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In this
section, it is discussed about the profile of 3M company, the purpose of the strategic
profile as well as the purpose of case analysis. The case is providing
information that 3M (Minnesota Mining and Manufacturing) company was established
in 1902 by five businessmen in the USA. The initial venture of the 3M company
to mine the minerals from earth and market those mined minerals. The company
did perform these tasks when 3M faced failure of an abrasive. The sales
representative of the company was encouraged to proceed directly instead of
dealing with the agents of the company to the shop where they could communicate
with those customers who had used their products. Furthermore, the salespersons
of the company could also determine both things like what their new products
were required as well as how their existing products might be improved to
increase customer satisfaction. So, these contacts to the people who had used
their products resulted in the early innovations of 3M.
Furthermore,
tough sandpaper was devised by the company as well as the company did also
capture a big part or segment of the niche market into the auto industry. At the
time of holding a niche market, a salesperson did observe that the shop
environment was made extremely unhealthy by dust from the use of sandpaper and
it was a challenging thing for the company. Then the company focused more on
resolving this issue from its sandpaper. At that time, the company had
purchased a patent that was the waterproof and consequently dust-free
sandpaper. So, 3M introduced wetordrysandpaper and this product did increase
the business of the company through solving several defects from the product. For
making more improvements to the product, the company did hire the inventor of
this product for full-time research and established its research and
development department
It was
also noticed by a salesman in auto body painting shop that the process of painting
cars worked badly and, in the response, the company did successfully developed
the scotch tape or masking tape to prevent the paints from running together. So,
that was the point when 3M started to develop and apply new technologies into
their products as well as they also invented transparent scotch tape. The case
is further providing the information that 3M company had funneled almost 45% of
its profits in researching the new product which was the triple times in the
size in the 30s. By concentrating on understanding its markets as well as
finding a niche to fill, 3M continued to grow in every condition even the
company did not stop to understand markets during world war. During the war,
the company did also focus on developing military products on a larger scale as
it can. At that time, 3M also introduced a new product named scotch magnetic
audiotape. According to this fact, the 100 million marks had been surpassed as
well as almost 10000 people were being also employed by 3M by 1952.
In 2000,
highlighting the continued commitment of the company to innovation, nearly 35
percent of the revenues in 2000 came from the products that have been presented
in the previous years. The main concern of the study is to see the major work
of the company. The case is showing clearly that 3M company was focusing on the
innovation and the entrepreneurial culture. For example, the company did always
focus on making new innovative products as well as they also encouraged their
employees to spend more time on the project and encouraged to take initiatives
and climate creativity. It is also mentioned in the study that as the employees
of the 3M company understood their own preferences styles, they can perform the
challenging tasks. Furthermore, another purpose of this study is to investigate
the company’s environment along in which all of the external environmental
factors are evaluated because the company did always focus to develop new
innovative products as well as encouraging innovation.
I.
Situation Analysis, General environmental analysis
In the general environment analysis
of the company section, it is discussed about the external environmental
factors which are influential and impactful on the company business and the
company innovations. These environmental factors can make the business of the
company more profitable or can bring the company at stake
Political
factors – in this
section, some important factors related to the 3M companies are discussed which
are influential in the company business. Political factors are given below.
·
Importance
of diversified the machinery and the political stability in the economy of the country
·
The
invasion of military risk
·
The
framework for the legality of company business is created through the contract
enforcement
·
The
governmental interference into the industry of diversified machine as well as
bureaucracy
·
The
tariffs and regulations for trade to the industrial products and material
·
Government
and the regelation ensure security/protection to the intellectual property
·
Some
regulations are also made by the government on setting up pricing for products
and goods. Furthermore, the company is bound to set the price according to legislation
to control the availability
·
Some
regulations and laws are also created for taxation. So, the company also has to
pay its imposed taxes and incentives
·
The
requirements for the production and labeling of the product are also created in
the diversified machinery
·
A
regulation made by the government for essential benefits of employees
Economic factors of 3M Case Analysis
·
US
currency stability and the exchange rates of the currency
·
The
interventions of the government in the US market
·
The
economy of the US is stable and 3M company has the edge to play in the market
freely
·
The
financial markets efficiency
·
The
quality of infrastructure into the industry of diversified machinery
·
The
education level or literacy rate in the US is high and good for the country’s economy
·
The
productivity is high and the labor cost too.
·
The
economic growth rate of the economy of the country is stable
·
The
interest rate and inflation rate can be impactful on the economy
Social factors – the important points which are given in this section like
shared attitudes and beliefs can play a major role in how 3M company marketers
will get knowledge and understand the selected market customers
·
The
population’s level of skills and demographics
·
Education
standards and level in the 3M company
·
The
roles of genders in the context of culture
·
The
leisure interests
·
US
culture is encouraging the entrepreneurship because their culture appreciate
innovations
Technological Factors – from several previous years, the industry
has been transformed rapidly as well as the technology is further contributing
to change the business trends throughout the world and 3M company is also one
of those companies that are influenced by the latest technology
·
Many
competitors of the 3M company in the market have adopted new technology and
they also developed their systems too based on this technology
·
The
technology is also highly impactful on the offering of the product and 3M
company is also influenced by technology.
·
It
has a direct impact on the structure of product cost in the industry of
diversified machinery
·
Direct
impact on the supply chain and value chain structures in the industry
·
The
diffusion rate of technology
·
The
activity of research and development of the 3M company
Environmental/global factors – in this section, it is discussed about
the environmental factors that are impactful on the 3M company. Every market in
the world has its different norms, values as well as may have unique standards that
can impact on organizational profitability. Some important environmental factors
are also available for the 3M company.
·
The
sustainability is making or developing the opportunities growth for 3M company
·
3M
company has also raised active investments for the protection of the
environment because the environment can be a very influential factor for the
reliability of the business.
Legal factors of 3M Case Analysis
·
The
lawsuit due to the disposal of the wastes during the manufacturing
·
The
discrimination law
·
Intellectual
property as well as patents security laws
·
Protection
of data of the company laws
· Legislations for the health and safety of the workers and employees
Industry
Analysis of 3M Case Analysis
In this section, it is discussed
about the porter’s five forces which are applied to the 3M company for the
analysis of the business. There are five forces included in this framework for
the industry analysis. The five forces are; threats of new entrants, threats of
substitutes, bargaining power of buyers, bargaining power of suppliers as well
as rivalry among the existing competitors.
Threats of
substitutes – the new
entrants into the markets can be a threat for the business of 3M company because
they bring new ways or methods to perform their business operations, new
innovations in the business as well as put also heavy pressure on 3M company. Furthermore,
the new entrants in the diversified machinery industry can also be a big threat
for the company because they can also introduce lower prices on the same
products 3M offers, as well as can new improved proposition value to the
customers in the US market. To prevents these threats, the 3M company must have
to manage these challenges as well as build effective barriers to secure the
business
Bargaining
power of Suppliers – every
company including 3M company into the industry of diversified machinery buy the
raw materials for production from different suppliers. The margins can be
reduced or minimized by the suppliers within the dominant position and the 3M
company can also earn more profits in the market. To extract the higher prices,
their negotiating power or bargaining power is used by the powerful suppliers
in the sector of industrial items from the companies in the industry of diversified
machinery. Furthermore, the main effect of the high-level bargaining power of
the supplier is that it can minimize the profitability in the diversified
machinery industry and it can be effective for the company.
Bargaining
power of Buyer – the
buyers of the raw materials and the finished product always want to buy a lot
of things into the minimum price and they mostly demand a lot of things into
their lower budget. It is a challenging situation for the 3M company because this
act can put a lot of pressure on the profitability of the 3M company. Furthermore,
the buyer with a high bargaining power ability can have extra benefits and discounts
that can take the 3M company into the pressure.
Threats of
Substitutes/substitute service or products – when the new product, service, or innovation of 3M
company meets the same needs of the customers within several ways, then the
profitability of the industry will suffer. It can be understood with the help
of an example. For instance, google drive and Dropbox are substitutes for data
storage devices. The threat of substitute products or services will be high in
the case of offering the propositions of value in a unique way as the offered currently
or previously. The customer will never like to use older services
Rivals in the diversified Machinery industry – the 3M company is effectively operating its business operations into the highly competitive industry of diversified machinery. Some other competitors are also providing their products and services into the market but this competition takes a toll on the organizational overall long-term profitability.
Competitor
analysis of 3M Case Analysis
There are also several competitors that
exist in the diversified machinery industry but the major and strongest
competitors of the 3M company are Emerson, Honeywell, corning as well as
General electric. All of the competitors of the 3M company are public types but
the employees figure vary. The net income of Emerson is $2.3b, Honeywell is 6.2
billion dollars, Corning has 960 million dollars as well as General electric
has 4.9 billion dollars. 3M company is operational within 36 countries while Corning
is actively working in the 15 countries. All of them are providing the manufacturing
facilities within 100 to 290 annually. The strongest competitor of the 3M
company is the General electric on the basis of gross profit.
Internal
Analysis of 3M Case Analysis
The 3M company has several
opportunities and strengths. In this section, it is discussed or analyzed the
strengths, weaknesses as well as threats of the 3M company internally. The company
has the advantage because it has a diverse product portfolio as well as it also
has global access. Furthermore, the company also has a strong financial
structure and due to its strong financial structure, it has a larger body of
employees. Due to the involvement in the different types of litigations, it
cannot take any additional steps for the production as well as for too many
changes into the company. The biggest threat to the company is that the company
sales may be affected in the case of a change in the valuation of the US dollar.
The company is using new technology in the workplace which is improving the
workability and manageability of the company.
II.
Swot Analysis of 3M 500 of 3M Case Analysis
Strengths of 3M Case Analysis
The 3M
company has several types of things that strengthen the business and
workability of the company. On the basis of these strengths provided in this
study, the 3M company can also improve the profitability of the company as well
as it can also hold a competitive advantage in the market. First of all, the 3M
company has a diverse system for the product portfolio and it also has global
access to the raw materials and important items for the production of goods. Due
to heavy productivity, effective portfolio as well as high sales, the company
has a strong financials. Furthermore, a strong competitive advantage is also
provided by the effective supply chain of the 3M company. The main strength of
the company is that it focuses more on research and development (R&D)
because it drives innovation.
Weaknesses of 3M Case Analysis
The main
weakness of the 3M company is that the company focuses on multiple areas as
well as it has also involved in several lawsuits. Due to this reason, the
company is bound in performing further actions as well as setting prices of the
products.
Opportunities of 3M Case Analysis
As
compared to the weaknesses, the 3M company has several opportunities. The
company has an opportunity in the electrical vehicle’s high growth in the
selected market segment that will provide the presence of the 3M companies in
the market. Furthermore, it may also have the mergers & acquisitions
(M&A) into the strategic high growth areas. Another opportunity is that the
company can have the transformation of business for long-term benefits.
Threats of 3M Case Analysis
The
major threat is that the business of the company is completely based on the
dollar rate. If the rate of the dollar may decrease, the sales of the company
may also be affected. Furthermore, another threat in the united states
protectionism as well as trade relations.
III.
Strategy Formulation of 3M Case Analysis
Strategic
Alternatives, Evaluation, and Choices
In this section, it is discussed
about the strategic alternatives of 3M company. 3M Company has retained
Goldman, Sachs & Co. to provide help to the company for exploring the
strategic alternatives of the company. 3M health care is one of the most
effective groups for business in five major businesses of 3M. The world-class
innovation service and products are provided by 3M healthcare because it is
assisting the healthcare professionals to improve the delivery as well as
practice for patient care. To invest in the health care business worldwide, the
business of the 3M company will grow and this investment will also increase the
value of the business.
IV.
Strategic Alternative implementation
Action Item
& Plan of 3M Case Analysis
The
chairman of the 3M company has issued some important updates as well as
announced the additional details about the capacity of the 3M company that
increases the respirators of N95, strong measures to combat or contest the
gouging of price as well as the new partnerships for the provision of help to
the healthcare workers protection. To address the specific crisis, the
management of 3M company continues to act upon with the urgency from every
aspect as well as the company will do everything as it can to protect the first
line soldiers like doctors, first responders as well as nurses. It is very
important to understand how the company is shipping as well as prioritizing the
products for the provision of very urgent needs to the customer and the
pandemic in a novel coronavirus crisis.
Furthermore,
at the end of the first quarter of the year, it anticipates the selection of the
strategic direction. With regard to any alternatives, no kind of decision has
been made for any kind of alternatives. But in the plan of the action item, the
company will invest in the healthcare field to strengthen the business.
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