Growth through investment
A Bibby Line Group case study

Page 3: Organic growth

Organic growth is achieved from within a business. It can be from winning new customers, by increasing sales of existing products and services and by introducing new product lines. It can also be achieved by moving into new geographic markets, perhaps by selling more in export markets. Organic growth is often safer than inorganic growth. Once a business has acquired a specialism, such as transporting cargoes by sea, it can be relatively easy to expand, for example, by sailing on new routes. It can be more difficult to buy and integrate another existing business into the existing company.

The early history of Bibby Line Group is characterised by organic growth. Starting with seven ships at the beginning of the nineteenth century, the company expanded over the next 20 years to acquire another 18 vessels. Initially it focused on routes to Mediterranean ports, before expanding to support trade with India, China and, later still, South America. Its ships carried many different cargoes, including cotton, sugar, animal hides and many other commodities.

Careful growth

Intelligent companies grow carefully. This means they are sometimes prepared to sell loss-making or poorly performing businesses, or realise profits when the value of an asset has reached its peak. The returns from selling businesses or assets can then be reinvested in new ventures. Knowing when to sell is an important business skill. Bibby Line Group sold its fleet of ships in 2005-07 when the global economy was at its peak. This provided the company with cash:

  • to reduce debts in some of its businesses
  • to reinvest in businesses that were less likely to be hit hard in a global recession.

This meant that when the global recession occurred in 2008 and 2009, Bibby Line Group was in a healthy position. It was debt-free and had money available to invest in growth opportunities. Taking advantage of lower prices of vessels during the recession and cheaper loans, Bibby Line Group purchased six new ships in 2010-11 as well as diving support vessels. Using its maritime expertise, the company has been able to develop new businesses in more specialist sectors of the industry:

  • Bibby Maritime specialises in providing and operating shallow water floating accommodation vessels. For example, the company is providing a vessel that is supporting the exploitation of natural gas reserves found off the coast of Australia by housing workers at the onshore terminal.
  • Bibby Offshore provides dive support vessels for the offshore gas and oil exploration and production industry. These are used by divers who are installing, repairing and maintaining sub-sea oil and gas platforms and pipelines.

These businesses are examples of how the Group has been able to maintain organic growth in its maritime businesses during a difficult economic period.

Bibby Line Group | Growth through investment

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