Businesses can often face significant challenges brought on by a wide range of factors which may include volatility in market conditions, changes in consumer preferences and demand and competition from emerging markets.
The effects from any combination of these events can result in reduced revenue and profitability, therefore diversity and growth within new sectors will be essential if a business is to both survive and thrive.
In this article Paul Knight, Managing Director of CME Limited, explains how the development of a turnaround strategy has succeeded in moving the company from a 90% reliance on the tobacco industry into new and diverse markets.
A core element of this strategy was capitalising on the innovative design and engineering resources within the business, leading to the development of new products which the company now supplies to the Pharmaceutical, Legal Cannabis, Food and Consumer Goods sectors world-wide. As a result, the company has seen revenue more than double whilst at the same time diversifying to just 40% reliance on the tobacco sector.
When market conditions change rapidly, as is the case for many businesses in the current climate, it is clear that companies need to both plan and react swiftly if they are to mitigate the effects on the business and establish a clear vision for the future. However, when change happens more slowly, perhaps over a number of years, companies with a long established heritage within specific market sectors often focus on servicing their existing customers and try to gain more market share in a declining market. In instances such as this, the long term effects on the business may not be quite so obvious initially, however there will come a point where the reality of the situation hits, and if there is no alternative strategy in place to diversify, the future of the business could be at risk.
CME Limited found itself facing a very similar scenario 5 years ago, primarily as a result of reduced demand for tobacco, a market that the company had nurtured and serviced successfully since its inception in 1985, establishing an installed base across 132 countries. With no firm future strategy in place at the time, the company appointed Paul Knight as Managing Director with the objective of initially stabilising the business, then developing and implementing a long term strategy that would allow the company to focus its comprehensive innovative design and engineering resources to target new growing markets as well as continuing to support its valuable historic customer base.
Paul Knight explains: “It was clear from the outset that the future success of the business would be dependent upon the development of a robust strategy, centred on growth through improvements and efficiencies in the methodologies attributed to the sales process, and growth through diversification into new markets, supported by new product development and cultural change.”
From a sales perspective, conducting a more formal approach to lead evaluation and scoring, qualifying the sales pipeline, performing a detailed analysis of competitors and pricing, has changed the focus and enthusiasm within the sales team. In addition, as new markets would play a key role in the future growth of the company dedicated sales resources were put in place for that purpose.
Paul Knight continues: “Our clear focus was on developing growth through diversification into new markets and the development of new products. Initial research identified a number of new markets where the technologies and core competences of the business were a very close, if not perfect match. Additional and extensive research was then carried out to understand the issues at the forefront of these markets, who our competitors may be, and which technologies would be required. We also identified and built up a network of like-minded OEMs and Automation businesses to help drive enquiries to CME through referrals.”
The company now applies its innovative design and engineering resource to develop both bespoke and standard automation solutions for applications within the Pharmaceutical, Legal Cannabis, Food and Consumer Goods sectors worldwide.
These are all growing markets which are increasingly looking to automation to counter labour shortages, improve quality and productivity and add the flexibility they need to deliver an agile response to the changing demands of their customers. The success of the diversification process has also allowed the company to remain buoyant through the current challenging business environment brought on by COVID-19.
Paul Knight concludes: “In a relatively short period CME Limited has successfully transformed and is on course for a sustained period of growth. Not only have we consolidated our position within our traditional markets, but we are now also recognised as a valued partner in a number of key projects. Amongst these are a contract to manufacture an automated clinical trial line, which will be the first major piece of equipment to be installed and developed within the new Medicines Manufacturing Innovation Centre in Scotland, securing a multi-machine export order for the legal cannabis sector, and the development of a precision robotic food packaging system, designed with EHEDG’s (European Hygienic Engineering and Design Group) exacting standards in mind. We continue to grow within our new markets, more than doubled our order intake and have reduced our reliance on the traditional tobacco sector from 90 percent to 50 percent, reducing risk.”