3M FINAL by Priyank

8/6/2019 3M FINAL by Priyank

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By Group 3

PRIYANK GUPTASUNNY JAIN

FARAAZ HASNAIN

LAXMAN RAO

YASHWANT NELLURI

IN THE NEW MILLENNIUM


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Facts Minnesota Mining & Manufacturing Company (3M) was formed in

1902.

One of the largest technology driven of US .

Over 50,000 products of high/low technology.

3M markets are Electronics, health care, telecommunications,

industrial, consumer and office, safety and other markets.

Popular brands such as Post-it, Scotch-Brite and 3M Scotchshield.

Innovation is the USP

Revenue $ 16.4 BN .

R&D budget $ 1 BN annually.


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Core Competency of 3M

Innovative technology portfolio.

Superior manufacturing process capabilities.

3M Satisfy the tests of core competency


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Evolution of 3M

Strategy1907-09 3M designed customer oriented brand of salesmanship.

1921 3M invented a waterproof sandpaper & purchased the patent and

removed defects.

1923 3M developed Scotch tape.1930 3M funneled 45% of its profits into new products & tripled in size.

1947 Scotch magnetic audiotapes were introduced. 3M grew almost 20-fold.

1950 Further innovation of dry-printing photocopy process.

1951 Invention of Thermofax.

1952 3M had surpassed the $100 million mark & was employing some 10,000people.

1956 Scotch gard fabric and upholstery protector.

1958 Scotch-brite scouring pads.

1959 3M 20th consecutive year of increased sales.

1963-67 It doubled in size, becoming a billion dollar company.


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Contd..1970 Number of obstacles interfered with its growth & 3M lost the cassette tape market.

1980 Major competitors threatened 3M on all fronts.

1990 Innovation was stagnating, most of the innovations were extension of existing

product lines

1997 30% of total revenue were generated from products introduced within past fouryears

1998 Revenue and profits both decline

2001 Launch of six sigma, a quality control and improvement initiative to cut costs. Out

of 75000, layoff of 6500 workers

2002 Acquisition of Corning Precision Lens , the worlds leading supplier of optical

lenses.

2003 Reorganization within the company, split of 3 largest divisions of the company i.e.

transportation, graphics and safety.

2003 Major realignment of R&D operations.

2004 Anemic revenue growth while broader makets had been expanding

2005 Realization to generate growth, maintain premium margins and managingcompany's portfolio


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Developing technology-oriented solutions to satisfy customer needs.

Filling market niches.

Abandoning markets where desired prices (and margins) cannot be

maintained.

Generating a high percentage of sales from new products.

Establishing and fostering a culture of Innovation.

PAST STRATEGY


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EXISTING STRATEGY


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3M Existing Strategy Growth strategy based on enhanced core competency and building

long-term competency.

Technology and innovation as the engine to grow and developexisting markets through disruptive (natural substitute)

technologies, logical developments and extensions of existingproducts, and "out of the garage" technology developments

Grow core business through the strength of constant reinvention,stronger key customer partnership, customization, solvingcustomer needs, entering niche segments, and capturing new

segments Emphasize product localization using mix of brands andlocal acquisitions

Speed growth through strategic licensing, investment in small techcompanies, University alliances, and extensive promotion ofinvention


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Contd

Maintain innovative culture - follow 15% rule

Accurately measuring sales growth potential - demand andcapacity to benefit from scale in core product categories* andto gain relative share in targeted markets

Accurate capacity planning

Competitive Advantage - unique shared technology model

Strategically manage portfolio

Maintain premium margins


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The Ansoffs matrix

3M leverages its existing resources and

capabilities.

3M seeks to achieve growth with existing productsin their current market segments, aiming to

increase its market share.

Strategy- Ansoffs Matrix

Market Penetration Market Development

Product Development Diversification

Market

Product

Old

New

Old New


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Strategy- Michael Porter Paramaters

3M has adopted differentiation strategy as it is

Patenting all its product to have the uniqueness inthe market.

Entering into New and emerging market to broad

market scope.


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SWOT ANALYSISSTRENGTH WEAKNESS

Strong R & D capability

Innovative Company

Diversified business portfolio

Robust industrial business

Weak personal care segment

Low margins in the US

OPPORTUNITY THREAT

Growing demand for LCDs

Acquisition of brands

International expansion

Growth in private labels

Higher oil prices

Exchange rate fluctuations

Threat of New entrants


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Crafting the strategyStrategies can be formed at different levels of the organization. As the

company 3M was growing in terms of its products, brands andinnovation, there was a need for division of business. Thus, the

company was divided into 6 business units

3M

Consumer andOffice Business

Display andGraphicsBusiness

Electro andCommunication

Business

Health CareBusiness

Industrial andTransportation

Business

Safety, Securityand Protection

ServicesBusiness


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Corporate level strategy: Corporate level strategy concerns

how a diversified company intends to establish business

position in different industries and the actions and approachesemployed to improve the performance of the group of

businesses of the company.

CorporateLevel

Strategy

Capturecross

business fits

Size ofdiversification

Related orunrelated

diversification

Geographicexpansion Strengthen

position inexistingbusiness

Position innew industry

through

acquisition

Divestationin weak or

unattractivebusiness


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Capture cross business fits

3M was initially only into abrasive and tape

business

Slowly they started to make products from

different sector

Size of diversification

3M didnt diversify their business beyond certain

limits. When they found that there were products

which were not profitable, were not taken for

research in their lab center


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Related or unrelated diversification

3M is a company that has pursued a strategy of related

diversification.

In 3Ms case, the commonality is in the development of a

set of core technologies, which are then shared amongdifferent kinds of business units

Geographic expansion

3M has vast a geographical expansion. It operates in morethan 65 countries having 75,000 employees worldwide

and 6,700 researchers contributing to the R&D of the

company with their innovations


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Strengthen position in existing

business

3M strengthens its existing businesses by continuous

innovation under the same product line which either

adds some new feature to the product or changing

the product to an extent that it meets some other

specific need

This decision is taken care of at the business levelbut the corporate policy is clear that there has been

strengthening of the existing business


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Positioning in new industry through

acquisition

In 3M the decision of acquisition to enter a new industry

is taken care at the business level and not at the corporate

level.

Because of the reason that 3M believes that no one can

understand their business better than the division itself

The decision is strictly taken on the basis of whether 3Malready owns the technology that the company they are

going to acquire has. If the answer is no, they will go for

the acquisition or else no


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Divesting in weak and unattractive

business

This decision, at 3M, is again taken at the

division level.

If the technology in certain business is outdated

and is of no use to 3M they will divest in that

business and go for a new one


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Business and functional level

strategy:Business level

strategy

Competitiveadvantage

Proactiveness

Respond tochanging

environment

Collaboration

Functional

Strategy

R&DSupply ChainManagement

ManufacturingSales andmarketing

Humanresource

managment

Financial

Strategy


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Contd

Strategic management for creativity in 3M

The rule of 15%

The 7 cent rule

25/5 rule

Motivational awards and forums

Golden step award Carlton Society award

Genesis grant


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BUSINESS AND FUNCTIONAL LEVEL

STRATEGY:

To increase the speed at which the employees

bring innovative ideas to the company 3M uses

following strategies:

a. The rule of 15%: Technical people could spend up to15% of their own workweek on projects that might

benefit the consumer, without having to justify the

project to their manager.

b. 25/5 rule: The rule of 25/5 said that 25% of theprofitable sales in any year should come from products

which were not in existence 5 years back. This strategy

was taken to boost innovation.


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c. 30/4 rule: The rule of 25/5 was revised and changed tothe 30% of profitable sales coming from products not

been into existence 4 years back.

d. Motivational awards and forums: To meet the human

requirements of esteem needs, there were awards which

were given to the scientists based on their work.

Golden step award: This award is given to a person whose

product has brought $5 million of profitable sales.

Carlton Society award: Any extra ordinary contribution to the

product lines of the 3M would fetch this award.

Genesis grant: This award is given to a person if he brings in a

new idea for a business division he doesnt belong to.

Contd.


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Competitive advantage of a company is defined bythree dimensions majorly

a. A product which has chances of winning

competitive advantage.b. Development of expertise which sets us apart from

our competitors.

c. Having an insulation on the business so that other

are not able to copy it easily.

3M has its innovation in terms of its competitive

advantage and the patent power acts as its insulator.

Competitive advantage:


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3M is a proactive company in terms of:

It feels the need of a customer by identifying its

problem and then it solves it.

In terms of market expansion and diversification.

keeps looking for opportunities to acquire

companies which have a technology which 3M

doesnt have.

Proactiveness


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Have 3M not changed the kind of products it

offers, it would have not sustained for such a long

time (110 years).

They respond to the changing environments and

needs of the consumers and act accordingly.

Respond to changing environment


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Operational level strategies at 3M for

innovation:

Lead user process:

The lead user process at 3M says that every

product is first made by the lead users first and

companies just commercialize the product.

3M try to get information from these lead users

in order to know the innovations already made

by them.


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At 3M, in the pyramid of expertise approach, they

will find out about the technology which is used

by the next lead user and reach the top of their

pyramid.

By reaching the top of the pyramid of every area

where advanced technology is used for the similarpurpose, the research team gets a fair idea of what

is already used by lead users in this world.

Pyramid of Expertise


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Indirect cost control

Global sourcing

E- productivity

Six Sigma

3M Acceleration programme

INITIATIVES TAKEN


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ROIC risen from 17.6% in 2001 to 21.6% in 2003

3Ms stock price had risen from $42 to $73 in

2003

2000 employees had been through six-sigma

training by the third quarter of 2003

400 higher level managers had been through

Advanced Leadership Development Programme

ACHIEVEMENTS


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Documents

3M FINAL by Priyank