / self-employed agents rather than hiring full time employees to maximise cost efficiencies. It is about to take on 10 additional people (3 Ireland, 1 Northern Ireland and 6 Britain) as selling agents on a small base pay plus commission basis.

Financial performance As a privately owned business, the company does not disclose details of financial performance. BlueChip has registered growth in both markets of approximately 30per cent year-on-year since 1999. Overall, up to 50per cent of the company’s turnover is from business within the island of Ireland.

Page 11: All-Island Business Case Studies

Operational differences between Northern Ireland and Ireland to top^ BlueChip sees no major barriers to trading on an all-island basis. Cross-border trade has contributed significantly to the company’s growth and certain differences between the markets – such as the early take up of newer technologies in the South – have stimulated expansion by creating demand for its services. Particular differences between the two markets as experienced by the company include the following:

1. Market demand The company finds that purchasers in Northern Ireland are more conservative than their counterparts in Ireland. Newer technologies, e.g. dictation services, are in higher demand in Ireland where a greater proportion of customers are ‘early adopters’ of new technologies. Given the pace of development in the sector, this difference impacts upon the focus of development in each jurisdiction.

2. Cultural differences The company finds that particular groups – e.g. unions or the legal profession – behave differently in each jurisdiction. This is not a difficulty in an all-island trading context, but – the company believes – a cultural difference which must be acknowledged and understood. Having locally based staff to deal with these issues is useful in this context.

3. Staff costs Operating in Ireland is more expensive than in Northern Ireland. The company estimates that staff costs are 25per cent higher in Ireland and overall staff expectations re salary levels also tend to be higher in Ireland. These increased costs must be built into the company’s pricing strategy and higher prices will impact upon competitiveness in the Ireland market.

4. Market profile BlueChip plans to focus on the legal services market in Ireland and Northern Ireland - key users of its mobile phone and digital dictation services. The company sees more opportunities in Ireland due to the larger number and scale of firms operating there compared with Northern Ireland.

5. Administration The company is essentially Northern Ireland based, selling product to Ireland. VAT requirements for both jurisdictions are dealt with from Northern Ireland and the company holds bank accounts in both jurisdictions. Working in both Northern Ireland and Ireland provides extra complexity from the VAT/currency aspect, but is not considered to be a major difficulty by the company.

6. Level of support BlueChip believes that there is plenty of assistance available for companies from Ireland who wish to enter the Northern Ireland market; however, development agencies in both Ireland and Northern Ireland could be more proactive in promoting Northern Ireland

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business in Ireland – overall there are less incentives for Northern Ireland companies to trade in Ireland,.

Summary to top^ In Northern Ireland, there is a high proportion of small companies with less than 50 employees and BlueChip Technologies believes that Northern Ireland based development agencies should provide greater support to the SME sector in gaining market intelligence and subsequently growing their business in Ireland. Many such SMEs cannot afford the relatively high cost of setting up in Ireland – e.g. the cost associated with trade shows, promotional literature, etc. – and would benefit hugely from concentrated support in developing business across the border. Specifically, networking is difficult for Northern Ireland based companies looking to develop business in Ireland – a networking event organised and run jointly by the appropriate development agencies in both jurisdictions would be hugely beneficial. BlueChip would appreciate any supports to grow the market in Ireland which it considers an important market as it has had very good experiences trading in Ireland and looks forward to continuing to grow its business there.

Page 13: All-Island Business Case Studies

WEBSITE

COMPANY: CORPORATE SOLUTIONS

SIZE: SME

LOCATION: HQ ROSTREVOR, NORTHERN IRELAND

SECTOR: PROFESSIONAL SERVICES

SUMMARY ON CORPORTE SOLUTIONS GROUP

OPERATIONAL DIFFERENCES BETWEEN IRELAND AND NORTHERN IRELAND

About the Company Corporate Solutions was established in May 2002 and specialises in delivering services to the corporate market:

Training; Hospitality / event management;

Leisure activities. Design and fit; and

Based in Rostrevor, Co. Down, the company also has offices in Slane Castle, Co. Meath; Carlingford Marina, Co. Louth and Osprey Hotel, Co. Kildare. Corporate Solutions is the exclusive managing partner to Slane Castle, Co Meath and is the sole VIP hospitality provider for the Slane rock concert. The company has also secured the contract to manage all events related to Ireland’s six-month presidency of the EU next year, presenting increased opportunities to the organisation.

Island operational profile With extensive experience in the hospitality and leisure markets, the founding partners developed a range of offerings including design and fit out of hotels, bars & nightclubs, and development of internationally accredited training programmes for the sector in hospitality management, customer care and leadership training. The company acquired an events business – Meetings and Events Management - and now manages national awards such as the Hotel, Sales & Marketing Award Ireland and the National Sales and Marketing awards. Their success to date has been in part based on cross-border alliances and cooperative marketing, and they continue to seek such linkages. They use ten hotels, in Ireland and Northern Ireland, when booking company away days for clients. These hotels are offered incentives to sell away days for Corporate Solutions when booking other events for their corporate customers. Likewise, Corporate Solutions may sell services provided by these hotels to its clients - a ‘win win’ situation for both parties. Suppliers are chosen based on best price and quality, and are from both Ireland and Northern Ireland.

Financial performance Turnover for the twelve-month period to May 2004 is anticipated to be €5m - €6m (£3.5m - £4.2m).

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Operational differences between Northern Ireland and Ireland to top^ Corporate Solutions sees no differences between the two markets in terms of how it develops new business and deals with customers. There are however some operational differences that impact on how the business is administered:

1. Insurance costs Insurance premia in Ireland are up to triple those in Northern Ireland due to the higher claims experience in Ireland, resulting in many insurance providers withdrawing from the service industry market there. This is likely to decrease competition and increase costs over time. An insurance policy for the activity centre in Rostrevor was thus quoted at £6,000 (€8,500) while a similar one for Carlingford was quoted at €35,000 (£24,700) – a huge difference even allowing for exchange rate differences. The company has recently negotiated a policy with a single company across all divisions and both jurisdictions - the higher insurance costs in Ireland are reflected in the premium. It believes that insurance costs in Ireland can discourage Northern Ireland companies from expanding into Ireland, particularly service, building and manufacturing companies.

2. State support The company believes that the support offered to service sector start ups / SMEs in Northern Ireland is superior to that offered in Ireland, where red tape is excessive. It sees that the level of bureaucracy in Ireland does not foster an entrepreneurial spirit and restricts the potential for companies to expand on an all-island basis.

3. Taxation Corporate Solutions has found that the corporate taxation environment is more favourable in Ireland than in Northern Ireland and this has led the company to base its design business in Ireland.

4. Currency Working in dual currencies - while an administrative complexity - is not an obstacle to cross border trade. The company asks its suppliers to quote in the currency where the service will be delivered and likewise prices jobs in either sterling or euro depending on the job location. It thus sees currency fluctuations as a manageable issue.

Summary to top^ Corporate Solutions has grown rapidly over a short period and attributes much of this to an experienced management team, high quality and dedicated staff, and an understanding of the importance of networking. It sees itself as an all-island business and on this basis is now looking to strengthen and grow within its current structure, continuing to offer its key services to the corporate market on the island. It advises others in the sector to focus on networking through alliances with other companies, or through networks provided by organisations such as Plato and FAS. (Invest Northern Ireland & County Enterprise Boards)

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WEBSITE

COMPANY: DOHERTY MEATS LTD SIZE: SME

LOCATION: HEAD OFFICE - DERRY SECTOR: FOOD AND DRINK

SUMMARY ON DOHERTYS MEATS LTD

KEY DIFFERENCES BETWEEN IRELAND AND NORTHEN IRELAND

About the Company Doherty Meats Ltd is a private meat

company established in 1830.

Its head office is in Derry, (Northern Ireland) and the

company sells a range of meat products –

sausages, burgers, hams, mince – in both the Northern Ireland and Ireland markets. Historically, Dohertys operated as two companies, one on each side of the border with a plant in Derry and another in Letterkenny (Donegal). Due to company rationalisations in the past ten years, there is now a single manufacturing plant operating in Derry where meat purchased from local suppliers is processed into the end products (mentioned above). The company also has a distribution depot in Donegal for the Ireland market. Both

businesses continue to trade as separate entities - one registered in Northern Ireland and one registered in Ireland. The company sells to a range of multiples, symbols and independents in Northern Ireland and in Ireland. The location and number of its suppliers vary depending on the availability and cost of meat, but cover both jurisdictions, and are driven by product specification, quality and availability. The company currently employs around 50 staff, with the majority based in its Derry plant and the remainder in its Donegal distribution depot. The brand name of Dohertys is very strong in the North West. As well as serving the major multiples in the North, Dohertys has a fleet of van sales focusing on smaller independent retail outlets and catering companies in Northern Ireland and Donegal.

Island operational profile Approximately 40per cent of the company’s sales are in Ireland. This figure is similar to sales recorded five years ago. In 1996, the BSE crisis threatened sales in Ireland by restricting cross-border trade in meat and dairy products. The company countered this by sourcing meat from Ireland for processing and resale back to the Irish market. Dohertys is an approved supplier of meat products, particularly mince and sausages, to the UK multiples based in Northern Ireland. The company successfully moved from being the supplier to a number of Musgrave stores in Donegal to supplying into Musgrave’s central warehouse in Dublin.

Page 16: All-Island Business Case Studies

Financial position The overall business – including both Northern Ireland and Ireland - has a turnover of approximately £5m (€7.2m).

Operational differences between Northern Ireland and Ireland to top^ Dohertys has been involved in cross-border trading for generations, and has moved from trading across the local border to the Ireland market. Differences it has experienced between the two markets are listed below.

1. Currency The uncertainty surrounding currency fluctuations between sterling and the euro is the company’s main difficulty in cross -order trade. The current range of 1.42 – 1.45 euros/sterling would be satisfactory in the longer term, compared with the situation in 2002 where sterling was particularly strong and in the range 1.55 - 1.6 euros/sterling. The company partly compensates for currency fluctuations by purchasing from suppliers based on both sides of the border, although this adds complexity and the need for continuous monitoring of exchange rates.

2. Administration While the company acknowledges that the border adds complexity to its trading operations – principally in terms of the two currencies and associated extra paperwork – this is seen as an administrative issue rather than a major trading difficulty.

3. Customer profile The profile of food retailing differs in both jurisdictions, with the multiples in Northern Ireland having a stronger foothold in the grocery market than in Ireland. As the strength of the multiples increased in Northern Ireland, Dohertys has learned to be flexible and adapt to such changes. By leveraging this experience in building relationships with multiples in Northern Ireland, it anticipates significant growth opportunities in Ireland as it targets multiples there, with additional investment in branding. Overall, Dohertys is very positive about potential growth in Ireland.

4. Infrastructure / Network development Transport costs to central distribution warehouses in Dublin also pose a difficulty. To address this, Dohertys has networked with another supplier of chilled products based in the North West and shares the cost of transport to Dublin. This arrangement works well and keeps transport costs to a minimum while securing distribution opportunities throughout Ireland.

Summary to top^ While Dohertys recognises a number of difficulties in cross-border trade, it is unaware of any barriers restricting growth of this trade. Growth is driven by the normal factors in any market and is not hampered by the existence of the border.

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The company has always traded on a cross-border basis, and historically recognised the North West as its principal market. It now perceives significant growth opportunities in Ireland as food retailing increasingly moves towards centralised distribution. They attribute their success to business flexibility; when issues such as BSE or a strong rate of sterling affect cross-border trade, the company looks at ways to overcome these problems, as it would in any marketplace when problems arise. The company pursues opportunities in the marketplace irrespective of the geographical location in Ireland. It would encourage other companies not currently trading on a cross border basis to explore the opportunities and take a flexible approach in addressing them.

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FM ENVIRONMENTAL LTD

WEBSITE

COMPANY: FM ENVIRONMENTAL LTD SIZE: SME

LOCATION: HQ NEWRY SECTOR: ENGINEERING

SUMMARY ON FM ENVIRONMENTAL LTD

KEY POINTS ON CROSS-BORDER TRADE

About the company Established over 25 years ago, FM

Environmental Limited incorporates

a group of business operations providing specialist services to

the pump and wastewater treatment

industry. The company’s head office is based in Newry, (Down) and it has a regional office in Limerick City. The company offers a comprehensive range of design, manufacturing, contracting and installation services. It has also formed a number of partnerships with overseas

firms enabling the group to establish operations in Europe, South East Asia, the Middle East, the Gulf States and the Americas. The company currently employs approximately 45 people in Ireland. FM Environmental's products include effluent treatment equipment, water and sewage pumps as well as specialised pumps for sludges, industrial effluents and solids handling requirements. It also offers service contracts and technology transfer arrangements, where the company trains client personnel in processes or products used.

Island operational profile

The company operates island-wide, supplying and installing water and wastewater systems. Its Limerick office supplies the Munster and West regions, while the rest of Ireland and Northern Ireland are supplied from its Newry base. The company sources its raw materials from Ireland, North and South. Approximately 45per cent of its turnover comes from the Ireland market, with 45per cent from Northern Ireland and 10per cent from overseas.

Up to twelve months ago, sales had been steadily increasing but have levelled off in recent months, largely due to the economic slowdown in Ireland. Much of FM Environmental’s business is with government bodies and semi state agencies, many of

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whom are adopting a ‘holding’ position with planned projects while levels of funding are assessed. This sense of economic uncertainty, coupled with a general increase in competitor activity island-wide, is having an impact on the company’s trade in Ireland. Despite this, it is an important market for FM Environmental and the company does not see this position dramatically changing in the future.

Financial performance As a privately owned business, the company does not disclose details of financial performance.

Operational differences between Northern Ireland and Ireland to top^ The company is not aware of any major difficulties in trading on both sides of the border. Differences exist and are outlined below, but none amounts to trading obstacles or deterrents to trade. Overall the company has had very positive experiences of cross-border trading and sees cross border trade as key to its continued success on the island of Ireland.

1.

2.

3.

4.

5.

Levels of bureaucracy Dealing with government bodies and local authorities is generally bureaucratic in nature. FM Environmental has found that there are higher levels of bureaucracy in Ireland where decision making is often a protracted process, resulting in longer lead times for projects. While this does not impede cross-border trade, it adds to costs of compliance and the complexity of the company’s operations.

Traffic congestion The growing traffic congestion in Dublin and surrounding areas is making travel more difficult and costly. The productivity of the company’s sales representatives has been adversely affected because of this in recent years. This has added to the company’s overall selling costs and therefore its general cost competitiveness. Belfast does not suffer the same levels of traffic congestion and as a result market development is not affected by additional costs.

Culture Other differences include the nature of business relationships North and South – personal relationships in a working environment tend to be more important in Ireland, while a business meeting in Northern Ireland would rarely stray from the issue at hand. The company does not see this as an impediment to trade, simply a difference which must be recognised and addressed accordingly.

Administration The company considers the island as a single market, with the two currencies adding some complexity to operations.

Standards Among its key client base – primarily local government - the company finds that the quality and service standards are now much stricter than several years ago. This has

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resulted in higher levels of resources required to do the job – time, paperwork, people, etc – adding to the overall project cost. For example, each job now requires a greater level of administration (paperwork) than previously. However, this is an island-wide development and has equally impacted operations North and South of the border.

6. Debtor terms Late payment by Ireland-based customers was cited in the past as an issue when trading across the border, but FM Environmental believes this has dramatically improved, due in part to stricter legislation governing payment terms with penalties incurred for late payment. However, the economic slowdown in Ireland is having an effect on payments due to a growing scarcity in private funds.

7. Insurance / Staff Insurance costs are high. FM Environmental purchases all insurance cover in Northern Ireland and insurance price differentials in both jurisdictions do not impact the company. Likewise, most staff are Northern Ireland-based, so the company has not experienced any particular jurisdiction-specific issues with labour costs or costs associated with recruitment.

Summary to top^ In terms of advice to companies looking to expand on an island-wide basis, FM Environmental considers networking, particularly for the SME sector, vital to success. Customer service is also key to establishing long-term relationships, as some customers may need to be reassured that service levels will not suffer because a supplier is based in another jurisdiction – however, this equally applies to suppliers dealing with customers outside geographical proximity. FM Environmental operates a proactive approach to customer satisfaction and retention, differentiating its product/service to customer requirements.

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WEBSITE

COMPANY: IARNRÓD ÉIREANN SIZE: LARGE

LOCATION: HQ DUBLIN SECTOR: TRAVEL/TOURISM

SUMMARY ON IARNRÓD ÉIREANN

OPERATIONAL DIFFERENCES BETWEEN IRELAND AND NORTHERN IRELAND

About the Company Iarnród Éireann is a member of the CIE

Group of Companies. Its principal activities are the provision of national rail intercity

and commuter passenger services,

freight services, catering services and the management of Rosslare

Europort. Employing 5,500 people, Iarnród Éireann operates over 2,500 passenger trains per week serving 140 stations and over 200 freight trains per week serving 33 depots. Iarnród Éireann jointly operates the Dublin–Belfast Enterprise rail service - the focus of this case study - with Northern Ireland Railways.

The Enterprise service Prior to the launch of the Enterprise service, both Iarnród Éireann and Northern Ireland Railways operated separate train services between Dublin and Belfast, using a common rail line. The trains used were old stock and disruptions on the line were frequent due to reliability problems as well as security issues at the time. In the early 1990’s both Iarnród Éireann and Northern Ireland Railways sought funding approval for a cross-border initiative to set up a joint train service between Dublin and Belfast to include upgrading of rolling stock and infrastructure. Funding for this considerable new investment, which would also be part funded by the EU, was announced at the Anglo-Irish conference meeting of 27th April 1992. With the commencement of work in March 1993 a joint committee was established with representatives from Iarnród Éireann and Northern Ireland Railways to jointly agree all aspects of the new initiative including pricing and service levels, number and type of carriages and trains, timetables, staffing, uniforms and marketing. The service was branded the ‘Enterprise’ based on consumer research1. With a train production lead time of five years, the new Enterprise service was launched on 1st September 1997. In the first year of operation of the service annual cross border passenger rail journeys of 800,000 were recorded. Journeys are now in the region of 1m per annum. Linking the cities of Belfast and Dublin in just over two hours, the Enterprise today is a fast, high quality rail network for business people, tourists and other rail travellers.

1 This was also the name of the first ever express service to operate between the two cities by Great Northern Railways (GNR) in 1947.

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Passengers can avail of either standard class or a superior class - First Plus - aimed at business travellers, including a choice of full meals, snacks and beverages served to the seat. The service comprises a total of three custom-built trains, branded and used exclusively for the Enterprise service. Eight services operate in each direction Monday to Saturday and five services in each direction on Sunday.

Island operational profile While a degree of cross-border cooperation existed between Iarnród Éireann and Northern Ireland Railways prior to the launch of the Enterprise (in that their trains ran on the same lines), the new initiative saw cooperation move onto a new plane, i.e.:

Every decision on the planning, launch and operation of the Enterprise service is made by the joint committee, with neither organisation having complete authority over any area. The timetable is scheduled in response to customer demand, ie, the first train from Belfast arrives in Dublin just after 9:00am and the first train from Dublin arrives in Belfast just after 9:30am, thus accommodating business travellers - a significant majority of their market. First Plus carriages are generally filled to capacity at peak times, highlighting the success of the initiative. Promotions run by one organisation are communicated to the other, who will endeavour to run similar ones. While the key messages are common, each organisation adapts promotion to suit the local market. Staff in both organisations meet regularly, e.g. marketing staff meet every two months, with daily contact and many informal meetings in the intervening period.

Financial performance In commercial terms, the revenue from the Enterprise is split between the two organisations based on the length of rail track in each jurisdiction – this is an approximate (although not exact) 50:50 split. Revenue earned by Iarnród Éireann in 2002 amounted to €198.8m (£140.1m) compared to €197.1m (£138.9m) in 2001 with passenger revenue showing an increase of €5.7m (£4.0m). Financial data for the Enterprise service are not published separately.

Operational differences between Northern Ireland and Ireland to top^ This cross-border initiative is unique in that every passenger journey (other than those beginning and ending in the same jurisdiction) benefits both organisations. There is therefore every incentive for each party to maximise business development opportunities in a ‘win win’ situation. While all strategic decisions are taken jointly by Iarnród Éireann and Northern Ireland Railways, a pragmatic approach is taken in day-to-day operations, e.g. a problem on a train arriving in Dublin will be dealt with by Iarnród Éireann maintenance staff. Operational differences are discussed below in terms of how both organisations jointly address various aspects of the service. Overall, the resounding success of the Enterprise service illustrates the lack of barriers in the operation of this unique cross- border service.

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1. Pricing / Currency Both organisations aim to equalise the cost of journeys, allowing for exchange rate differences. Yearly fare increases are agreed and the timing of their implementation coordinated, with CIE reviewing exchange rate fluctuations on a regular basis. Fares do not change with fluctuations in exchange rate, although the rate at which sterling is exchanged in the booking offices would vary to reflect the then current rate.

2. Staff Train crews for the Enterprise service obviously need to be based where a train starts in the morning. Timetabling has two trains based in Belfast and a third in Dublin, i.e. two train crews are based in Belfast and one in Dublin. Both organisations train their own staff within a broad framework of agreed standards. The actual training format could therefore differ between them although training programmes are shared and particular aspects may be adopted by one or the other. A common training programme is being considered by both companies’ operations departments.

3. Market profile The latest independent market research indicates that some 41per cent of customers use the Enterprise service once a month or more with 46per cent of customers indicating that they were travelling by train for leisure purposes or to visit friends or relatives while some 35per cent availed of the service for the purpose of work, business and/or education.

4. Customers Both organisations adopted a joint customer charter when the service was established. The charter includes customer service levels and standards, complaint procedures, accountability, punctuality, levels of compensation, etc. A passenger with a complaint will be referred to the organisation who issued the ticket, although the complaints procedures operated by each are identical. For Iarnród Éireann the customer charter was effectively piloted on the Enterprise service and the concept has since been adopted for their Intercity and Suburban services. 5. Marketing A joint marketing budget is agreed each year. Media costs vary widely between the jurisdictions, e.g. a promotion run in the Belfast Mirror will be less expensive than a similar one in Dublin.

6. Reservations There is a joint reservations system whereby passengers can call either Northern Ireland Railways or Iarnród Éireann direct. Reservation staff in both organisations access a single reservation system to make bookings. A new on-line reservation system is expected to be launched in April 2004.

7. Conditions of use While there are some differences between Iarnród Éireann and Northern Ireland Railways in the conditions attached to certain tickets, each accepts the conditions of the other in relation to the Enterprise service and will honour these accordingly.

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8. Transfer of learning Each organisation learns from the other. Thus Iarnród Éireann set up a rail break service offering a combined rail / hotel package on an island-wide basis. Northern Ireland Railways saw the opportunity to do likewise targeted at the Northern Ireland market and now offers similar island-wide rail / hotel packages. Both markets benefit the Enterprise as passengers will use the service whether originating in Belfast or in Dublin.

Summary to top^ The level of peak time resources is the key restricting factor for growth in passenger numbers - trains are currently full at that time and both organisations would require investment in stock to grow numbers. This would, however, have to be considered in the context of the total services offered by each organisation, as well as their individual station capacities, rail infrastructures and investment priorities generally. The Enterprise service is frequently held up as a yardstick for improved cross-border cooperation. Its success since establishment over five years ago is testimony to the power of cross-border planning and operations, against a backdrop of increased customer demand for better access between the commercial and social hubs of Belfast and Dublin.

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WEBSITE

COMPANY: MUSGRAVE GROUP SIZE: LARGE

LOCATION: HQ, CORK SECTOR: RETAIL / WHOLESALE

SUMMARY ON MUSGRAVE GROUP

KEY DIFFERENCES BETWEEN IRELAND AND NORTHERN IRELAND

About the Group

Musgrave Group is the largest food and grocery distributor on the

island of Ireland. Established in the latter 1870s, it pioneered voluntary group retailing and cash-and-carry wholesaling in Ireland. The Group also has interests in Spain and in Britain, where it operates through 230 supermarkets and convenience stores.

Island operational profile Musgrave operates an island-wide distribution and support network for independent supermarket owners and owns the franchise to over 590 Supervalu supermarkets and Centra convenience stores. Musgrave SuperValu Centra’s network services 24per cent of the market in Ireland and 10per cent in Northern Ireland, with a 20per cent share of the market on the island. The operation in Ireland provides support and assistance to its sister company in Northern Ireland in areas such as transaction processing, systems

support and logistics. This works well for the company with the value-adding and customer facing functions such as sales, marketing and purchasing managed from Northern Ireland. Musgrave also operates the country’s leading wholesale cash-and-carry operation, with 9 large purpose built facilities offering traditional food and non-food ranges, based in Dublin (3 locations), Cork, Limerick, Galway, Waterford, Belfast and Derry. It also operates an extensive foodservices and delivery business.

Financial performance Musgrave SuperValu-Centra sales on the island rose by 10per cent in 2002, with recorded retail sales in Ireland of €2,300m (£1,589.3m) in 2002, and €317m (£219m) in Northern Ireland. Group profit before tax was €57.6m (£39.8m) in 2002, up 22per cent on the €47.1m (£32.5m) achieved in 2001. Overall, the business in Northern Ireland performed well during 2002, with investment in existing and new stores by independent retailers bringing the total number of stores at

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year-end to 90. In August 2002, distribution operations were centralised in a new custom-built facility in the Belfast Harbour Estate, comprising 200,000 sq ft of ambient and chill warehousing and support office facilities.

Operational differences between Northern Ireland and Ireland to top^ The Group's core businesses in Ireland and Northern Ireland continue to trade in an increasingly competitive business environment. Despite uncertainty in economic prospects, the Group’s business model - a retail franchisee model with the franchisees owning the stores, operating under the SuperValu or Centra banner and availing of Group purchasing and promotional benefits – has proven to be robust in the recent economic slowdown in Ireland. While Musgrave has a significant market share in Ireland, opportunities remain for development. Likewise the market in Northern Ireland is progressing and confidence in the development of the market is growing. Particular differences between the two markets Musgraves experienced by the Group are listed below:

1. Regulatory environment The risk of dominance of retailing by large multiples is a concern, potentially leading to uncontrolled growth of superstores and predatory pricing1. This is of particular relevance to the Northern Ireland market where multiples are less restricted – in Ireland, retail planning guidelines restrict retail developments to 3,000 sq metres (3,500 in Dublin) and the Groceries Order (1987) prevents low cost selling. The strength of UK multiples, i.e., Tesco, Sainsbury’s and Safeway, in Northern Ireland is thus a particular concern to the Musgrave Group as further uncontrolled growth in this sector could reduce the market need for so many smaller retailers. Musgrave is keen that its product and service offering remains strong and competitive within this environment. To address these issues, the independent sector in Northern Ireland, including SuperValu Centra, Spar, Mace, Nisa and Costcutters, and pure independents, came together and formed the Northern Ireland Independent Retail Traders’ Association (NIIRTA), together with a number of manufacturers acting as associate members. NIIRTA’s role is primarily a representative one, putting forward arguments for balanced retail development in Northern Ireland, as to ensure fair play and a level playing pitch on which all competitors can compete on an equal footing.

2. Suppliers Musgrave Group has a policy of encouraging local supply where possible. While there has been a degree of parallel, (i.e., cross-border) trading, this has slowed down with the strengthening of the euro. In many cases, it is now cheaper for Northern Ireland retailers to buy locally and opportunities are arising to bring products into Ireland from the North. There are also a number of common suppliers, both sides of the border, representing the full range of goods processed in Ireland, e.g. dairy products, drinks and meat. Dry goods are mainly imported into Northern Ireland - from off the island, chiefly Great

1 Predatory pricing refers to the practice of pricing staple goods tactically to attract consumers, either below cost or at cost. Below cost pricing is illegal in Ireland but not in Northern Ireland.

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Britain. This represents a further market opportunity to dry good suppliers based on the island. 3. Trading Environment The suspension of the Northern Ireland Local Assembly is an issue as, when in operation, it had a positive influence in terms of helping to stabilise the market and increasing business confidence.

4. Currency While not a major issue and difficult to quantify, a single currency would reduce trading costs and streamline administration.

5. Infrastructure While transport links between Northern Ireland and Ireland have historically been poor, these have improved in very recent times with direct flights now offered between Cork and Belfast, and Dublin and Belfast, and improvements to the rail and road networks. These developments will have a positive effect on cross border trade.

Summary to top^ The Musgrave Group sees no real barriers to development of the business in Northern Ireland in terms of availability and capability of franchisees for the stores. Likewise staff costs and availability do not represent barriers. As a key player in the independent sector in both Northern Ireland and Ireland, the Group’s emphasis on local supply will open up opportunities locally or across the border for suppliers based in both markets. Overall, the Group’s experience in developing its business into Northern Ireland has been extremely positive, having grown to the current level from zero in 1996. Its success in Ireland, with many outlets in border areas, is now being replicated in Northern Ireland and provides an excellent basis for development. In addition, Northern Ireland has a strong independent sector which had lacked support and this provided an opportunity for the Group. Given a fair basis of competition, the Group sees no reason why its well proven business model should not support further development in both jurisdictions.

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WEBSITE

COMPANY: NORBROOK LABORATORIES SIZE: LARGE

LOCATION: HQ NEWRY SECTOR: LIFE SCIENCES

SUMMARY ON NORBROOK LABORATORIES LTD

KEY DIFFERENCES BETWEEN IRELAND AND NORTHERN IRELAND

About Norbrook Since its foundation in 1968, Norbrook Laboratories has

grown to be a leading pharmaceuticals

company. With world-class facilities, it

manufactures a comprehensive range of

veterinary and medical pharmaceuticals, contract manufactured products and pharmaceutical active ingredients. It is the largest producer of sterile veterinary injectibles in the world and

the only company licensed by the Food and Drug Administration (FDA) to manufacture them outside the US for sale within the US. With four main finished product manufacturing facilities in Ireland based in Newry (Down), Norbrook manufactures 800+ products globally and exports to over 110 countries with in excess of 1,700 marketing authorisations. Its commitment to state – of – the – art manufacturing facilities is evidenced by a £50m (€72.4m) investment over recent years.

Operational profile There are approximately 700 staff in Northern Ireland and 20 in Ireland. The principal manufacturing facility in Newry produces finished product while a smaller manufacturing facility in Monaghan produces an ingredient for use in the manufacturing process in Newry. In addition to manufacturing facilities, there are also sales, marketing, R&D and finance staff based in Newry, and there is a small sales office at the Monaghan location. Primarily Norbrook sells product for two specific markets:

Products dispensed via prescriptions, i.e., a vet will diagnose a sick animal and prescribe a particular product which the farmer than buys in a registered outlet;

Over the counter (OTC) products which the farmer buys directly (without prescription) from a registered outlet, typically a specialised Animal Health outlet.

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For historical reasons and differences in the structure of veterinary services in both markets, Norbrook typically sells the majority of its products to veterinary wholesalers in Northern Ireland, and directly to vets in Ireland. Norbrook has a single sales management structure for the island, with separate sales teams for Northern Ireland and Ireland reporting to a sales manager in Ireland. There are 7-8 field sales staff operating in Ireland and 3-4 in Northern Ireland. Some Northern Ireland - based staff cover areas within Ireland where this makes sense geographically, i.e., some of the border counties are serviced by Northern Ireland - based sales staff. Norbook’s suppliers are globally based, although many of its suppliers of primary and secondary packaging are based within the island of Ireland. Some of the active ingredients required for manufacture are highly specialised and the company must source these from a limited number of suppliers, often outside the island. Following a strategic decision in recent years, Norbrook now produces many of its own chemicals required in the manufacturing process to secure supply and cost advantage.

Financial performance As a privately owned business, the company does not disclose details of financial performance. However, total sales in Northern Ireland account for approximately 4per cent of Norbrook’s total (global) turnover, while the market in Ireland accounts for approximately 6per cent of total turnover. Domestic sales have grown steadily for the past number of years and the company does not foresee further significant like-for-like growth in either market, save through new product launches, as it has achieved a level of market saturation, holding prominent positions in each market – as number one supplier in Northern Ireland, and within the top three suppliers in Ireland. Norbrook intends to maintain these positions.

Operational differences between Northern Ireland and Ireland to top^ Norbrook has not found any particular difficulties in trading in both Northern Ireland and Ireland. There are differences between the two markets but none that constitute a barrier that cannot be overcome. The differences noted by Norbrook are listed below:

1. Regulatory environment While there are different requirements for selling certain products in different markets, there has been a movement in recent years towards a harmonisation of the regulatory environment across the EU. However, differences are apparent while trading in the context of Northern Ireland and Ireland. For example, a product might be categorised in Ireland as an OTC product while categorised as a prescription product in Northern Ireland. This impacts packaging, promotion and the selling channel used - a prescription product cannot be promoted directly to the end user (the farmer), for example, but must go via the veterinary service whereas an OTC product can be promoted directly to the end user.

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2. Currency The two currencies on the island of Ireland have in the past caused some difficulties particularly when the exchange rate differential became significant. The company might sell product to a customer in Ireland who, because of the beneficial foreign exchange rates, would then sell that product back to the Northern Ireland market at a profit. In such a scenario, a danger for the company, in that a product packaged specifically for the Ireland market subsequently could make its way to the Northern Ireland market, for which it is not intended and where the packaging and regulatory requirements differ. This has been a ‘grey area’ in terms of legality but Norbrook is keen to ensure that the integrity of its brand name is not compromised in any way because of this issue. However, this has not been a significant problem of late.

3. Competition Different levels of competition exist between Ireland and Northern Ireland. For example, there might be ten competitors supplying a particular product within Ireland, but only four in Northern Ireland supplying the same product. This is driven by a number of factors, including how products are categorised and the structure of the veterinary sectors in each market. The varying levels of competition may impact upon Norbrook’s pricing structures in each market. The value of production livestock is also a factor in determining pricing levels and, therefore, competition. For example, if an animal is worth €300 in Ireland and the cost of vaccination is €20, this may be an acceptable cost of vaccination vis-à-vis the overall value of the animal. If the same animal is worth considerably less in Northern Ireland, but the vaccination costs the same, then this cost may not be perceived as good value vis-à-vis the overall value of the animal. Price differentials for animals still exist between the two markets but not to the same extent in recent years. However, Norbrook must be aware of any differences and price its products accordingly.

4. Corporation tax The lower corporation tax rate in Ireland can make Norbrook’s products less competitive relative to its Irish based competitors. As all Norbrook’s finished-product manufacturing on the island of Ireland takes place in Northern Ireland, the majority of the value created (profit) is in Northern Ireland where it is taxed at the higher rate.

5. Infrastructure With higher fuel costs in Northern Ireland, it is more costly to have sales staff on the road than in Ireland.

6. Staff Recruiting and maintaining the right staff is critically important to the business. With rising standards of living both sides of the border, staff remuneration

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expectations frequently exceed the rewards available, leading to some dissatisfaction depending on where staff live. The impact of the weakening Euro has had particular implications in that regard.

Summary to top^ As a truly global organisation, Norbrook does not encounter any significant issues when trading between Northern Ireland and Ireland. These are its home markets where Norbrook established a strong foothold before expanding to become a major player in world markets. However, for companies looking to grow within the island, there are a number of factors to be considered:

The main principle is understanding what the customer wants, and then providing it at the right levels of price, delivery and quality. Companies should not become ‘wrapped up in local issues’; instead, they need to focus on standard market considerations – supply, ethics, value for money, confidence etc. These equally apply in Northern Ireland and Ireland. The transportation infrastructure has historically imposed limitations to cross border trade. However, recent improvements to the rail link and the introduction of direct flights between Belfast/Dublin and Belfast/Cork will foster greater levels of cross border trade going forward. Investment in R&D and marketing is essential for cross border trade to significantly expand. These are areas in which companies – North and South – have historically been weak. As a result of the proximity of both markets, it is physically much easier to trade between Northern Ireland and Ireland than, say, between Northern Ireland and Belgium. If a company is unable to trade ‘on its own doorstep’, it is less likely to be successful in other export markets. Norbrook is an extreme example of a company that started with, focused on, and subsequently conquered its home markets (both Northern Ireland and Ireland) before successfully expanding into other export markets.

In order to expand, companies must recognise geographical areas and any cultural differences that exist within these areas. The cultural differences often cited in the past are less discernable now as more foreign based companies come into Ireland, encouraging industry generally to look beyond the local environment. The key issue in developing cross-border trade is the development of confidence, competence and trust. Any barriers are perceived ones and can be addressed through education and by encouraging mobility of people.

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WEBSITE

COMPANY: QUINN DIRECT SIZE: LARGE

LOCATION: HQ CAVAN SECTOR: FINANCIAL SERVICES

SUMMARY ON QUINN DIRECT

KEY DIFFERENCES BETWEEN IRELAND AND NORTHERN IRELAND

About the Group

The Quinn Group is a leading company based in

Ireland with interests in cement, concrete, glass packaging,

financial services and hotels. The Group

recorded turnover of €500m (£345.5m) in 2002. It employs

approximately 2,500 employees in its various industries and locations in Ireland and Northern Ireland. Quinn Life and Quinn Direct are both separate companies within the financial services division of the Quinn Group. The case analysis focuses on Quinn Direct.

Island Operational Profile Quinn Direct, launched in 1996, provides a full suite of general insurance products including motor and home insurance as well as commercial liability, property damage, commercial vehicle and fleet covers. With 150,000 active policyholders across all of its business streams, the company holds a 9per cent share of the Ireland insurance market and 6per cent of the Northern Ireland market.1 Quinn Direct is the only indigenous insurance company operating on the island (many of the players in the insurance market, both in Northern Ireland and Ireland are subdivisions of larger multinationals). The company employs over 650 staff on the island, with 50 employed in a Northern Ireland location. With its head office in Cavan, Quinn Direct also operates offices in Enniskillen (Fermanagh) and Dublin, where a second office is to be opened later in 2003. Its market in Northern Ireland is growing as a result of the office in Enniskillen and the proximity of the Cavan office to the border counties in Northern Ireland. The company also benefits in the Northern Ireland market from the strong company name of its parent, Quinn Group, based in Fermanagh. The company sells via telesales its products to customers in both Northern Ireland and Ireland from either call centre in Cavan or Enniskillen. Staff are trained in any differences in products that may exist between the two jurisdictions and can therefore deal with all customers, regardless of their location.

1 ‘Major new knowledge led investment for Enniskillen’, Department of Enterprise, Trade and Investment (NI) press release, 26 March 2003; and discussions with Quinn Direct.

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The company focuses on maintaining a low cost base relative to its competitors in the following ways:

The location of the company, i.e., the majority of staff are based in Cavan where overheads are lower than the main urban areas such as Dublin and Belfast;

Its sales model, i.e., direct to the customer with no ‘middle man’ commissions, and the cost efficient selling channel used (telesales); and

The company, is relatively young, has a younger workforce and therefore labour costs tend to be lower. In comparison, many of its competitors have a number of branch offices, sophisticated broker networks and a staff with an older (more expensive) age profile.

In keeping with this approach to minimize costs, Quinn Direct has relied mainly on customer satisfaction to grow its business rather than heavy investment in promotional campaigns. It has built up good relationships with financial writers in the national press in both jurisdictions and frequently uses this channel to publicise details of its products. Financial performance Quinn Direct posted a pre-tax profit of €33.5m (£23.2m) in 2002. Its income from insurance premiums rose by 38per cent to €256m (£176.9m) in the same year. Operational differences between Northern Ireland and Ireland to top^ Quinn Direct believes that there is little difference between the markets in Northern Ireland and Ireland. When selling general insurance products into either jurisdiction, the same principles apply. The key differences are listed below. 1. Regulatory environment Working with two different legal processes has implications for the company in terms of costs associated with products and staff training in product/service offerings.

Insurance claim costs in Ireland are typically 40-50per cent higher than in Northern Ireland. In Northern Ireland, a scale of awards is publishes and referred to in the judiciary process. No such scale exists in Ireland, resulting in many claims going to court with higher settlement costs. This also has implications for the timescales involved with settling claims.2

Differences exist between the two jurisdictions in areas such as health and safety, liability/property damage and employers’ liability (which is compulsory in Northern Ireland but not compulsory in Ireland). This means that products/services relating to these areas are slightly different in either jurisdiction. However, Quinn Direct ensures that staff are trained in all aspects of these products and therefore insists it is not an issue for the company.

2 The Government in Ireland is making inroads in this area and is currently reviewing the need for a personal injury assessment board, which would be a statutory board outside the normal legal process operating without incurring costs of legal fees, to all parties.

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2. Market demand The type of products sold into each jurisdiction tends to be driven by customer demand. For example, in Northern Ireland, customers typically look for comprehensive insurance while the majority of customers in Ireland want third party insurance. This is principally is principally driven by higher insurance costs in Ireland. Summary to top^ The company believes its success as an all-island operator can be attributed to the following:

The company is based in an area close to the border, thereby drawing staff and customers from both sides of the border. Many staff working in the Cavan office, for example, are from Northern Ireland and know the market and its requirements for doing business.

The company offers an all-island service. Many haulage businesses typically operate on an all-island basis and look for insurance to cover both jurisdictions. Quinn Direct is one of a small number of insurance providers that can offer this service - many others operate in one or the other jurisdiction so the customer would need to effectively negotiate two separate insurance products to cover both Northern Ireland and Ireland.

While the company operates in two separate jurisdictions with two different legal systems, it does not find this to be a barrier to cross-border trade. The company must be aware of differences between the two jurisdictions (e.g., health and safety, liability/property damage and employers’ liability), however these do not cause any particular issues in a trading context. All Quinn Direct call centre staff are 100per cent integrated in that they are fully trained in all differences along product lines, so that any staff member, regardless of his/her location, can deal with customers looking to purchase general insurance products, whether based in Northern Ireland or in Ireland.

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WEBSITE

COMPANY: ULSTER BANK SIZE: LARGE

LOCATION: HQ BELFAST SECTOR: FINANCIAL SERVICES

SUMMARY ON ULSTER BANK

KEY DIFFERENCES BETWEEN IRELAND AND NORTHERN IRELAND

About Ulster Bank Corporate Banking & Financial Markets look after the banking needs of business and corporate customers, treasury and money market activities, asset finance, stockbroking and offshore financial services.

Ulster Bank Group, a member of The

Royal Bank of Scotland Group, is a leading provider of financial services in

both Ireland and Northern Ireland. The

Bank's activities are handled by two main customer facing business divisions - Ulster Bank Retail Banking and Ulster Bank Corporate Banking & Financial Markets, assisted by Manufacturing, Central Services and Finance support functions.

The bank employs more than 4,000 staff on the island of Ireland, with approximately 2,000 staff employed within each jurisdiction (there are more branch staff in Ireland and more head office staff in Northern Ireland). There are approximately 94 branches in Northern Ireland and 117 branches in Ireland. Its Ireland operations trade under Ulster Bank Ireland Ltd, while its Northern Ireland operations trade under Ulster Bank Northern Ireland.

Its Retail Banking division handles all personal and small business customers with responsibility for all branch banking, wealth management and direct banking activities of the Group. Island operational profile

While bank operations at branch level in Northern Ireland and Ireland are largely autonomous, certain group functions are managed on an all-island basis.

The bank uses its call centre based in Northern Ireland to service customers on an all island basis. Advertising / promotional campaigns are managed from an all-island perspective. Typically this involves dealing with a single advertising agency and the development of common advertising campaigns for both Northern Ireland and Ireland, with currency or other local variations incorporated to fit each jurisdiction as appropriate. Ulster Bank’s mortgage business operates as an integrated unit across the island, with strategic decisions concerning its mortgage services being made by a single management team responsible for both jurisdictions.

This case analysis focuses on Ulster Bank’s mortgage business.

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Financial performance In 2002, Ulster Bank reported an 8per cent rise in its total group income to £593m (€858.1m), with profits up 7per cent to £278m (€402.3m). It does not report financial results for Northern Ireland and Ireland separately. Operational differences between Northern Ireland and Ireland to top^ The bank is not aware of any barriers, other than standard market and legal considerations, to trade on an all island basis.

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Market position Ulster Bank holds different market positions in Northern Ireland and Ireland and, as a result, operates on somewhat different levels. In Northern Ireland, for example, it is the market leader holding 25per cent of total market share (in terms of main current accounts), while in Ireland, it is fourth behind Bank of Ireland, AIB and Permanent TSB, holding 8per cent of the total market share. In terms of the mortgage market, Ulster Bank considers the market in Northern Ireland has matured to a greater extent than in Ireland. In Northern Ireland, the market has been subject to higher levels of competition for much longer than the Ireland market, which has just recently opened up to mortgage suppliers from outside the jurisdiction. The bank sees greater business potential in Ireland, as it holds only 3per cent of the mortgage market compared with 6per cent in Northern Ireland. Because of its strength in the more openly competitive Northern Ireland market (relative to its key Ireland rivals AIB and Bank of Ireland who hold 5per cent and 2per cent market share in Northern Ireland, respectively), Ulster Bank believes that it will be well positioned to grow its share of the mortgage market in Ireland as the mortgage market there continues to open up. The bank’s experiences, therefore, of trading north and south is expected to provide a competitive advantage over its key competitors in the mortgage market.

Regulatory environment Variations in legislation between Northern Ireland and Ireland mean that the bank must adapt its trading model accordingly; this has implications for its marketing strategies and training for staff at group level.

The legislation in Ireland limits the mobility of mortgages between operators as opposed to Northern Ireland, where there are lower penalties for changing mortgage providers and therefore more switching between providers. Ulster Bank must therefore have a proactive customer satisfaction and retention approach, differentiating its service offering for its Northern Ireland customer base. Staff operating at Group level are responsible for the mortgage business in both jurisdictions. They therefore must be able to think and work with two sets of information, including different interest rates, terms and conditions, etc, on an ongoing basis, and be able to switch between these sets of information as the need arises. This adds a certain complexity to operations but not enough to be considered a trading obstacle.

Currency Within Ulster Bank’s mortgage business, the two currencies represent an additional administrative layer in certain cases, although at retail level, Northern Ireland customers

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are generally dealt with by Northern Ireland-based staff, while Irish customers are dealt with by staff based in Ireland. The exception tends to be where customers live in one jurisdiction, typically in a border area, but work in the other jurisdiction. The customer could, in theory, apply for his or her mortgage in a branch in either jurisdiction where retail staff in this instance would need to deal with two currencies (the currency the customer wishes to secure the mortgage in, and the currency the customer is earning). Overall however, the two currencies on the island do not pose any particular trading problems for Ulster Bank’s mortgage business. Summary to top^ Ulster Bank’s experiences of operating in two trading environments - in many ways offer more advantages to the company than it does disadvantages. The bank is able to leverage its experiences from one trading environment to the other, offering it a competitive edge and allowing for a transfer of knowledge on an ongoing basis, rather than simply at a point in time. For Ulster Bank, its presence in both Northern Ireland and Ireland is seen as intrinsic to its operations and ongoing success. Any complexity due to trading across the two jurisdictions is simply acknowledged and addressed through its operational and strategic plans.