A French Success Story

1. A French Success Story Andrea Bolieiro Robert Fine Brian McKenzie Victor Moura

2. The Company • Cinram duplicates and distributes multimedia discs: #1 in the world • 40% of global market share • Cinram made two acquisitions in France in 1995 • Vidéopouce and Duplication France

3. Key Financial Figures - France • Financials: • Turnover around 90 M€ (5.5% of global sales) • 2/3 from media duplication • 1/3 from distribution • Fixed cost around 15 M€ • Gross margin around 14%

4. Cinram’s Products • Manufacturer and distributor of DVDs, CDs, and other entertainment media • 2 French Operations: • Cinram Optical Disc (Louviers) • Cinram France, Logistics (Champenard) • This includes all the steps to get the product ready for sale when they arrive at the retailer • Emphasis is moving to services

5. Revenue by Product

6. Cinram's clients • Cinram’s two main clients are Warner Brothers and FOX studios • Operations of Warner and Fox have to be kept separate • Clients expect that their customers can get next day, customized service • WB and FOX’s customers include retailers (Carrefour), Specialists (Virgin), and Rentals • Close to end-user; strong client relationship; ongoing distribution and value-added services

7. The Cinram Approach to International Growth • Be close to the markets where customers are present (Be close to the major studios) • Major Markets = North America & Western Europe

8. The Cinram Approach to International Growth (2) 2. Growth through acquisition has been a key to Cinram’s success • Must respond quickly to movements of their major customers • Target existing facilities suited for their business (Duplication + Logistics) • Be ready for operation within 3 to 6 months

9. France – A Strategic Location for Cinram • Need to be close to the French market: • Proximity to market – ability to offer customized solutions to customers in France • Warner + Fox Studios both keep Paris offices to manage their French businesses • Cannes Film Festival • Marketing Specificity in France • A very different market for DVDs & CDs • Demands of French vendors are very unique

10. France – A Strategic Location for Cinram (2) 2. Infrastructure in France • Education/Labour infrastructure • Cinram maintains it’s own in-house IT staff, as well as engineers & technicians • Established Distribution network • Vidéopouce and Distribution France • Legal Infrastructure

11. France – A Strategic Location for Cinram (3) 3. Cultural Fit – French & Canadian business culture are quite similar • Founder of Cinram is a French Canadian • French creativity/ingenuity – The French take pride in their work • Flexibility to adapt and change as necessary • Netherlands was too rigid in their adoption of company policies

12. Constraints in France • Anticipated constraints • Cultural difference, high cost • Other constraints encountered in France • Militant unions (Ex: LCR) • Stringent and inflexible labour laws • Social obligation to keep people employed

13. Constraints in France (2) • Cinram France experiences lower volumes than other European operations (lower demand) • Therefore it does not benefit from a scale effect

14. Adapting to France • One of the main goals of management has been to increase worker productivity • Targets and monthly reviews • Productive figures tracked on a daily basis • Cinram France has also had to find ways to meet its social obligations • Movement of workers from VHS manufacturing to special packaging

15. Adapting to France (2) • Uses a combination of CDD, CDI and Personnel Temporelle in order to be more flexible

16. Key Cost Comparison Cost Advantage? • No cost advantage to operating in France • Revenue per worker

17. Key Benefits • Productivity (units per person per hour) is very high and defect rates are very low in Western Europe as a whole • In Champenard, 99% of deliveries are done on time • Transportation network allows them to locate in a suburb of Paris and take advantage of lower real estate costs • Numerous unquantifiable benefits

18. Future Strategy • Short-term horizon (6-12 months) • Client management and acquisition • Aggressive market share growth (> 40%) • Medium-term horizon (1-5 years) • The standard: HD-DVD or Blu-ray? • Continued integration of value-added services • Long-term horizon (5+ years) • Expansion: saturation, new markets, piracy • Shift to logistics and support service business

19. Essential Advice Six crucial recommendations • The local expert and dealer • Property taxes: The make or break • Labour relations, political penchants • Evaluate cultural integration • Productivity management and growth • Be flexible, be patient, be adaptable!

20. Questions?

21. We Thank Jean-Michel Cathonnet Vice President Cinram Europe Frederic Burak Director Cinram France

22. We Thank Joel Theate Director of Distribution Cinram France David Locksley, Chief Information Officer, Cinram International Ron McKenzie, IT Consultant, Cinram International (Expatriate – Cinram France)

23. Bibliography Burak, Frederic. 2006. Interviewed by Andrea Bolieiro, Robert Fine, Brian McKenzie, and Victor Moura. June 1, 2006. Cinram: A French Success Story. Burak, Frederic. “Cinram in France.” Internal Documents. February 7, 2006. Cathonnet, Jean-Michel. 2006. Interviewed by Andrea Bolieiro et al. June 1, 2006. Cinram: A French Success Story. “Cinram International – 2005 Annual Report.” Toronto, Canada. March 2006. Locksley, David. 2006. Interviewed by Brian McKenzie. Email correspondence, June 1-5, 2006. Cinram: A French Success Story. McKenzie, Ron. 2006. Interviewed by Brian McKenzie. Email correspondence, June 1-5, 2006. Cinram: A French Success Story. Theate, Joel. 2006. Interviewed by Andrea Bolieiro et al. June 1, 2006. Cinram: A French Success Story.

24. Our Team Andrea Bolieiro 4211 Hazineh Court Mississauga, Ontario CANADA, L5B 3N6 andrea.bolieiro@gmail.com Robert Fine 132 Bombay Avenue Toronto, Ontario CANADA, M3H 1C4 robert@finefam.ca Brian McKenzie 25 Mitchell Ave. Brampton, Ontario CANADA, L6Z 1H2 bmckenzie07@ssb.yorku.ca Victor Moura 2915 Appleton Court Oakville, Ontario CANADA, L6J 6S5 victor.moura@gmail.com