Page 3: Organic growth
One method used to grow a business is organic growth, sometimes called internal growth. Organic growth occurs when a business grows by selling more products or services. Ansoff’s matrix outlines four ways this can be achieved:
- market penetration – selling more of its products to existing customers
- market development – selling its products to a wider market, either at home or abroad
- product development – increasing the product portfolio by selling new products or services to existing markets
- diversification – selling new products or services to new markets.
Organic growth is a long-term strategy. It is a lower risk growth strategy than inorganic growth as it is building on the company’s strengths to increase sales. For IMI, growth of each of its five platform businesses is driven by:
- new product development
- market development – seeking opportunities in a variety of emerging markets.
New product development (NPD)
IMI seeks to maximise organic growth opportunities by focusing its innovative new products on the four growth drivers. IMI’s strategy for growth has seen increased investment in new product development, as well as sales, to increase exposure to the higher growth emerging markets. For example, IMI’s Severe Service division has experienced growth in emerging economies such as Argentina where its market-leading control valve technology gained new customers in the oil and gas industry. Using IMI’s technology, Pan American Energy eliminated high vibration and poor fluid control in its water injection control valves and pumps, avoiding expensive shutdowns and maintenance costs.
In recent years climate change has been a key growth driver for IMI’s Severe Service division in a variety of markets. For example, in Spain IMI worked on ‘Andasol 1’, Europe’s first trough commercial power plant. The plant supplies environmentally-friendly solar electricity for up to 200,000 people using steam powered turbines. IMI engineered valves to control the flow of steam, eliminate the emission of greenhouse gases and improve efficiency.
New product development also drives IMI’s organic growth in all divisions. For example, IMI’s Beverage Dispense division engineered a premium juice dispensing unit for McDonalds. Focusing on the ageing population and climate change growth drivers, this new product has the capacity to double the existing number of juice brands McDonalds can offer, giving customers greater choice of healthy beverages. The unit helped McDonalds’ sustainability goals by using hydrocarbon to reduce negative impact on the environment and LED lighting to reduce power consumption.
IMI’s organic growth, in each of the five platform businesses, is a result of carefully planned strategies and the expertise of its global workforce to deliver innovative solutions to the challenges facing its customers.