P#240712591 Case Analysis- 3M (2022)

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Surname 1 Student’s Name Course Instructor Due Date 3M - Case Study Introduction and Company's Overview A strategic analysis using external and internal scanning tools, including SWOT and PESTLE analyses, is critical to determine the company’s strategic position and help the strategic decisions such as market expansion or new product development. In addition, this scanning outlines the challenges: risks, and weaknesses the company requires to resolve. The strategic analysis in this report is for 3M, a company in the mining and manufacturing sector. 3M is a powerful global company founded 120 years ago in 1902 that has set benchmarks in innovation by emphasizing introducing innovative products to exceed customer satisfaction. However, 3M is not immune to various challenges, including economic stagnation, global inflation, and supply chain disruptions. In addition, 3M is vulnerable to various weaknesses, including job attrition, weak demand forecasting, and other business challenges. Therefore, this environmental scanning is essential to identify business challenges, opportunities, and core competencies. 3M should use its core competencies, such as strong brand image and financial position to tap market opportunities and solve the underlying problems mentioned above. 1. Company Overview and History 3M (Minnesota Mining & Manufacturing) is a conglomerate firm founded in 1902. After its foundation, 3M has grown massively over time. Currently, 3M provides a wide product variety across different industries, including heavy industries, healthcare, electronics, aviation,

Surname 2 and automobile (GlobalData Plc). Although 3M serves the end consumers, businesses such as hospitals, retailers, and automakers are the top clients of this company (Forbes Magazine). 3M is a leading designer and manufacturer of various products, including films, tapes, adhesives, film, and advanced materials used across various industries. 3M owns different brands, including Scrotch, Scotch Brite, Nexcare, Filtrete, Command, ScotchBlue, and Scrotch-It. Over time, 3M has grown massively (Forbes Magazine). As of 2022, 3M was present in over 70 countries and manufactured over 60,000 product categories under five segments: industrial, safety, electronics & energy, healthcare, and safety & graphics. 3M has an impressive reputation and image (Forbes Magazine). In 2021, 3M was cited as one of the leading ethical firms. At 3M, the vision is to become the leading technology firm serving every home with innovative products and providing different products to the users. 3M has also crafted a unique selling proposition by offering exceptional innovations with integrity (Forbes Magazine). The unique selling proposition allows 3M to differentiate itself from its competitors (Finance Yahoo). In addition, 3M has strived to maintain an edge in the market by developing and serving customers with innovative products (CSIMarket). Therefore, this has enabled 3M to be an innovative firm. 3M's headquarters are in Maplewood, Minnesota. Danley Budd, Willam McGonagle, Hermon Cable, Henry Bryan, and John Dwan are its founders. Despite the unprecedented COVID-19 crisis, 3M recorded a net income of $5.92 billion from sales of $35.36 billion in 2021 (Kary). Major competitors threatening 3 M's position are Pfizer, Emerson, GE (General Electric), Panasonic, Tyco, J&J, Honeywell International, Pfizer, Carlise, Corning, Donaher, Johnson Electric, Nikon Kohden, and Avery Dennison (CSIMarket). Therefore, 3M must sustain its competitive position to beat its competitors.

Surname 3 2. External Environment Analysis External environmental analysis is necessary to diagnose and determine conditions outside the business affecting its operations. There are various tools, such as PESTLE analysis, to deploy in the external environmental scanning. PESTLE is an effective strategic framework for examining the organization because it considers potential factors likely to affect business and its success across the market ( Perera 7) . Understanding the external environmental factors are essential in strategic planning and execution. Political Environment Political conditions are significant factors affecting organizational success. There are various political factors influencing organizational success. One major factor is political stability. Because 3M is a multinational company with a presence across nearly all countries is vulnerable to global politics (geopolitics). For example, global political stability is essential for 3M to thrive ( Asadzade and Izadi 4) . Unfortunately, the current geopolitical factors ranging from the Russian war in Ukraine, tensions between China and the USA, and the armed conflicts across different parts of the world, present a significant risk for business ( Asadzade and Izadi 4) . For example, armed conflicts erode economic and diplomatic cooperation across countries. Wars also disrupt supply chain activities. For instance, Russia's blockage of Odesa port in the war with Ukraine created an artificial food shortage, leading to high costs. The war in Ukraine has also fueled unprecedented inflation worldwide ( Asadzade and Izadi 4) . Inflation is a factor that affects companies across different industries. Therefore, peaceful resolutions to the armed conflict are necessary for a company to stay afloat. Another major political issue is the geopolitical competition characterized by toxic politics and nationalism instead of collaboration. Increasingly, many countries and world leaders

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Surname 4 care about national interests rather than collective interests for the benefit of humanity. For instance, great powers such as China and Russia compete for the global leadership position and challenge the US economy ( Asadzade and Izadi 4) . Political competition hinders collaboration and increases confrontation. Countries are also competing with each other by increasing international trade barriers because of political competition ( Asadzade and Izadi 4) . For example, China and the USA slapped each other with higher tariffs, increasing the cost of business. Therefore, this negatively affects international trade activities. The past regime under Donald Trump also antagonized many countries, including American allies such as Canada and the EU. During the Trump presidency, foreign policy has become antagonistic ( Lanteigne 17) . For example, Trump imposed more tariffs on steel imports. Because 3M relies on supplies locally and internationally, the tariffs on steel and other items increase the cost of business. In addition, Trump threatened to scrap free trade agreements, including NAFTA, alleging that these agreements were unfair to the USA or were to blame for a trade deficit ( Lanteigne 17) . As a result, this threatened to increase the cost of trade. However, there are many favorable political factors affecting the business. One major factor affecting 3M is the economic stimulus packages enacted by the US government in 2020 and 2021 to save businesses from collapse amid the COVID-19 pandemic ( Aizenman 5) . The stimulus packages also targeted to cushion the households hit by the pandemic. The stimulus packages were effective in the business recovery. The government has also implemented TJCA (Tax and Job Cuts Act) to promote economic growth and cut organizational costs ( Aizenman 5) . Therefore, this has made the USA more economically attractive. Economic Environment

Surname 5 The economic environment is a significant factor affecting business activities. Favorable economic activities attract business success and vice versa. One major economic factor affecting global business is the rising inflation rate. In the last ten months, the world has unprecedented inflation level has been fueled by uncertain conditions, especially the war in Ukraine and COVID-19. COVID-19 and the war in Ukraine disrupted the fuel supply chains, leading to shortages ( Aizenman 5) . In addition, sanctioning Russia, a major oil exporter and producer, has created an energy shortage, increasing inflation ( Asadzade and Izadi 4) . Inflation is increasing the cost of doing business. In addition, inflation erodes the purchasing parity. Unfortunately, 3M has no control over global inflation or the ongoing war in Eastern Europe. The growth in the interest rate caused by global inflation affecting the world is a significant challenge facing businesses. Recently, central banks worldwide have responded to the ever-rising inflation rate by heightening the interest rates to contain unprecedented borrowing and unsustainable demand. The high-interest rates the business charges have increased the cost of acquiring credit. Interest rates also have credit acquisition less attractive to investors. Hence, the high-interest rate is a significant blow to companies, including 3M. Global economic growth has also slowed in the last two years and is facing a recession. An economic slowdown is driven by COVID-19 and war in Eastern Europe ( Aizenman 5) . In the last few months, countries, including wealthy nations such as France, the UK, Italy, and Germany, have experienced nationwide protests for economic hardships in the country. Many citizens in those countries are even threatening their governments to exit NATO and mend ties with Russia because the harsh economic situation in those countries is driven by cuts in the oil and gas shipment into Europe by Russia ( Asadzade and Izadi 4) . The global economy has

Surname 6 stagnated because of the disruptive events following the war and COVID-19 ( Aizenman 8) . Therefore, the global economic slowdown may erode product demand in those countries. Social Environment The social environment is another factor to consider for a business to thrive. Therefore, a company must evaluate the social factors influencing the business's success. One major social factor is the global community increasingly embracing eco-friendlier products. The demand for sustainable and environmentally conscious products has increased recently (Annual Report 2). In addition, consumer preferences are shifting in favor of eco-friendly products. Because 3M is an environmentally conscious product, the changing preferences towards sustainable-oriented products is an opportunity for 3M to seize. Another social factor rests with demographic changes. The world is experiencing unprecedented demographic changes. For example, developed countries such as the USA, Canada, Germany, and Japan are experiencing an aging population crisis fueled by significant growth in life expectancy ( Ho and Hendi 6) . The low birth rates in these developed countries have also led to a decline in productive labor. The health burden has also increased in these countries because of the higher business costs ( Bulut and Maraba 5) . Fortunately, developing countries such as India, Sub-Saharan African nations, Vietnam, and Indonesia are reporting growth in the youthful population. Fertility rates in LDCs (less developed countries) are also high. Hence, this provides an opportunity for youthful and productive labor. The millennials and Generation Z boom into the marketplace and workplace is also a social factor affecting business activities. For example, millennials are increasingly replacing their baby boomer and Generation X parents in the workplace ( Bulut and Maraba 5) . In addition, Generation Z and millennials have become the biggest consumer groups. Because these

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Surname 7 generations have different characteristics from the earlier generations, marketers must develop marketing and motivation practices that resonate with these generations. For example, 3M must consider that the new generations joining the workforce love independence and freedom ( Bulut and Maraba 5) . Therefore, their staff motivation and retention strategies must provide autonomy, freedom, and open-mindedness to motivate and attract the emergent groups of consumers and clients. Technological Environment Technology is a significant force shaping business activities and affecting organizational success. One leading technology affecting business operations is the IoT (Internet of Things). The IoT encompasses smart devices, sensors, and Bluetooth capabilities (Annual Report 4). The rise of IoT has streamlined marketing activities and business decisions. For example, the IoT has driven the rise of e-commerce. E-commerce presents an opportunity for 3M to sell its product online and interact with customers virtually. The Internet has also improved brand visibility and empowered consumers more by availing information about brands and products at the touch of a button (3M 50a). Therefore, this reflects the potential of the IoT. Blockchain is another major technology disrupting business activities, including supply chain management. 3M can leverage blockchain technology to gain control over its supply chain and trace materials from source to end (Tank). For example, 3M can use blockchain on cloud services like Azure to identify counterfeits, enhance consumer safety, and protect organizational performance (Tank). Blockchain technology can also help 3M identify invisible supply chain management problems. Therefore, blockchain is an incredible technology that 3M should exploit.

Surname 8 Another impressive technology revolutionizing the manufacturing industry is 3D printing. 3M is among the pioneer companies to embrace 3D printing in its manufacturing operations (3M 50a). The many advantages of 3D printing have influenced 3M and other innovative companies to embrace 3D printing in their business operations (3M). For example, 3D printing can boost performance and increase precision, reducing errors in production management (Langnau). In addition, 3D technology can cut operating costs and improve efficiency in organizational performance (3M 50a). As a result, this has driven many companies to embrace 3D printing technologies. Legal Environment The legal environment governs the business and decisions, including entry and bargaining for commercial contracts. In addition, the laws governing the procedure companies apply in resolving contracts facing them. Different laws influence business operations. For example, labor policies and legislation influence business decisions and operations in the host market. In addition, intellectual property across different host countries affects business operations. A company must be familiar with the intellectual property and employment laws guiding the operations of a company in both the host and home markets. Anti-competitive and anti-discrimination laws are also part of the legal factors affecting the business. Different countries have anti-competition and anti-discrimination policies influencing the business relationship ( Morton et al. 44) . Anti-competitive policies are laws that prohibit restrictive business practices. For example, these laws prohibit hostile takeovers or attempts from monopolizing the market. Sherman Anti-Trust Act exemplifies an anti- competition law enacted to prevent unfair competition ( Morton et al. 44) . On the other hand,

Surname 9 anti-discrimination laws such as the Civil Rights Act aim to promote equity and fairness in treating people, including customers and employees. 3M must observe different regulatory policies and laws. Finally, the judiciary is a significant factor affecting business operations. Judicial independence is a major desirable factor in stimulating organizational success. The lack of judicial independence across the countries has eroded investors' confidence. In addition, the judiciary must be fair and expeditious to instill investor and consumer confidence. Unfortunately, executives in some countries have infiltrated the judiciary, affected its independence and led to judicial corruption. Therefore, 3M must be aware of such issues when entering other countries. Physical Environment Physical environmental factors have also affected business activities. For example, environmental policies and agreements have shaped business functions. In addition, the international community is pressuring companies to embrace environmentally sustainable practices (Annual Report 2). For instance, countries adopted and ratified Paris Agreement for atmospheric mitigation. Under this accord, countries are committed to lowering air pollution and emissions that deplete the ozone layer and cause climate change. Hence, 3M is under pressure to comply with this international agreement. Natural resources are also part of the physical environment affecting the company. A significant aspect of the physical environment is the depletion of natural resources, including minerals, metals, and other resources required in manufacturing items (Annual Report 2). As a mining and manufacturing company, 3M relies heavily on raw materials to perform its functions and sustain its activities ( Lee 4) . Hence, the depletion of natural raw materials increases

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Surname 10 production costs by heightening costs. As a result, 3M should leverage reverse logistics to recover the waste materials and improve production capacity at the organization. Moreover, consumer activism is a major environmental factor affecting 3M. Consumer activism has recently heightened because of the rising consciousness of the need to protect the environment ( Lee 4) . As a result, consumers are increasingly pressuring their product providers to protect the environment or produce healthier and eco-friendly products. The rising demand for eco-friendly products is a positive factor influencing the demand for 3M because its products are environmentally friendly (Annual Report 2). 3. A SWOT analysis. A SWOT framework is a strategic analysis tool for auditing an organization's internal and external environments. A company can examine its strategic position through SWOT analysis and decide whether its success is conducive ( Perera 40) . The SWOT analysis will help to determine whether the organization's strategic situation is favorable or unfavorable. Strengths Weaknesses  Ethical reputation  Great product range  Well-diversified product portfolio  Great finance management  Brand recognition  Wide internet presence  Product portfolio  Brand recognition  Fragile brand image  Inability to meet demand requirements during unprecedented crises  Lawsuits  High attrition rate  Inability to compete on innovation  High days' inventory  Ineffective in predicting demand

Surname 11  R&D (research and development)  Brand value Opportunities Threats  Business diversification  Automobile industry  Acquisitions  Emerging environment pressures  Rising technology  Declining transportation costs  Vulnerability to disruptive mega- events such as public health crises  Fierce competition  Regulatory costs  Lack of new products  Isolationism  Lack of new products Strengths Ethical image is a significant competitive asset of 3M. Mainly, 3M draws its competitive advantage by investing in CSR. 3M devotes itself to CSR practices, including fair labor practices and sharing its fortunes with stakeholders. In addition, 3M has adopted pollution prevention measures such as using renewable energy sources. In 1975, 3M adopted 3P (Pollution Prevent Pays) initiative. Because 1975 and early 2000s, 3M reduced pollution in its facilities by over 72%. 3M has also won several EPA (Environmental Protection Agency) awards. For example, 3M won Energy Star Award in 2012. 3M also develops eco-friendly products and attracts environmentally conscious customers around the global markets (Annual Report 2). Therefore, this has led 3M to maintain an impressive brand image across the key markets. Another significant competitive asset of 3M is the wide market reach supported by a strong logistics and supply chain network. Strategically, 3M has partnered with several distributors and retailers across the value chain. The widespread network of distributors and

Surname 12 retailers ensures 3 M's to be near the consumer reach. A company enjoys greater sales when the products are available and near the customers' reach. Effective financial management is another primary source of competitive advantage. 3M proved excellent in managing its financial resources at the height of the pandemic. Although the pandemic wreaked havoc on commercial activities, 3M was among the few giant companies to survive amid lockdowns. In addition, 3M reported growth during the pandemic year, showing a resilient and robust financial position at the height of the pandemic. The strong financial position at 3M revealed the solid management of its financial resources. Therefore, this could enable 3M to wither disruptive business conditions. Strong brand equity is another major strength of 3M. 3M is a recognizable brand across over 70 countries. In addition, 3M enjoys an incredible brand reputation from engaging in ethical business (Annual Report 2). Therefore, 3M can use its strong brand position to launch a new product. A well-diversified product portfolio is another primary source of competitive advantage. 3M is a conglomerate firm with over 55,000 product lines across different industries (Annual Report 4). As a result, this allows 3M to absorb risks facing its businesses and have multiple revenue streams. In addition, a well-diversified portfolio has allowed 3M to maintain strong profitability and financial success (Annual Report 3). Therefore, this exposes why companies should use diverse revenue streams across different businesses. R&D (research and development) is also a significant source of competitive advantage for 3M. 3M has invested substantial resources in R&D (Annual Report 53). Over the recent decades, 3M has been spending vast resources on R&D to sustain its innovation and competitive advantage (Annual Report 3). In 2020 alone, 3M invested nearly $2 billion in R&D.

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Surname 13 Weaknesses The fragile brand image is a primary internal deficiency facing 3M. Although 3M has positioned itself as an ethical and socially responsible company, this comes at a great price or responsibility. Any mistake could jeopardize the image and reputation that 3M has built for several years. Another major challenge is an inability to maintain supply chain needs during dispute business situations such as public health crises. For example, 3M failed to meet the demand requirements during the pandemic, including N95 masks (Contrera). The N95 masks were instrumental in containing the virus spread during the pandemic. Therefore, the inability to meet the demand requirements hindered 3M from maximizing sales. Shortage of these N95 masks also fueled panic among the public (Contrera). Hence, this exposes the lack of a backup plan to manage supply chain issues during disruptive events. Another weakness rests with the lawsuits. Despite its impressive image, 3M is not immune to lawsuits. For example, 3M was embroiled in a $5 billion lawsuit over pollution allegations. The lawsuit claimed that 3M released toxic chemicals into waterbodies and air. 3M defended itself, claiming that the released substances did not pose any environmental hazards to the users (Kary). Nevertheless, 3M agreed to pay over $850 million to settle the lawsuit. Therefore, this could undermine 3M’s image. Another weakness is that 3M has longer days inventory than the competitors. The longer days inventory period implies that 3M consumes more time collecting its debt than competitors (Kary). 3M is also ineffective at predicting demand, leading to missed opportunities and higher business costs, such as greater inventory storage costs. Therefore, this area 3M should resolve to emerge as a profitable business.

Surname 14 The inability to compete with its competitors on innovation is also a challenge facing 3M. Although 3M has spent vast resources on R&D but cannot its competitors, such as Samsung, Panasonic, and others, competitors (Annual Report 53). Another weakness is the huge attrition rate at the company. 3M has been facing an enormous attrition rate compared to the competition. Hence, this requires 3M to invest more in developing and training employees. Opportunities 3M has vast opportunities to sustain and improve its competitive advantage. A significant gap for 3M to exploit is to diversify its business. 3M can diversify its business, further improving its competitive advantage. Further diversification will increase the competitive position and strengthen the business's market position (Kary). Strong diversification will also help 3M to open more revenue streams to enhance its business. The rising technologies, including 3D (additive) manufacturing, also present a powerful opportunity for 3M to improve its competitiveness, including cutting costs and enhancing its innovation. For example, 3D technology allows a company to regenerate and reuse waste into compelling products (Langnau). 3D technology has proven effective in recovering plastic waste and developing useful healthcare products, including prosthetics (Langnau). Besides 3D technologies, 3M can leverage innovative technologies such as blockchain to streamline supply chain activities (Langnau). For example, blockchain technology can allow 3M to track its deliveries and seamless communication with suppliers and customers. Therefore, leveraging technologies could increase the competitive position of 3M. Reduction in the logistics and transportation costs is another classic opportunity available for 3M to exploit. The declining transportation costs are instrumental in lowering the company's logistics and shipping costs. Therefore, this provides a greater opportunity for the company to

Surname 15 improve profitability and lower operating costs. Another opportunity rests with expanding the product portfolio. Growth in the product portfolio through acquisitions and mergers can strengthen the competitive position. Acquisitions will strengthen the product portfolio and increase diversification. Hence, this will enhance the market share of the business. Threats Competition is a top challenge facing 3M. 3M faces competition from all angles, including electronics, industrial equipment, healthcare, and other sectors. Major competitors threatening 3M are Honeywell International, J&J, Cardinal Health, Samsung, Panasonic, Tyco International, Balchem Corporation, Avery Dennison, and Conmed Corp. The competitors above continue increasing their market share and diversifying their revenue sources, presenting a significant threat to 3M. Another significant risk confronting 3M is international business complexities such as complex regulations, trade restrictions, exchange rate regimes, and political conflicts. For example, different countries have diverse tax and tariff regimes, affecting international businesses and trade. 3M will continue to face these challenges as it expands into new markets. Therefore, global business risks are significant risks the company should address. The ever-rising business regulations. New regulations keep on emerging, increasing compliance risks for the business (Tank). For example, governments have established new and tighter environmental and consumer protection regulations. Stricter regulations increase the compliance cost facing an organization. The absence of new products is also a significant shortcoming facing 3M. Over the past few decades, 3M has failed to introduce new products for new markets, unlike its competitors (Tank). The failure to develop new products at 3M has led to missed opportunities.

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Surname 16 4. Corporate-Level Strategy A sound corporate strategy is critical to meet corporate goals and achieving long-term success. At its core, the corporate-level strategy establishes the value of an entire organization. In addition, a corporate-level strategy should respond to the emerging market condition and be comprehensive. An effective corporate-level strategy has four elements: visioning, objective setting, resource allocation, and prioritization/strategic trade-offs. 3 M's corporate-level strategy is to become an innovation hub. At 3M, scientists visit different innovation centers to understand the pain points (3M 8a). In addition, 3M encourages its customers to visit its innovation centers to share their ideas and explore new possibilities. Innovation centers allow clients, employees, and scientists to freely interact and exchange ideas for future projects consistent with open innovation (Trivedi). The open innovation approach is a strategy whereby a firm allows ideas from external stakeholders to inform innovative solutions. An advantage of open innovation is its responsiveness to emergent demands. Therefore, this reflects why 3M is leveraging open innovation to promote competitive advantage. 3M unveiled the "15% rule" in 1948. In this rule, employees spend 15% of their work time on innovation. Most products and brands, such as Post-It note, were invented during 15% of the employees' work time (Trivedi). The success of this rule has inspired many companies. As of date, many companies, including HP and Google, have copied the "15% rule" from 3M. Another major program on innovation is the 30/4 rule to boost innovation speed (Trivedi). Under the 30/4 rule, 3M seeks to ensure that 30%v of its profits are from products developed within the last four years. This rule has drastically strengthened the innovation spirit at 3M. At 3M, innovation powers the NPD (new product development) to increase the market share via new customer acquisition or market creation, boosting profits. Each year, 3M spends at

Surname 17 least $1 billion (6% of its sales) in R&D for innovation. Strong investment in R&D has boosted innovation at 3M. Another aspect reflecting the corporate-level strategy at 3M is the commitment to science and sustainability. 3M is serious about introducing innovative and scientific solutions to enhance its success. In addition, 3M is considerate towards sustainability and climate change. Strategically, 3M announced carbon-neutral plans by 2050 (3M 8a). 3M plans to invest at least $1 over 20 years in climate and ESG (Environment, Social, Government) perspective (Annual Report 2). The strong innovation spirit at 3M has made many people regard 3M as an entrepreneurial organization. Undoubtedly, its core competency is rooted in its strong innovative spirit. In addition, 3M is tolerant of failure and encourages people to accept any idea regardless of how foolish it may appear (Trivedi). People are also encouraged to learn from their mistakes. Hence, this has transformed 3M into an innovation powerhouse. 5. Business-Level Strategy Business-level strategies are initiatives that outline how a company develops a leading edge. Common business-level strategies companies adopt cost-leadership, broad differentiation, and focus strategies ( Perera 40) . A company may use one of these strategies or combine both strategies. Strategically, 3M is a firm that has combined different business-level strategies to grow and handle competitive pressure. Cost leadership is a strategy that develops competitive advantage by optimizing profits by lowering costs and ensuring the competitive advantage in an organization. Although 3M uses other strategies, cost leadership is the main strategy for developing a competitive advantage through effective cost management (3M 8a). For example, 3M has leveraged economies of scope

Surname 18 and scale to allow the company to source raw materials at far lower costs than its rivals. At 3M, the central fixed overheads are widely spread out, lowering administrative and selling costs per case. In addition, 3M generates economies of scope by requiring several businesses to share production assets within the firm (Trivedi). Hence, competitors are likely to make lower margins regardless of whether they match prices with 3M if they compete from the cost perspective. The cost leadership strategy has enabled 3M to expand its market to the middle class. Middle-class consumers often emphasize the cost leadership and pricing factor (DataArt). Through a cost-leadership strategy, 3M has managed to keep its products affordable and accessible to many consumers (DataArt). In addition, this enables 3M to provide attractive discounts without incurring losses (Trivedi). As a result, this has promoted strong growth margins and enhanced the organization's competitive advantage. Differentiation is also part of the business-level strategy used at 3M. Differentiation is an effective strategy that emphasizes developing an exceptional image and distinguishing a brand from its competitors (3M 8a). At 3M, the differentiation strategy focuses on maximum innovation. Strategically, 3M invests in R&D to develop innovative and sustainable products. 3M differentiates itself from its competitors by focusing on healthy and eco-friendlier products (3M 17a). In addition, 3M has differentiated itself by creating an ethical and CSR-oriented image (Annual Report 53). Through differentiation, 3M provides a reason the customers should prefer its choices over the alternatives provided by the competitors. Differentiation also allows 3M to develop cult followership and encourage customers to maintain loyalty to its brand (3M 17a). Therefore, this has allowed 3M to sustain its revenue and profitability. The focus strategy is also part of the business-level strategy deployed at 3M. In focus strategy, 3M narrows to a specific market segment to serve certain market needs. For example,

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Surname 19 3M uses a low-cost focus approach to serve the needs of mass consumers. In addition, 3M continuously revises its products to satisfy the emergent clients' needs, achieve their psychological expectations, and maximize the value for money. 6. Company Structure An organizational structure is an essential component of an organization. It defines levels of responsibilities and authority across an organization. In addition, it shows coordination and supervision of activities across an organization ( Perera 40) . An organizational structure affects the business operations and provides the standard operating procedure foundation. 3M uses a hierarchical structure with a clear level of responsibilities at the corporate level consistent with its culture. 3M is a highly sophisticated company requiring top executives to have strong control over business operations. Hence, 3M needs a hierarchical structure to maintain control and command to maintain control over business operations realistically. Nevertheless, 3M maintains a divisional structure within the hierarchical design because it operates different divisions, including transportation, communications, healthcare, electronics, industrial equipment, and other segments (Dubey 2). Hence, this requires 3M to keep a divisional organizational structure. In addition, each department has distinct structures based on its needs. For example, one department could have a matrix design while another could have a functional structure. The matrix designs support the R&D consistent with its corporate-level strategy of innovation. The office environment is a significant aspect driving the innovation culture at 3M. For example, the collaborative office layout and interactive environment allow people to work

Surname 20 synergistically and work towards the accomplishment of the organizational objectives. In addition, this environment provides freedom and fosters guidance to the workforce. Another advantage of this layout and environment is that it allows people to test their ideas quickly within the office environment. As a result, this creates well-defined business processes. 3 M's workplace environment also has a tiered management of BPI (business process identification), direct reporting, and management to establish an innovative environment to balance technical excellence with management. The direct-reporting style enables managers to work continuously on technical activities and mentor people across the workplace (Dubey 2). In addition, 3M has an organic-mechanistic framework with popular and simple taxonomy of organizational structural properties. Creativity orientation is also involved in the 3M's organizational structure. The creativity orientation underpins diverse strategic choices for operational excellence (Dubey 2). 3M must follow strict processes, including controlling orientation, to enhance excellence. The image below outlines the unique structure deployed by 3M:

Surname 21 (Dubey 3) 7. Recommendations Recommendations are necessary for 3M to improve its sustainable competitive advantage. Recommendations are built on the company's strategic audit. One major challenge identified by the external environment is that 3M is grappling with the aging population in developed countries. As a result, 3M should shift its manufacturing operations to countries such as South Africa, Indonesia, Nigeria, and Vietnam with youthful, productive, and talented employees. In addition, 3M can enjoy low-cost labor in these countries, supplementing the cost- leadership business strategy. Therefore, relocating the company operations to locations with cheap sources of labor will allow 3M to emerge as a highly competitive and innovative company. Another issue for 3M to address is ineffective prediction. 3M is ineffective in demand forecasting, contributing to missed opportunities. Strategically, 3M should leverage data-driven forecasting using predictive analytics to enhance an organization's competitive advantage.

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Surname 22 Predictive analytics will increase forecasting accuracy and improve JIT (just-in-time) inventory management. Effective JIT management will complement the cost-leadership strategy by preventing an organization from incurring unnecessary costs in handling inventories. Accurate demand forecasting will also enhance sales by preventing the company from missing opportunities. As a result, this will maximize the competitive position of an organization. The high attrition rate is another issue for 3M to address. At 3M, the attrition rate is high and requires the company to invest in training and development. Effective employee training and development can enhance an organization's competitive position by ensuring that the skills are up-to-date with job requirements. In addition, training and development will increase staff retention and motivation, encouraging performance (Trivedi). The company can also reduce the skills gaps with staff training and development. 3M should also use its competitive assets to unveil new products, including green resource management, outstanding brand equity, and reputation. 3M is a well-known company providing innovative and high-quality products in other industries, such as aviation and defense. Therefore, 3M can tap the market potential using its competitive assets such as impressive brand image and reputation. 3M should also embrace continuous improvement philosophy to improve its products (Trivedi). Although 3M offers innovative and unmatched products, it should continuously improve its quality to maintain customer satisfaction. Continuous improvement aligns with the innovation culture at 3M. Hence, strong innovation is critical to maximizing the competitive advantage. Moreover, 3M should take advantage of the emergent consciousness of environmental- centric consumption patterns. Consumers increasingly prefer brands devoted to addressing the pressing environmental challenges (Trivedi). The new policies, such as Paris Accord, also

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Surname 23 promote environmental-centric behavior. Hence, 3M should leverage these opportunities to enhance product demand. 8. Case Question 1: Roots and Tenets of Innovation and Entrepreneurial Culture at 3M 3M undoubtedly has an innovative and entrepreneurial culture. Its innovation journey dates to its formative years. The innovation legacy and strong entrepreneurial spirit at 3M are tooted from an entry of William L. McKnight at 3M as a bookkeeper in 1907 (GlobalData Plc). Despite joining 3M as merely a bookkeeper, he rose through the ranks over time to the chairperson. McKnight runs 3M at the senior level from 1914 to 1966, serving as a general manager between 1914 and 1929 and president between 1929 and 1949 (GlobalData Plc). Finally, McKnight served as chairperson between 1949 and 1966. When working for 3M, McKnight redefined the innovation journey at 3M. Diversification is a central tenet of the innovation and entrepreneurial journey at 3M. Upon entering 3M, McKnight established the general diversification guidelines and avoided the price cuts, improving sales by 10% annually and instilling staff morale. McKnight also develops a powerful quality control system and establishes a unique corporate culture that allows people to make and learn from mistakes (GlobalData Plc). In addition, McKnight developed a culture that allowed people to accept foolish ideas. Therefore, this encouraged people to accommodate each other's ideas. Another aspect is that McKnight designed aggressive and customer-oriented salespersonship. The aggressiveness in the sales growth was part of the strong entrepreneurial spirit at 3M (Trivedi). Creatively, McKnight built a culture that required the sales representatives to engage directly with customers and discover the client's unique needs. Therefore, this allowed 3M to design products or innovations that met or exceeded customer desires.

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Surname 24 The "15% rule" is another tenet of the entrepreneurial and innovation aspect at 3M. Under this rule, employees dedicated 15% of their work time to innovating or experimenting with new and great ideas (Trivedi). Another tenet was the "30/4 rule," focused on requiring the company to generate 30% of the sales from products launched in the last four years (Trivedi). As a result, this has promoted strong innovation and entrepreneurial spirit by encouraging people to promote the recently unveiled products and innovation. 9. Entrepreneurship and Innovation at 3M from the McKnight to DeSimone's Era Innovation and corporate entrepreneurship at 3M have been a journey under the tenure of various leaders, from McKnight to De Simone tenures. Since McKnight's era, innovation and entrepreneurial culture have developed formally and informally (Trivedi). The formal development involved the establishment of strong R&D and innovation centers (3M 17a). These centers provided for informal interaction between employees and the company. From McKnight to Di Simone's era, the innovation center team invites customers to share ideas with them on R&D development (Trivedi). As a result, this has nurtured open innovation approach, allowing the company to develop innovations that fit customer needs. On the other hand, 3M institutionalizes its structure using organizational structure. 3 M's organizational structure is built on entrepreneurial development and intense R&D culture (3M 17a). 3M divides its structure into corporate research laboratories to develop emergent technologies and socialize innovations across different divisions (Dubey 2). At each division, employees at the research lab work closely with targeted users to develop products that meet user needs and specifications. In addition, developing different product lines or capabilities at the company emerges from socialization between interdisciplinary teams and users (Trivedi).

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Surname 25 Therefore, this ensures that the realization of the product's success relies on smooth communication between employees at different business units in the workplace. 3M has created open communication lines and established proper avenues for interactions. For example, 3M has built avenues, including technology platforms, social clubs, and educational opportunities offered to employees. Workplace entitlements are also equal across different levels of an organization (Dubey 2). Hence, managers at different levels receive the same style and quality of furniture, regardless of their reams and location. In addition, 3M distinguishes the management team from the workforce by ensuring the executives have an office and meeting table. The team also has the same seating styles, leading to uniformity and equality in office management. Conclusion Environmental scanning is essential in identifying competitive positions, challenges, and opportunities facing 3M. From the findings, 3M is a highly competitive company that applies innovation as the corporate-level strategy. 3M has focused on innovation to differentiate itself from its competitors. At a business level, 3M uses cost-leadership, focus, and differentiation strategies. Strategically, the three business strategies are compatible with each other. The external and internal scanning also reveals that 3M has many competitive assets, including solid financial management, strong brand recognition, a positive image, innovative culture, and other core competencies. However, there are various challenges, including weak demand prediction, high attrition rate, competition, and limited launch of new products. 3M needs to address these challenges by tapping existing opportunities, such as expanding its product portfolio, adopting predictive analysis, and investing in staff development.

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Surname 26 Work Cited 3M. "A Century of Innovation: The 3M Story." https://multimedia.3m.com/mws/media/171240O/3m-century-of-innovation-book.pdf Aizenman, Joshua, et al. The Political Economy of the COVID-19 Fiscal Stimulus Packages of 2020 . No. w29360. National Bureau of Economic Research, 2021. https://www.nber.org/system/files/working_papers/w29360/w29360.pdf Annual Report. “3M Science Applied to Life.” https://s24.q4cdn.com/834031268/files/doc_financials/2021/ar/3M_2021_Annual_Report_ Web-(3).pdf Asadzade, Peyman, and Roya Izadi. "The reputational cost of military aggression: Evidence from the 2022 Russian invasion of Ukraine." Research & Politics 9.2 (2022): 20531680221098337. https://doi.org/10.1177/20531680221098337 Bulut, Sefa, and Dilara Maraba. "Generation Z and its perception of work through habits, motivations, expectations preferences, and work ethics." Psychology and Psychotherapy Research Study (2021). http://193.140.60.133/xmlui/bitstream/handle/20.500.12154/1366/S%20Bulut.pdf? sequence=1&isAllowed=y Contrera, Jessica. "The N95 shortage America can’t seem to fix." https://www.washingtonpost.com/graphics/2020/local/news/n-95-shortage-covid/

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Surname 27 CSIMarket. "3M Company (MMM)." https://csimarket.com/stocks/compet_glance.php? code=MMM DataArt. “Blockchain-Based Loyalty App for 3M: Dataart Case Study.” Blockchain-Based Loyalty App for 3M | DataArt Case Study , www.dataart.com/clients/case-studies/blockchain-based-loyalty-app-for-3m. Dubey, Khushbu. “‘Organizational Structure and Culture of ‘the 3M Company’ – A Case Study.’” Organizational Structure and Culture of ‘The 3M Company’ – A Case Study,” www.penacclaims.com/wp-content/uploads/2018/05/Khushbu.pdf. Finance Yahoo. "3M Company," (2022). https://finance.yahoo.com/quote/MMM/profile/ Forbes Magazine. “3M | Company Overview & News.” Forbes , Forbes Magazine, www.forbes.com/companies/3m/?sh=3c162c0d4aec. Ho, Jessica Y., and Arun S. Hendi. "Recent trends in life expectancy across high income countries: retrospective observational study." Bmj 362 (2018). https://www.bmj.com/content/362/bmj.k2562.full Kary, Tiffany. "3M Faces New Cancer Claims in Minnesota's $5 Billion Lawsuit." https://www.bloomberg.com/news/articles/2017-11-20/3m-faces-new-cancer-claims-in- minnesota-s-5-billion-toxin-suit Langnau, Leslie. “3M enters the additive manufacturing industry with new material, also offers contract manufacturing.” https://www.makepartsfast.com/3m-enters-the-additive- manufacturing-industry-with-new-material-also-offers-contract-manufacturing/

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Surname 28 Lanteigne, Marc. "The spiralling effects of the Sino-American trade war." (2020). https://munin.uit.no/bitstream/handle/10037/18804/article.pdf?sequence=2 Lee, Hye-ryeon, et al. "Health professional's willingness to advocate for strengthening global commitments to the Paris climate agreement: Findings from a multi-nation survey." The journal of climate change and health 2 (2021): 100016. https://doi.org/10.1016/j.joclim.2021.100016 Morton, Fiona Scott, Kartikeya Kandula, and Karissa Kang. "Do We Need a New Sherman Act?." Colum. Bus. L. Rev. (2022): 42. https://journals.library.columbia.edu/index.php/CBLR/article/download/9979/5038 Perera, Rashain. The PESTLE analysis . Nerdynaut, 2017. https://books.google.co.ke/books? hl=en&lr=&id=ZWpLDwAAQBAJ&oi=fnd&pg=PA2&dq=pestle+analysis+marketing&ot s=Dud4qP3vLE&sig=RG2ia6RGonArqlM5FzZPlAXSzgA&redir_esc=y#v=onepage&q=p estle%20analysis%20marketing&f=false Plc, GlobalData. “3M Co Company Profile - 3M Co Overview.” GlobalData , www.globaldata.com/company-profile/3m-co/. Tank, Kevin. “Neogen CEO Touts Deal with 3M's Food-Safety Unit, Says It Improves Blockchain Innovation.” CNBC , CNBC, 15 Dec. 2021, www.cnbc.com/2021/12/15/neogen-ceo-3m-food-safety-unit-deal-improves-blockchain- innovation.html.

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Surname 29 Trivedi, Suryakant. “The Strategy That Makes 3M an Innovation Powerhouse.” The Strategy Story , 27 May 2021, thestrategystory.com/2021/05/27/3m-innovation-strategy/.

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P#240712591 Case Analysis- 3M (2022)

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