Seeing the bigger picture

Irish firms must tap into foreign markets to achieve significant growth, writes Caroline Madden

AFTER SOME frantic Budget-related fire-fighting on the home front, Taoiseach Brian Cowen finally managed to escape from hordes of angry pensioners and students on Wednesday by jetting off to China to catch up with an Irish trade delegation. One of the aims of this trade mission is to support Irish companies in accessing the Chinese market.

Given the relatively small size of our domestic market (Ireland's population is 4.5 million compared to a population of 1.3 billion in China), Irish businesses must tap into foreign markets if they want to achieve significant growth and expansion.

In fact, according to Aidan Shine, of the South East Business Innovation Centre (BIC), the very future of "Ireland Inc" depends on forcing homegrown Irish businesses to think big.

"It's no good if they think regionally, like in the southeast for example, or even nationally," Shine says. "They have to think almost immediately of scaling the business for export."

Ireland can no longer rely on foreign direct investment as it did in the past, he explains, as this investment is now flowing towards lower-cost countries such as India. "So we're going to be relying more and more on our indigenous small companies to grow bigger very quickly," he says.

Entrepreneurs hoping to go global will be relieved to know that there is no shortage of support and advice out there.

"There's a massive level of support for Irish businesses interested in exporting, from Enterprise Ireland, from their local chamber, from the BICs and the enterprise boards," says David Bourke, of Chambers Ireland. "An entrepreneur would be well-advised to spend some time researching to see what exact help is available."

Despite all the support available, expanding a business and creating a global brand remains a huge challenge, but at least Irish entrepreneurs have some stellar role models. Take Jerry Kennelly, for example, who is the subject of this week's visual case study which accompanies this business education article and can be viewed on www.eoy.tv.

Kennelly, who left school before sitting the Leaving Cert and describes himself as unemployable, started out as a photographer in Tralee and succeeded in growing his stock photography business, Stockbyte, from a start-up to a global brand.

"It was a very small team of people. We were competing against the very large companies," he recalls. "It was a real pleasure to build up that sort of success with them, from Ireland, from our home town."

"The centres of excellence in stock photography were Seattle, New York and London," he continues. "Tralee has been added to that map."

After successfully cracking the global market, Kennelly hit the headlines in 2006 when Stockbyte was bought by its chief competitor Getty Images for a cool €110 million. This deal made other Irish entrepreneurs sit up and take notice, and realise that an exit strategy of this nature is not only possible, but potentially extremely lucrative.

"I think there's a growing acceptance that people can start businesses with a view to selling them on," observes Shine. "They're becoming a lot more mature and educated and they understand markets a lot better," he continues. ""Now you hear them talking about . . . looking toward a trade sale to a bigger fish in the same business."

One factor that facilitated Stockbyte's rapid expansion was the development of technology such as the internet. However, many Irish enterprises make the mistake of thinking that simply having a website means that they have gone global.

David Bourke, of Chambers Ireland, feels that Irish companies are not exploiting the full potential of the internet.

"Our own research tells us that when it comes to e-business, a lot of Irish companies are still sitting on their hands," he says. "So while maybe 70 per cent of businesses do have a website, there wouldn't be a satisfactory amount who have an e-business strategy."

According to Shine, the internet can be particularly beneficial for business-to-consumer type ventures, but when it comes to business-to-business activity, "there's a lot still done on handshakes".

This explains why, despite all the advances in communication and videoconferencing technology, the Taoiseach joined almost 100 Irish companies and groups in China this week. When it comes to sealing deals, nothing quite beats the old-fashioned personal touch.

Irish Times Business Education Series

This regular column provides second-level students with an insight into key business issues, and is published every Friday in the Business This Week supplement.

It is intended to complement a series of 12 visual case studies available on the Ernst Young Entrepreneur of the Year programme's new online business education channel www.eoy.tv. Teacher support notes are also available here. The relevant visual case study for the week can also be accessed on www.irishtimes.com/business. The case studies have been developed in collaboration with the Business Studies Teachers Association. Each case study is directly related to the Leaving Certificate business course.

Business Expansion: Stockbyte

This week's case study ties in with the following areas of the Leaving Certificate business studies curriculum:

Unit 2: Enterprise - Jerry Kennelly provides aspiring entrepreneurs with a very useful checklist of must-have skills and characteristics. He differentiates between a characteristic and a skill and illustrates why each has a part to play in entrepreneurial success.

Unit 5: Business expansion - this case study examines possible expansion paths for a rapidly growing business, and the process of building a world-class brand.