OUTLINE OF PRESENTATION 1st slide present pictures of 3M products 3M Company Background (Introduction) One of the largest technology driven

n enterprises in the United States organized into 35 different business units in a wide range of sectors including consumer and office products, display and graphics, electronics and telecommunications, healthcare, industrial, safety, security and protection services, and transportation.

It has operations in more than 60 countries, and in the US, it has operations in 22 states. The company has also been awarded with 487 US patents.

In more than a hundred years of existence in the industry, 3M is faced with the following problem: Problem Statement (2nd slide) What strategic course of action should 3M implement to leverage its core competency that would enable the company to pursue growth opportunities, consequently delivering value to shareholders? Presentation of Brief History of 3M (3rd slide) 3M was established (1902) William McKnight made his mark in 3M Invention of masking tape, scotch cellophane tape Discovery of Scotch Guard and Post-It Venture into the international market Slow progress for 3M

DeSimone became CEO of 3M (1991) Jim McNerney took over as CEO (2000) George Buckley succeeded McNerney as 3M CEO (2005)

To further analyze the performance of 3M in the past years, the following table presents the strategic initiatives and internal capabilities employed by different CEOs that have been instrumental in securing past successes of the company.

McKnight Establishment of a central research lab.

DeSimone Creation of 3M Innovative Properties (IPC).

McNerney Six Sigma Process

15% rule

Indirect Cost Control

3M Technical Forum

Global Sourcing

Patient Money Genesis Grants Pacing Plus Program Rewards and recognition programs to honor employees Duel career tracks Process for auditing ongoing product developments Human resource practices (profit sharing plan, stock purchase plan, pension plan) Organized the company into key product divisions, key philosophy: divide and grow Notion of getting behind the smoke stacks Institution of lead user process Challenge 81

E-productivity 3M Acceleration Program 3M-like Performance Evaluation System Allocation of resources between new business opportunities Technology leadership Leadership development programs

Buckley Continuation of McNerneys strategies Provision of innovative and differentiated products that increase efficiency and competitiveness of customers Application of technology platforms to different market opportunities Controlling and boosting productivity through Six Sigma Selective divestitures of businesses not seen as core Continuing internationalization at 3M

Presentation of Case SWOT

Strength
Innovative culture More than 100 years of existence in the market

Good financial performance (increasing sales, operating margin, ROI, and EPS)
present Exhibit 3 in graphical form Increased employee productivity Having awarded with over 7,000 patents Varying technical expertise of more 900 scientists for the companys R&D

Weaknesses
Growth rates that lagged behind what is achieved by other technological enterprises Decline in R&D innovations Stable, non-moving stock price Inattention to weaker development projects

Opportunities
High-growth of white space areas in the market Acquisitions Fast-growing markets in China, India, Brazil, Russia, and Poland

Threat
Competition Currency Risk (for international operations) Lack of shareholder confidence Having identified the companys external opportunities and threats as well as its internal strengths and weakness, we have now a clearer view of the problem faced by the company currently. Looking back at our problem statement, What strategic course of action should 3M implement to leverage its core competency that would enable the company to pursue growth opportunities, consequently delivering value to shareholders?

Critical Success Factors The proponents have identified the following critical success factors that will be used as a basis in achieving in formulating a sound recommendation or strategies would help in solving 3Ms problem: Strategic Objectives FINANCIALS Improve returns Reduce cost structure CUSTOMER Increase satisfaction with 3MS product and people Increase after sale satisfaction INTERNAL Create innovative products Technology leadership Minimize operational problems Customer retention New product development Technology platform Employee productivity rate Strategic Measures Return on investment, revenues Operating expenses Market share, customer relationship

Innovation Technology Leadership Sustainable Sales Growth Market Share

Cost Optimization/Efficiency Employee performance

Recommendations Enter the white-spaced market Establish their own business units in untapped market segments Acquisition of companies that have existed in the targeted market segment.

Maintaining and enhancing the innovative culture.

increased budget allocations for R&D

 Increasing the employee time from 15% to 20% to work on a new idea or
technology

Create a database on all projects or ideas whether approved or rejected to avoid

duplication of innovations. If an idea is already existent and was initially rejected, other scientists can utilize the data for improvement.

Continued focus on international markets to maximize margins and capture emerging growth opportunities. Pursuit of technological growth trends and new technological developments.

Implementation: (discussion)

Leverage core competency. Stress on the 15% rule for employees. Foster an innovative culture for the company. Devise strategies that would motivate employees to explore and discover disruptive ideas that would bring great potential for the company. Establish a system of quota per business unit in terms of new product development. Encourage the development of new ideas by funding those with great potential and looking for alternative funding for those projects that are conceived to be of low potential. Organize a showcase of new ideas, where those with high potential would receive instant awards. Consistent communication with end users to develop products that is customer-centric.

Explore and exploit growth opportunities Enter market segments with high potential for growth. Acquisitions.

Continued implementation of Six Sigma and other internal strategies that bring down costs Partnering with universities for R&D

Recommendations Defining a firm in terms of its assets and core capabilities is a more durable basis for strategy. Core business Strong brands, customer awareness, market share and satisfies customers are means to create and maximize shareholder value. Here are the recommendations to maximize value: Develop a New Product on a Regular Basis

Potential buyers who are affected by the changing global market environment respond largely to their own needs and problems. Identifying the needs of potential buyers and segmenting markets according to those needs enhances the new product acceptance. The innovating organization is brought closer to its potential buyers as new product development requires a variety of research approaches. The company can jointly create a new product with its potential buyers, then estimate when and how many consumers might enter the market to buy it to anticipate market response. Emphasis on Customer Focus

Customer focus is at the center of creating any future corporate strategies. Customer focus primarily proposes that the basic philosophy of companies should be to serve customers rather than sell products and in the course establish longterm relationships by treating customer as strategic assets. This will allow 3M to understand the customers current and potential needs clearly. Such an understanding would lead to marketing functions to be in line with customers needs rather than compulsions centered on products. As such, pricing will be in line with customers willingness to pay rather than to cover costs, advertising and communications will inform, appeal and endear to customers, customers convenience will dictate distribution rather than logistical ease and product features would essentially reflect customers unmet needs rather than show off the latest technological supremacy.

Product Localization

Acquisitions and having a diversified business and geographic presence are part of 3Ms strengths. Product localization using a mixture of brands and local acquisitions will defend the companys created markets against new entrants. This will project a strong international image essential to servicing customers both globally and locally. 3M will gain a tangible competitive advantage by giving customers in new markets a compelling reason to buy 3Ms products and enable a market penetration. Also, this will create an effective communication with its international customers and prospects. Extend Private Labeling

Private labels have been seen by many as an indicator of growing retailer power. On the other hand, the growth of discounters and warehouse clubs has put immense pressure on traditional retailers and significantly increased retail competition both within and between retail formats. Since a large portion of most retailers revenue and profit comes from selling manufacturer brands, which many of their competitors also offer, building their own equity is a particularly challenging problem, but one with big potential rewards. Such equity insulates them from competing retailers, which has the direct impact of increasing revenue and profitability, and the indirect impact of decreasing costs as their leverage with brand manufacturers also increases. Private label products may have their own unique brand names or be branded under the name of the retailer. They allow the retailer to differentiate its offerings from competing retailers, although often without the support afforded manufacturers brands. Consumer perceptions of these dimensions of retailer image can help develop strong and unique retail brand associations in the minds of consumers Dual Branding

Dual branding is the association of two or more already well recognized trademarks in a synergistic retail setting designed to benefit each. It is s one of the fastest growing areas in franchising. Dual branding can in the best of circumstances,

address

various

business

realities,

allowing superior

strategic

positioning,

heightened visibility to the consumer and reduced cost factors. Beyond the search for new sites and means of presenting a product to the consumer, dual branding can allow a chain to add additional product without the time and investment normally necessary. Higher combined volumes and shared costs can result in improved levels of return on investment.