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Cultivating Core Competency
Presented By- - Kaushik Samanta
Sougata Mitra Debasish Patra
Nishtha Aggarwal Pritam Kumar
Hridaynarayan
Company Profile :Incorporated in the year 1902 by five businessman.Commonly known as Minnesota Mining and
Manufacturing Company.In 2002 it changed its name to 3M.3M is a diversified entity operating into six business
segments.Made its first mark in the market with Sandpaper.
There after created its dominance with its innovation Waterproof sandpaper in 1921 .
The Company was initially enlisted in the New York Stock exchange in the year 1946.
3m Expanded made its presence globally by establishing its operations in canada,Mexico,UK,France,Germany,Australia in the year 1950.
Milestone 1902- Minnesota mining and manufacturing co. nicked named 3M
was formed by five businessman.
1907 & 1909 -William L McKnight and A.D Bush joined 3M and Soon design an aggressive, customer oriented brand of salesman ship
1921- First innovative product of 3M wet or dry sand paper which significantly let to expansion of business.
1923- 3M developed a successful masking tape- scotch tape which prevented paints from running together.(process used to paint car)
1930- 3M funneled 45% profits of its new research product and trippled in size
1947- scotch magnetic audio tape being introduced.
1950 - The first dry-printing photocopy processed.
1951- Discovery of Thermo Fax
1952- Under the leadership of McKnight the business experienced are 20 fold growth which led to surpassing the 100 million mark and employment opportunity for 10000
1956- Scotchgard fabric and upholstery protector
1958- Scotch-Brite scouring pads
1959- The company marked its 20th consecutive yr . Of increase sale
1963 & 1967 - 3M doubled its size in to a billion dollar company
1969- Introduced its first traffic signal
1970- Hindrance in the growth of the company by loosing one of the biggest cassette tape market by two Japanese co’s
1991- A major strategic shift in R&D by pushing the research staff to work more closely with the marketer and transform existing technology into commercial products.
1992- International sales accounted for over 50% of total 3M sales
1997- 30% of total sales were generated from products introduced within the past 4 years.
1998- Decline in revenue and profit lead to restructuring and workforce reduction of about 5,000.
1999- Reorganized in to six Business segment 2000- 35% of revenues came from products that have been introduced
in the last 4 years
2001- Quality marked a key aspect towards profitability by introducing six sigma
2001- company experienced under performance and was relatively directionless.
2002- The company officially become 3M company. The year was marked to drive growth through acquisitions.
Revenue increased marginally where as income increased by 20%.
2004- 2005 : Anemic revenue growth that slowed between 1 and 5 percent.
2005: 3M acquiring of Cuno lead to market leadership in filtration
2006- 3M become a $21.2 billion company. Massively expanded by adding 50 thousand product through its product line.
2008- Took one step ahead by acquiring Aearo Holding Corporation.
2009-63% of total revenue comes from outside United States.
Source:- WWW.3M.COM
Products & Services :
all the product and services provided by the company is follows:
Displays & Graphics 3M brighten the displays on electronic products, such as flat-
panel computer ,monitors, cellular phones, PDAs, and LCD televisions.
Manufacturing & Industry innovative products and services help manufacturers improve
their businesses. With a global network, we meet needs of both multinational and local customers.
Electronics,Electrical&Communications 3M is a leading supplier of innovative solutions to the
electrical, electronics, and telecommunications industries.
Office company continue to rejuvenate products for the office. An
example of this is the Post-it® brand -- notes, flags, easel pads … today more than 1,000 Post-it® products are sold in more than 100 countries
Health Care 3M Health Care is committed to providing the health care
community with innovative solutions, based on 3M's diversified technologies, that help improve the quality of life.
Safety, Security, and Protection produce products that increase the safety, security, and
productivity of workers, facilities, and systems around the world.
Home & Leisure Some of the world’s best-known consumer brands, Scotch®,
Post-it®, Scotch-Brite®, and Scotchgard™, are household names. 3M people find ways to make life better and easier.
Transportation Industry We provide high-quality abrasives, tapes, films, adhesives,
and specialty materials for the manufacture, repair, and maintenance of autos, aircraft, boats, and other vehicles
Business Segment :Diversified business segments, including:
–Filtration products
–Medical supplies/software
–Office supplies
–Surveillance equipment
–Reflective coating
–Touch screen components
Source-http://www.wikinvest.com/stock/3M_Company_(MMM)
Business Cycle
Rein of CEOs Strategic business decision
Outcome
Mc Knight(1914-1966)
Richard Carlton
1. Aggressive customer oriented salesman ship, niche in growing auto industry.
2. Development of first corporate R&D
3. Diversion of 45% of profit towards R&D understanding market product research.
1. First product innovation in the form of dust free sandpaper.
2. Development of transparent scotch tape.
3. Lead to 20 fold growth of the company.
4. $100 million sales and employee strength of 10000. major product innovation in the form of “Post-It”
Rein of CEOs Strategic business decision
Outcome
L.D.DeSimone 1. Existing technology being transformed in to commercial product by close association of research staff with marketers.
1. New product turn around time reduced.
2. Invention of customer driven products.
3. International sales of over 50% of total sale.
4. 35% revenue comes from last 4 yrs product.
McNerney 1. Efficiency as a key drive towards growth through introduction six sigma
2. Applying 15% rule.
1. Reduction of defect quality control and cost cutting up to half million.
Rein of CEOs Strategic business decision
Outcome
Buckley 1. Concentrated on the uniqueness of company shared technology model
2. Focused on constant innovation
3. Stronger customer partnership, customization , entering new segment.
1. Increase of market share.
2. Emphasizing on local market and building long term competency
3. Development of highly customized 50000 products
Source:www.3m.com
3M Lattice: The 32 technology Platform
Source-http://solutions.3m.com/en_US/
Understanding 3M Lattice
3m have an unique technology and manufacturing model is known as “adjacency lattice”.
That shares basic technology and manufacturing process across multiple business, market & product lines
Almost all of 3M’s basic business are connected with each others by this way.
This lattice or ‘network ’ makes 3M so power full and enduring as an industrial competitor.
Technology Market Architecture
Source-http://www.slideshare.net/finance10/george-w-buckley-chairman-president-and-chief-executive-officer
How The Invention Machine Goes To Market
Source-http//www.3m.com
Innovation It’s All About Imagination Process and People
Source-case study
Patent Portfolio
http://www.slideshare.net
3M BRICP Patent Fillings
Source- George Buckley’s presentation in may 2006
Acquisition And Divestitures
Over time 3M divest or close those business where they
1. Can’t built scale or good relative share 2. They can’t differentiate through technology3. Base technology which is at the end of life and
can’t be refreshed
CORE COMPETENCY
1. Technology platform hold together its diverse business activity
2. High frequency of transforming customer expectation into unique solution both for the commercial and industrial customer.
3. Practice of cooperative sharing technology across operations brand market segments.
4. Incredible manufacturing capability and know how is the hidden and untold hero of 3m and a significant barrier to entry
Competitive Advantage :
Sustained Research & Development – Science Based Company
Diversification of Business Segments
Global Manufacturing Network
Brand Recognition
Technological differentiation will remain hallmark of 3M competitive strategy of the future
Porter’s Five force model
Competitive Force 1: Rivalry among Existing Firms
In the conglomerate industries of Healthcare and Office Supplies, there is a moderate level of rivalry among existing firms
Competition for a conglomerate not only comes from other competing conglomerates but niche firms as well.
conglomerates size, niche firms don’t pose much of a direct threat.
conglomerate has a much greater purchasing power and more R&D Departments which allow them to compete on prices.
Competitive Force 2: Threat of New Entrants - low
The industries of Healthcare and Office Supplies exhibit high barriers to entry, so the threat of new entrants is low.
The high barriers are created by the amount of capital (money) and time it takes to become a competitor in these sectors.
A new entrant would face the problem of finding a supplier that would sell its goods at low enough prices to compete with pre-existing firms.
Competitive Force 3: Threat of Substitutes
Product-for-product substitution (email for mail, fax); is based on the substitution of need;
Generic substitution (Video suppliers compete with travel companies);
Substitution that relates to something that people can do without (cigarettes, alcohol).
Competitive Force 4: Bargaining Power of Buyers
This force is relatively high where there a few, large players in the market, as it is the case with retailers an grocery stores.
Present where there is a large number of undifferentiated, small suppliers, such as small farming businesses supplying large grocery companies.
Low cost of switching between suppliers, such as from one fleet supplier of trucks to another.
Competitive Force 5: Bargaining Power of Suppliers
3m can buy raw material from various supplier around the world. So the main industry power of suppliers is low
Due to the size of the large quantities of material from their suppliers makes strong bond with them.
Numerous suppliers and the firms can leverage them against one another to get best prise.
Strong supply chain and logistic support de centralized the warehouse facility.
SWOT Analysis :
STRENGTH
1.Strong R&D capability.2.Diversified Business
Portfolio.3.Robust Industrial
Business
WEAKNESS
1.Weak Personal Care Segment.
2.Low Margins in the United States.
OPPORTUNITY
1. Growing Demand for LCDs.
2. Acquisition Of Brands.3. International Expansion.
THREAT
1. Growth In Private levels2. Higher oil prices.3. Exchange rate
fluctuations.
Award
Thomson Reuters named 3M among the “2011 top 100 global innovators ”
3M ranked no. 44 in industry weeks US 500 ranking
3M ranked 2nd in the general industry
3M ranked 4th among the best regarded large US companies according to a Harris interactive servey
3M ranked 32nd in corporate responsibility magazine’s -2010
3M ranked 15th in Barron's list of the world most respected co’s.
3M ranked 3rd in the list of top 20 best co’s for
leadership.
Source-www.google.com
Corporate Social Responsibility
Vision: Commitment towards sustainable development through environmental protection
All plants are certified ISO 14001: 2004 for its environmental management system
Prior to lunching any new product the product is taken through life cycle management which addresses the safety and hazards and environmental aspect of product after uses by the end consumer
Source-www.3m.com
FINANCIAL REPORT OF LAST 10 YEAR:
YEAR SALES(In Million) EARNING PER SHARE($)
2010 26662 5.63
2009 23123 4.52
2008 25269 4.89
2007 24462 5.6
2006 22923 5.06
2005 21167 4.03
2004 20011 3.56
2003 18232 3.02
2002 16332 2.5
2001 16054 1.79
Source-http://ycharts.com/
20102009200820072006200520042003200220010
5000
10000
15000
20000
25000
30000
SALES
SALES
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
0
1
2
3
4
5
6
Earning Per Share
Earning Per Share
Profit Margins
2002 2003 2004 2005 20060.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%Profit margins
Profit margins
DuPont analysis provides insight into factors affecting the Return On Equity of a company. The DuPont equation decomposes ROE as follows:ROE = (Net margin) * (Asset turnover) * (Asset to equity ratio)Net margin indicates operating efficiency, Asset turnover measures the total asset use efficiency, and the Asset to equity ratio is a measure of financial leverage
Source-http://ycharts.com/
3M Company Profit Margin: 13.46%(2011)
Date Range- 3/31/2007 to 12/31/2011
MMM Profit Margin Range, Past 5 Years Minimum-2.93% Dec 1995; Maximum24.23% Sep1997 Average10.81%Source-http://ycharts.com/
Capital Expenditure in BRICP countries
3M Company R&D Expense: 379.00M(2011) : Date range- 3/31/2007 to 12/31/2011
MMM R&D Expense Range, Past 5 Years Minimum- 0.00 Mar 1987; Maximum-1.10B Dec 2000 Average-115.86M
Source-George Buckley’s presentation(www.3m.com)
2006 2005 2004 2003 2002
Net sales 22,923.00 21,167.00 20,011.00 18,232.00 16,332.00
R&D Exp. 1,352.00 1,274.00 1,143.00 1,102.00 1,066.00
R&D as % of Sales
5.9 6.0 5.7 6.0 6.5
Source-http://ycharts.com/
Key Learning from the Case. Continuous innovation leading to the survival of a
corporation.
A good visionary is a key driver to success.
Close interaction of R&D to the commercialization of products leads to better customization of products to that of the customer needs and wants.
Multiple process application leading to reduction the risk of sales revenue.
Diversification to Divestment.
Technological differentiation will remain hallmark of 3M’s competitive strategy for the future.
3M focus his technical resources on supporting the strategic plan
3m follow the customer value chain
Long term market power can be enhanced by long term of the core competencies
