Page 2: Growth as a business strategy
Choosing the right business strategy can give a company a competitive advantage over its rivals. A strategy is a plan to meet business objectives. These might be to increase profits, to grow the business or even just to survive through a difficult economic period.
A strategy needs to set the scope and direction of a company. The scope relates to what products and services the company produces and what markets it operates in. In recent years Bibby Line Group has extended its scope to branch out into new products and markets. The direction the company has taken has been one of growth. This has been achieved through both organic and inorganic growth. Organic growth comes from growing the existing business by winning new customers and increasing sales.
Inorganic growth involves acquiring or merging with other companies to increase the portfolio.
There are several business benefits associated with a growth strategy:
- Efficiencies from economies of scale. As businesses grow larger, they may be able to reduce their unit costs. For example, the same information technology system can be used to serve several businesses in the Group rather than just one. Larger companies can buy supplies and materials in bulk and so benefit from discounts for large orders.
- Control through large market share. Companies with a large share of a particular market can, to some extent, exert influence over the market and their competitors. They can be leaders rather than followers in terms of pricing and other aspects. Smaller rivals will not have the same influence.
- Security from spreading financial risk. Having a portfolio of businesses enables a company to spread risks. If some subsidiaries have poor results, they can be supported by those areas of the company that are doing better. All businesses in the portfolio help the Group's results by making a contribution to overheads.
A focus on innovation
Bibby Line Group has achieved outstanding performance by continually seeking ways to grow and diversify. One of the Group's values is ‘restless momentum’. This means continually innovating.
Innovation involves the development of new ideas, both for improved goods and services and for new and better ways of working.
This focus on innovation is central to all businesses within Bibby Line Group. Each subsidiary operates independently but all are encouraged to innovate. Each management team is responsible for the achievements of its part of the Group's business. The subsidiaries are also expected to grow and, like the overall Group, this can be achieved both organically and inorganically.