This document summarizes a student assignment analyzing the craft sector in Ireland. It discusses the economic features of the Irish craft sector, including that it is made up primarily of microbusinesses with annual sales under €25,000. It also analyzes the competitive forces in the sector, key drivers of change such as technology and policies, factors for future success including networking and partnerships, and provides an outlook for future growth. The conclusion emphasizes that while the sector benefits from tourism investments, craft businesses could improve by developing business skills and collaborating more through clustering.

1. WATERFORD INTITUTE OF TECHNOLOGY
The Business
Environment of the Craft
Sector in Ireland
Assignment 1, Strategic Management
Marie Wilgaard Kelly. W20066429
10/19/2015
LecturerAnne Marie Lally Word count: 1987

2. Marie Wilgaard Kelly Page 1
Chapter 1: Introduction
This assignment will be undertaking a critical assessment of the craft sector in Ireland. Craft
being identified as hand crafted and designed pieces produced in Ireland.
The content of this assignment will be focusing on the dominant economic forces, the
competitive forces, the key forces driving change, key factors for future success and a sector
outlook. The main source of information are the SIA Report (2001), which was the first large
scale analysis of the Irish craft sector and the Indecon Report 2013, because it is the most up
to date independent economic analysis.

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Chapter 2: A Critical Assessment of the Craft Sector in Ireland.
2.1. Dominant Economic Features in the Craft Sector in Ireland.
The revenue generated by craft in Ireland and Northern Ireland every year is estimated,
because the figures in the different report are based on surveys conducted by telephone or
post and subsequently scaled up to reach an overall figure for the craft sector. Figure 1 below
is taken from the Platinum Consulting Group’s (PCG) report in 2004 and 2005. It clearly
indicates the uncertainty of the figures, when the same company reaches different
conclusions for the same years in different reports.
Figure 1, Craft sector revenue by year and report.
Total revenue in
millions. (€) 2000 2001 2002 2003 2004 2005 2006
PCG, 2004 90 76 84 86 96
PCG, 2005 121,6 126,1 118,7 121
Source: PCG report 2004 & PCG report 2005.
The craft sector is made up by 70.1 % of microbusinesses with sales under €25,000. This
reflects the diversity and small scale of the sector. See Figure 2.
Figure 2: Breakdown of sales revenue reported by craft makers 2012.
Sales Band % of respondents in Sales band
Less than €10,000 49.3%
€10,001 – €25,000 20.8%
€25,001 - €50,000 12.4%
€50,001 - €100,000 8.4%
€100,001 - €250,000 6.2%
€250,001 - €500,000 1.8%
€500,001 - €1 Million 1.1%
Source: Indecon, 2013. p. iii.
The level of employment in the craft sector is estimated in a similar way. The Indecon report
(2013) estimated that 5,351 people are employed in the craft sector, but that there are 17,081
people employed in craft related work. Over the period 2009 – 2012 employment fell

4. Marie Wilgaard Kelly Page 3
annually in the sector. (Indecon, 2013). Again these figures are estimates only and based on
surveys, but it shows that the craft sector may be small in direct employment. In addition the
sector also has an effect on the tourism industry.
The Irish craft brand is strong nationally and internationally, especially in U.K., U.S.A.,
Canada and Continental Europe. The Indecon report (2013) estimates that 2.01 Billion euro
was spent on craft products in 2009/2010 in Ireland. The Irish craft sector is also heavily
influenced by the tourism industry and the Irish diaspora. Growth in tourism has a positive
effect on craft sales (SIA, 2001).
Design, quality, branding and price are very important aspect of consumer interest in Irish
craft (SIA 2001, p. 20). This is also highlighted by feedback from retailers. Buyers are
interested in the individual design and highly differentiated nature of craft products. (Indecon,
2013, p.36). Craft appears to have a strong brand generally, because consumers can readily
identify products as craft across the broad spectrum of the different types of craft. One in two
consumers had an interest in buying and owning craft, especially women over 35 year of age.
Craft are by the majority viewed positively. (MillwardBrown, 2012, pp. 6-10)
Only 83% of craft makers in 2012 (Indecon 2013, p.21) had a website and the functionality of
the website seems to be related to the sales band the business is located in. The higher the
revenue the more advanced website (Indecon 2013, p.23). Figure 4, indicates that IT
technology can be a challenge for the smaller craft businesses.
Figure 3: Breakdown of craft makers by sales band and website functionality in 2012.
Basic visual website Website with transaction capability
Product
images &
specifications
Email
enquiry
Product
pricing
Order
placement
Card and
PayPal
payment
Less than €10,000 56% 57% 29% 21% 0%
€10,001 - €25,000 79% 77% 39% 38% 39%
€25,001 - €50,000 67% 64% 33% 27% 30%
€50,001- €100,000 84% 88% 52% 52% 52%
€100,001-€250,000 100% 82% 47% 47% 47%
€250,001- €500,000 67% 50% 33% 33% 50%
€500,001- €1 m 50% 100% 50% 50% 50%
Source: Indecon, 2013, p.23.

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2.2. The Competitive Forces in the Craft Sector in Ireland.
Competition in the Irish craft sector is characterised as weak to moderate, because it is a
small sector with many highly differentiated microbusinesses. Some craft makers believe
they have no direct or indirect competition, because their product is unique (SIA, 2001).
However craft products are luxury goods, they compete directly with other luxury goods.
New competitors are often in a weak position, when starting up. Funding is difficult and new
entrants are often students. The entry barriers of the sector includes access to funding, low
profit margin, access to retail and exhibitions and customer loyalty.
Supplier bargaining power is a moderate to strong force in the Irish craft sector, suppliers can
be very limited in numbers as they can be very specialised and are servicing a niche market.
Craft makers using retailers to sell their products can find themselves having to take up
disadvantageous sales contract with the retailer holding the stronger hand over a micro
business. This could include 90 days credit, delivery assurances and a high commission.
(SIA, 2001, p.24)
Customers often price around and can have the opportunity to make a bargain, when
purchasing directly of the craft maker. However the products are so highly differentiated and
not that readily available on the High Street, consumers often already have the intention to
buy when entering the studio.
The Irish craft sector has low to moderate forces of competition leaving room for the
individual business to make a profit. It is difficult to directly compare prices on individually
designed and unique hand crafted products. Customers are expecting a high value product
and are willing to pay the relative higher price than mass produced goods.

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2.3. Key Forces for Driving Changes in the Craft Sector in Ireland
The key driving forces for change are political, economic, technological and legal.
The continuous development of the craft sector is dependent on public policy and funding for
instance through the Enterprise Boards and the Design and Craft Council of Ireland. The
report from Indecon (2013) calls for a national intervention in order to implement the
strategies to further develop the potential of the craft sector (Indecon, 2013, p. 65).
Economically the craft sector lies in the luxury area and therefore is quickly affected by the
cyclical nature of the economy. The micro business nature of the sector is also highly affected
by interest rates and availability of credit.
The Irish craft sector is lagging behind in the e-commerce and general technological
advancement. It is a very traditional sector with only 83% of craft makers having a website in
2012. (Indecon, 2013, p. 21). However, technological advances are also threatening the
sector. An example of this is Rapid prototype processing, where anything can be re-created
and cheaply reproduced. This highlights the importance of copyrights and the last driver of
change: the legal driver. Micro businesses cannot afford copyrighting their products and
intellectual property is easily stolen.

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2.4. Key Factors for Future Success in the Craft Sector in Ireland.
Key factors of success in the craft sector relates to overcoming the challenges faced,
including strategies to overcome the growth barriers, increase networking and cooperation,
develop a few craft businesses of scale and provide the advantage of economies of scale to
small businesses. Orla Kiely could be an example of a business of scale (Ferran, E, pers.
comm. 16 October. 2015).
Networking, clustering and partnership are also mentioned as drivers of success in various
reports. The report by SIA (2001) highlights the low levels of cooperation in the sector. The
subsequent reports all mention the lack of collaboration across the board and urge the
implementation of strategies to improve cooperation. Clustering is a potential strategy for
craft businesses to grow and avail of scale economy benefits (Indecon, 2013, p.56)
An example of a cluster could be Kilkenny City, Kilkenny Craft Trail and Made In Kilkenny
(Ferran, E, pers. comm. 16 October. 2015).
Craft is a unique product and often the narrative sells the product. A barrier for growth could
be the ability to standardize and commercialise the product, while still telling the story. A
look at the arts world shows how this can be done with an artist like Damien Hirst succeeding
in reaching a wide audience and selling his art through social media and websites.

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2.5. Outlook for the Craft Sector in Ireland.
The Irish craft sector is positively supported by a high level of education and has not reported
skilled staff shortages since 2000 even though it is a labour intensive sector (SIA, 2001 &
Indecon, 2013). 40% of craft makers and 66% of educators feels that the students qualifying
have the necessary creative skills and techniques, however only 14% of craft makers and 8%
of educators felt that the students were prepared for the commercial element of business
(Indecon 2013, p.35). This leaves the craft sector weak on business skills and a focus on
developing these business skills is required. Indecon (2013). Figure 4 shows the expectations
of craft makers in 2012 based on surveys.
Figure 4: Breakdown of craft makers by sales band and expectation for future growth
in revenue in 2013 – 2017 in percentage growth per annum.
Sales band + 15% 11 – 15% 6 – 10% 1 – 5% 0% -0%
Less than €10,000 23% 11% 16% 20% 20% 10%
€10,001-€25,000 31% 18% 16% 11% 9% 15%
€25,001-€50,000 45% 10% 10% 16% 10% 10%
€50,001-€100,000 33% 13% 8% 33% 8% 4%
€100,001-€250,000 35% 0% 29% 29% 6% 0%
€250,001-€500,000 0% 0% 33% 0% 33% 33%
€500,001- €1m 0% 33% 0% 67% 0% 0%
Source: Indecon, 2013, p.53.
Tourism and the success of the craft sector are linked. The marketing efforts of Failte Ireland
have had a positive effect on the craft sector (PCG, 2006). 3.23 million overseas visitors
toured Irish places of historical and cultural value in 2011 (Indecon, 2013, p. 54). Craft
makers, who have been able to tap into the tourism sector, are at an advantage to craft
makers, who are in an area with low or little tourism (Indecon, 2013, p. 57). As long as public
policy heavily funds the tourism sector, the craft sector will benefit as well.
The European Creative Industries Alliance published a report in 2014 strongly highlighting
the importance of the cultural and creative sectors as a key driver for growth for the economy
as a whole. (ECIA, 2014, p.7)

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Chapter 3: Conclusion
The dependence on support from the public sector is a weakness, that leaves the sector
vulnerable to policy changes both culturally but also within tourism. This opens up the
question of what role public support should have in the craft sector. The support should
develop and grow the industry without increasing the level of dependence. The different
economic and analytical reports all highlights the importance of networking, collaboration,
partnerships and clustering. Maybe this is an area that could be developed without increasing
dependence on the public sector, but rather dependence between the craft businesses. This
also includes the updating of business skills, where enterprise boards are ideally suited.
The Irish craft sector benefits hugely from the large public investments into the promotion
and development of the tourism industry. However, even though craft businesses produce
high value well renowned unique products, many craft makers seem to have only few
business skills. This points toward creativity and artistry, but leaves the sector marked by
individuality and only little collaboration. More focus and support for business skills is
needed, but also a look at what Orla Kiely and Damien Hirst have achieved, while still telling
the unique narrative that sells the product.

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Chapter 4: Bibliography
Artzy. (2015). Damien Hirst. [Online] Available: https://www.artsy.net/artist/damien-hirst.
[Accessed 16th October 2015].
Circa Group Europe. (2015), Design-Driven Innovation: Why it matters for SME
competitiveness. Northern and Western Regional Assembly.
European Creative Industries Alliance. (2014), create innovate grow. European Creative
Industries Alliance.
Indecon. (2013), Creative Clusters Economic Analysis of the Current Status and Future
Clustering Potential for the Crafts Industry in Ireland. Craft Council of Ireland. Kilkenny
Indecon. (2010), Economic Significance and Potential of the Craft Sector in Ireland. Craft
Council of Ireland. Kilkenny.
Johnson, G. Scholes, K. & Whittingdon, R. (2008), Exploring Corporate Strategy. Pearson
Education Limited.
Millwardbrown (2012), Public Perceptions and Awareness of Irish Craft. Craft Council of
Ireland. Kilkenny.
Platinum Consulting Group. (2006), Sectoral Analysis of the Irish Craft Sector 2005. Craft
Council of Ireland. Kilkenny
Platinum Consulting Group. (2004), 2003/2004 The Irish Craft Industry. Craft Council of
Ireland. Kilkenny.
SIA Consulting Ltd. (2001), The Irish Craft Industry 2000. Craft Council of Ireland.
Kilkenny.
SIA Consulting Ltd. (2002), The Irish Craft Industry 2001. Craft Council of Ireland.
Kilkenny.
SIA Consulting Ltd. (2003), The Irish Craft Industry 2002. Craft Council of Ireland.
Kilkenny.

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Thompson-Strickland-Gamble. (2008), Strategic Management. (16th Ed.) McGraw Hills
Companies, Inc. United States.
Willie Miller Urban Design (2013), Mapping the craft sector in Southern Ireland. Craft
Council of Ireland. Kilkenny
Reglab (2012). [Online] TACTICS, Where the Cluster Winds Are Blowing (in Europe).
Available: http://www.reglab.dk/bibliotek?k=klynger&t=&s=&p=1. [Accessed 16th October
2015]
Reglab (2007). [Online]. Policy guide til klynge udvikling. Available:
http://www.reglab.dk/klyngeudvikling/policyguide-til-klyngeudvikling. [Accessed 16th
October 2015]