Cartridge World

1. Cartridge World Prepared for: Best in France 12 May 2009 Orla Liston I Richie Carroll I Jason Poulsen I Atsushi Saito I Olga Fedorova

2. Constraints French Benefits Closing Company Cartridge World When did it come to France - Came to France in 2003, but originated in Australia in 1991. What's its business Remanufacturing of ink and toner cartridges for consumer printing Sale of compatible cartridges and printing accessories Refill of empty ink cartridges for inkjet printers, laser printers, fax machines and photocopiers with top quality, brand-specific ink and toners. What are its key figures (world sales, French sales, profits, market share etc.) -It currently has close to 18% of the worldwide ink cartridge market (Revenue) -Sold nearly 60 million ink jet cartridges and 10 million laser cartridges in France in 2007. -World’s fastest growing ink refilling retailer in the $60 billion printer cartridge industry Note: Only 22% of cartridges are refilled in Australia, 27% in the USA and 15% in the UK.

3. Constraints French Benefits Closing Company Company Products Senario1: Import and sell Senario2: Produce in France • FC2: Store, Factory, Negotiation, Tax • VC1 - VC2 = Transportation, and products are small • Estimating FC2 and VC2 might be difficult  Hidden cost

4. Constraints French Benefits Closing Company Company Products • Don’t produce products in France—Import and resell • Their cost • Fix cost: Store • Variable cost: Labor, Transportation, Cartridge parts

5. Constraints French Benefits Closing Company Clientele Who are the company's clients? Consumers and SME Worldwide +1600 stores in +45 countries What are their expectations? Network of sites Cater to local needs both in Australia and Internationally Provide competitive prices on superior products How will a French presence help or hurt the company's ability to satisfy client demands? Necessary to access French speaking clients Provide more tailored service in France France is one of the largest European markets

6. Constraints French Benefits Closing Company Why it Came to France Company approach to international growth 1600+ stores in more than 45 countries, with an average of 4 Cartridge World franchises being opened EACHWEEK! French Federation of Franchises; 130+ stores in France. Where else did it consider? -It is currently growing hugely worldwide, so it has considered and located in many other countries apart from France. Why was France a key target location -Owner for Europe had worked in France and UK so was familiar with France and how business was done here—very comfortable move

7. Company French Benefits Closing Constraints Company Values Efficiency Integrity Pride Customer Satisfaction What are the core values of the company? What values may not fit with perceived French values? Efficiency

8. Company French Benefits Closing Constraints Principle Constraints What are the principle constraints the company foresaw before coming to France? -Social Protection: very strong protective labor laws—protects employees Very challenging to fire employees Easy to get in trouble for something if you don’t know the system well -Higher Taxes -High Risk of Strike -Shorter Work Week: only 35 hours per week

9. Company French Benefits Closing Constraints Surprises? Did they discovery any others once they arrived? Not that bad because they are a franchisor that hires French people -The French understand their own system Mostly challenging for the executives -Top-down problem not bottom-up problem -Executives from American schools and American business style -Very to the point and don’t like to waste time -Hard to find franchisors that can handle/understand American system -Management to hire people well-versed in both cultures/bilingual

10. Company French Benefits Closing Constraints Worst Constraints Which are the worst constraints? -35 Hour work week -Taxes are higher here How do these constraints differ with their other locations? Longer work hours in US and other Western cultures, similar to home country of Australia

11. Company French Benefits Closing Constraints Losses? Did the local subsidiary lose projects to other countries because of these constraints? -No; Cartridge World franchised all over Europe, over 1,600 stores in 45 countries -Franchisor, generally not hiring other non-French people to work in France—with the exception of management above the franchisees and below the executives -Franchising in different nations makes a lot of sense

12. Company French Benefits Closing Constraints Adaptations What kinds of adaptations did/is the company making to its people management systems? -Try to deal with the differences -Hiring fully bilingual people -Hiring English speakers so as to help communication -Hiring those who can understand differences working in different countries, and between Europe and non European differences

13. Company Constraints Closing French Benefits Key Benefits What are the key benefits of being in France? High quality of infrastructures High labor productivity per hour (as a % of the US level) High quality of life in France France is 5th largest economy in the world Location benefits for expanding throughout European market

14. Company Constraints French Benefits Closing General Advice Take time to think about things before starting What advice do you offer to other companies in this sector concerning use of France as a location? Get very good consults (someone who is used to setting up companies in France Make a very detailed contract for the employees

15. Company Constraints French Benefits Closing We’d Like to Thank Isabelle Eloy Finance Controller Isabelle@cartridgeworld.fr 01.58.46.15.63

16. Company Constraints French Benefits Closing Questions?