Brady Shiplet

BUAD 5312 – LU01

March 11, 2010
Case 1: 3M: Cultivating Core Competency

Case 1 deals with 3M’s challenge of deriving a strategy to succeed in building the company’s core competencies. This
strategy should generate growth, maintain premium margins, and strategically manage the company’s portfolio – all without
driving out 3M’s culture of innovation.

PART A: External Environment Factors

3M operates in the following markets: Industrial and transportation; health care; safety, security, and protection services;
consumer and office; display and graphics; and electro and communication. The company operates on a global scale in the
US; Europe, Middle East, and Africa (EMEA); and Asia Pacific markets. It is headquartered in Saint Paul, Minnesota, and
employs about 79,200 people.

STRENGTHS:

• Diversity across industries and regions protects against demand fluctuations.

• Developed many successful niche markets.

• Micromanufacturing competency, leveraged across many markets, make it difficult for competitors to beat it.

• Innovation, technology, manufacturing capabilities, and know how provide a significant barrier to entry.

• Six competitive platforms in order to reach markets: low cost, scale share, relative share, customer value
chain, pristine service, and premium brands.

WEAKNESSES:

• Missed second quarter earnings target in 2006. Sent stock tumbling.

• Lack of focus on growth of core competencies creates room for entry.

• Rising oil prices result in price increases and supply limitations of several oil-derived raw materials.

• Mass marketed private brands lower margins for the company.

OPPORTUNITIES:

• Build new business on enhanced focus on emerging business opportunities with high growth potential.

• Search for disruptive, “just out of the garage” technologies.

• Search for logical developments and extensions of its existing products.

• Offer secondary, lower priced brands.

THREATS:

• Investors hold company to a higher standard.

• Criticism over anemic revenue growth that had slowed.

• Retailer increasingly offering private labeled goods at a discounted price.

PART B: Internal Environment Factors

STRENTHS:

• Strong research and development capabilities.

• Highly capable scientific, engineering, and manufacturing company.

• Ability to manufacture innovative products efficiently and consistently, on a global basis.

• Incredible intersegment technology sharing

• Revenue spread across six key businesses, healthcare being the largest.

• Ability to solve and deliver unique solutions for original equipment manufacturers (OEM) and mass channel
customers.

• Ability to extend adjacent knowledge across multiple markets

WEAKNESSES:

• Problems in display and graphics business.

• Lack of focus on emerging digital technologies.

OPPORTUNITIES:

• The remarkable breath of technologies, along with its ability to combine them; help to create a steady stream
of groundbreaking products.

• Ability to increase the range of a single technology application. Ex: Adhesive leads to Post-it.

• Add digital-oriented competencies over time.

THREATS:

• Maturing products cause loss in market share.

• Increasing complexity of logistics.

* Each SWOT analysis was derived from preceding analysis and research.