says what are the strategies followed by 3M.

1. Understanding Strategy in Innovation
and technology oriented business
Team members -
MUPPANI PRUDHVI 2011C6PS665H
SAKSHI KHANDELWAL 2012A1PS428H
VALLEM VEENASRI 2012A1PS840H
SURE SAI ABHISHEK 2012A3PS242h
DURGA RAO GUNDU 2012A3PS255H

2. What is innovation ???
Innovation is the process through which economic and social value is
extracted from knowledge through the generation, development, and
implementation of ideas to produce new or improved strategies,
capabilities, products, services, or processes.

3. Key topics of focus
Developing and implementing innovation and technology strategies
Increasing organizations' capacity for innovation
Organizing innovation and research and development (R&D) effectively and efficiently
using lean processes
Identifying, evaluating and exploiting new technologies
Setting up and supporting technology and innovation networks
Intellectual property: IP for innovation
IT support for R&D, technology and innovation management

4. 3M is a diversified technology company serving customers and communities with innovative
products and services. Each of our five businesses are committed to making our customers lives
easier and better.

5. Mission Statement
“To solve unsolved innovatively”
The mission statement clearly states that the company is not just making and selling
innovative products, but it is solving the customer needs in the most innovative way.
It is this mission statement of 3M which helps in bringing the strategic objectives and
specific target performance

6. Vision Statement
3M Technology Advancing Every Company
3M Products Enhancing Every Home
3M Innovation Improving Every Life

7. Values
Act with uncompromising honesty and integrity in everything we do.
Satisfy our customers with innovative technology and superior quality, value and
service.
Provide our investors an attractive return through sustainable, global growth.
Respect our social and physical environment around the world.
Value and develop our employees' diverse talents, initiative and leadership.
Earn the admiration of all those associated with 3M worldwide.

8. Segmentation

9. Target Group
Customers using industrial packaging
Industrial users of polymer and adhesives
Users of interior designing components
Pharmaceuticals
orthodontic practitioners
users of stationeries and homecare products
computers and TV manufacturers; enterprise, military, aerospace markets
Positioning
Creativity and process Innovation in various fields

10. SWOT ANALYSIS
Strengths
Strong research and development capability with over 80,000 employees worldwide
Diversified business with over 55000 products in its portfolio
It has operations in over 65 countries and commands a strong brand name
Robust cash position and financially improving performance over the years
Its product reach through retailers and distributors is in nearly 200 countries
CSR activities for environmental benefits is a good way to enhance market position

11. Weakness
Environmental issues and litigations have sometime affected the image
Being a market leader, any mistake hurts the brand image world over

12. Opportunity
Acquisitions to strengthen existing businesses
Automotive industry on road to recovery would mean more business
More global presence through tie-ups and diversification in businesses can lead to
more growth

13. Threats
Unfriendly environmental regulations and strict government policies can affect
position
Intense competition can lead to loss of market share
Risks associated with conducting business outside the US

14. Sales of 3M

15. Porter’s Five forces Model
Threat of
New
Entrants
Industry
Rivalry
Power of
buyers
Power of
suppliers
Threat of
Substitutes

16. Business Description
MAIN INDUSTRY
New Technology Development
6 SUB INDUSTRIES:
Health Care
Industrial and Transportation
Display and Graphics
Consumer and Office
Electro and Communications
Safety, Security, and Protection services

17. Threat of New Entrants
Main Industry LOW
As the Capital investment is very high most of the new entrants can’t
afford such large amounts.
Sub Industries HIGH
As these industries are segmented industries other industries which
are focused as well as well equipped firms will have a significant
probability of entering the market which makes the intensity at high
level for example a retailer may sell the product at relatively low price
than 3M

18. Power of Buyers
Main Industry LOW
Sub Industries LOW
As 3M produces innovative products the customers are ready to pay premium prices
which makes the power of buyers low in both industrial cases.

19. Power of Suppliers
Main Industry LOW
As 3M provides a huge investment on R&D and also has a large possibility of buying
raw materials from various suppliers the power of the suppliers here is low
Sub Industries LOW
As these industries are segmented industries it has various inlets from the suppliers
which makes the power of suppliers here low

20. Threat of Substitutes
Main Industry LOW
Competition based on new product development
As 3M has the best innovation and provides expenses in R&D and there are few who do that
at large scale the threat is low
Sub Industries HIGH
Competition based on Commercialization
As sub industries are segmented industries the local level retailers have a edge over the 3M
as they can provide more focused products that satisfy customer needs so the threat of
substitutes is high at the low level.

21. Intensity of Rivalry
Main Industry LOW
Sub Industries MODERATE
Competitors
Honeywell
General Electric
DuPont
Johnson & Johnson

22. Open Innovation at 3M
Idea Generation Selection Execution Commercialization
Ideas and
innovations
from inside the
organisation
patents and
innovations
from outside the
organisation
Select
Successful
Ideas
Prototypes
and
Production
IP
Licensing
IN
IP
Licensing
OUT
Product
brought
to market
Technology
Spin-offs
Develop
New ideas
Technology
Licensing
IN

23. Internal Analysis – Resource Based View
3M’s core competency and capabilities are due to its valuable tangible
and intangible resources
3M has an excellent intangible resources which lead the company to
scale greater height today
3M has a wonderful organizational culture which develops the
innovative skills of an employee as well as entrepreneurship
capabilities
The effective functional strategies help the firm to create best and
innovative products
As there is a saying” innovation is distinguished from invention by the
fact that innovation is usually applied successfully in practice.”

24. Intangible Resources of 3M
HUMAN CAPITAL
Professional Development
New skills and Knowledge
Commitment
Collaborativeness
ORGANIZATIONAL CAPITAL
Business Philosophy - ” Never kill
a new idea, even if it looks like a
foolish one”
Decision making and working style
Institutionalized knowledge

25. Intangible Resources of 3M
RELATIONAL CAPITAL
Company – Stakeholders
Relationship & Trust
SYMBOLIC CAPITAL
Reliability
Trustworthiness
Image and reputation

26. Capabilities and Products

27. Core-Competency
We can consider that 3M’s entrepreneurial culture is its core competency, since 3M
has been consistently heralded within both the scholarly and practitioner
communities as a model for entrepreneurial development.

28. Firms with entrepreneurial cultures out-perform their competitors
which has five dimensions:
Autonomy – Employees are encouraged to make a business case to their proposal and
compete for their share of organizational resources. 3M’s is often viewed in the academic
literature as a good example of how autonomous employees can add value to a company.
Innovativeness – Management embraces the development of new products.
Proactiveness – Research and Development is a driving value within the organization
Competitive aggressiveness – The company is willing and sometimes eager to engage the
competition.
Risk taking – There is a systematic internal process in place to delineate ideas from
opportunities

29. 3M’s Approach
ENTREPRENEURIAL APPROACH
15 Percent Option
30 Percent Rule
Seed Capital
Tolerance for Failure
Rewards for Success
R&D Spending
DESCRIPTION
Certain employee encouraged to spend up to
15% of their work week initiating and
developing projects of their choice.
30% of business unit revenue should come
from products introduced within the last four
years
Revenue provided for promising ideas
Failed projects will not negatively affect an
employee’s job
Employees and departments receive financial
rewards if their products reach sales goals.
3M spends 6-7% of sales on R&D investments

30. Value chain analysis
Of 3M

31. Value chain analysis

32. Strategic decisions in the value chain

33. Resources Vertical
integration
Economic
s of scale
Economics of
scope
Location Linkages
Product design and
development
↑
(R&D)
_ _ ↑
(R&D
management)
_ Marketing
after sales
Supply ↑
(employees and
patents)
outsourced _ ↑
(ideas)
_ Product design
development
Operation _ outsourced _ _ ↑
(as it is
outsourced)
Product design
after sales
Marketing and sales ↑ (promotional
activities)
both _ ↑
(same website)
_ product design
development
After sales service ↔ _ _ _ _ product design
development
Human resources _ _ _ _ _ Operation
Infrastructure ↑
(R&D enhances
IT)
_ _ _ _ Strong with all

34. Open Innovation at 3M
Idea Generation Selection Execution Commercialization
Ideas and
innovations
from inside the
organisation
patents and
innovations
from outside the
organisation
Select
Successful
Ideas
Prototypes
and
Production
IP
Licensing
IN
IP
Licensing
OUT
Product
brought
to market
Technology
Spin-offs
Develop
New ideas
Technology
Licensing
IN

35. PRODUCTS & SERVICES
Our inspiration comes from listening to customers and creating new products and
solutions for the challenges and opportunities you face.
Displays & Graphics
We’re a world leader in films that brighten the displays on electronic products, such as
flat-panel computer monitors, cellular phones, PDAs, and LCD televisions.
Manufacturing & Industry
Our innovative products and services help manufacturers improve their businesses.
With a global network, we meet needs of both multinational and local customers.

36. Electronics, Electrical & Communications
3M is a leading supplier of innovative solutions to the electrical, electronics, and
telecommunications industries.
Office
We 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.
Safety, Security, and Protection
We produce products that increase the safety, security, and productivity of workers,
facilities, and systems around the world.

37. 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.
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.
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.

38. Operation
From that factory, the work-in-process was shipped 600 more miles to Minneapolis,
where a contractor applied the 3M logo and the WIP was sliced into the right sizes.
From there, another 200 mile trip to a contractor that added the hooks and did the
final packaging. 1300 miles of supply chain travel in total for a product that just sells
for a few bucks

39. Linkages
Also in developing products, researchers collaborate with Sales and Marketing to
identify customer needs and then often to work with customers in the development
process

40. Shop3M.com

41. usefulness of the features provided
convenience of the features on this site
number of clicks to get where you want on this site
how quickly pages load on this site
If you heard about this website from a social network, please specify the site (i.e.
Facebook, Twitter)
Which best describes your role in visiting this site today?

42. Business level strategies

43. Market Segmentation
Market Segments
Display and Transportation
Graphics
Health
Care
Office Govt. Safety and
security
Electrical Manufacturi
ng and
industry
Work and
leisure

44. Cost leadership strategy
Another common business level strategy that the 3M Company is using is relative cost
leadership not an absolute one.
It could be asked as a controversial question why 3M has no absolute cost leadership
with this big size and global presence.
The answer is because the Company has a diversified business in at least six different
areas and to be a cost leader in all of those markets is a big deal therefore, 3M has
relatively low cost in any of the businesses .

45. Differentiation Strategy
Being the top most innovators in the world.. They follow some of the
innovative strategies :
Rule of 15% : “At 3M we live by our wits”. Rule in R&D , to
spend 15% of lab time in research of your
choice. Increases innovation speed.
25/5 rule : financial strategic decision. 25% of the company
profits should come from products that are 5 years
old.

46. 30/4 rule : 25/5 rule revised. Now 30% of the profits should
come from products 4 years old. Done to increase
innovation at faster speed.
7 percent rule : from every 1 dollar sales, 7% will be spent on
R&D . Which gives 28% more sales due to
large spending on R&D.

47. Awards and Recognitions
The work of outstanding technical employees is recognised by the 3M Carlton Society,
this is voted on by peers.
Employees that create products which sell $4 million or more are awarded the
prestigious Golden Step Award
Employees have a choice to work on a management or laboratory career ladder, no
employee is forced to take a management role if they don’t wish it

48. Focused Differentiation
America Europe Middle East
& Africa
Asia & pacific

49. Strategic Groups
3M being the leader in almost every industry, has some of the major competitors :

50. Mature Industry
•3M is definitely in the Mature phase of industry life cycle. It
launches products in various areas every year and also
simultaneously remove the unwanted products in the market.
•Innovative Products : able to persuade consumers to pay for
benefits. The ability to do so usually depends on the products
they sell.
•Brand loyalty : they have been working and giving innovative
products back to back . Which has imbibed them as brand in
minds of costumers.
•Using IT and Internet : shop3M. com
Fragmented
Industry turned to
consolidated

51. Deter entry to rivals
Product proliferation : being in almost every sector of the world like automation,
electronics, healthcare, finance etc. It has filled all the niches available to it by
launching diverse products in every area.
Maintain Excess capacity : To survive in industry, they need to produce in bulk. So
they produce their products in bulk so as to prevent rivals to get a place in the
industry.

52. Non- Price Strategies
Product Development: involves creation of new products to existing markets. For eg:
taking adhesives in manufacturing industry it started with masking tapes, spray
adhesives, sealants and many other products.
Market Development : as an example focusing on adhesives in manufacturing
industry, they diversified their products to sticky notes, glues which could be used by
students and general public

53. Corporate Level Strategies
Corporate level strategy concerns how a diversified company intends to establish
business position in different industries and the actions and approaches employed to
improve the performance of the group of businesses of the company

54. Decisions at Corporate level

55. Cross Business Fit of 3M
3M was Initially only into abrasive and tape business.
Slowly they started to make products from altogether different sector but the only common
thing was all products needed innovation.
The common thing innovation acted as the fit for their business. Thus, 3M kept on
increasing products into their product portfolio which required innovation.
To do this effectively they converted 3M into a diversified organization with 6 different
divisions.

56. Size of diversification
3M didn’t 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. Thus they limited their diversification into 6 major business classes.

57. Unrelated Diversification of 3M
The businesses in which 3M diversified were not related to each other in many ways
but were common in certain aspects , i.e. all products made were made based on the
needs of customers which were unmet and meeting those needs required innovation.
3M has 6 major businesses which are not related to each other.
They have different departments to take care of each unit.
The 6 businesses are further divided into more than 35 units which take care
of different brands and product lines.

58. Geographic expansion
3M has vast a geographical expansion.
It operates in more than 65 countries having 75,000 employees worldwide and
6,700researchers contributing to the R&D of the company with their innovations.

59. Strengthen Position in Existing Business By
3M
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 level but the corporate policy is clear
that there has been strengthening of the existing business.

60. Positioning in New Industry
In 3M the decision of acquisition to enter a new industry is taken care at the business
level and not at the corporate level.
This is because of the reason that 3M believes that no one can understand their
business better than the division itself. And thus they know what acquisition they
should go for.
The decision is strictly taken on the basis of whether 3M already 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

61. Diversification in weak and unattractive
business
This decision, at 3M, is again taken at the division level. If the technology in certain
business is out dated and is of no use to 3M they will divest in that business and go
for a new one. This strategy helps them to think only about the new things to bring in
and not to ponder over a business not looking good in future

62. Global Level Strategies
Of 3M

63. Localization
Localization is The Key Strategy To Penetrate And Grow In International Markets
3M enters new international markets by exporting its products to that market.
it focuses on localization of the supply chain by using locally sourced raw materials, to
manufacture products in local plants and selling through local distribution channels.
Identifying and developing products to cater to local requirements has also helped
3M increase its presence in global markets.

64. Efficiency By 3M Consolidated Supply Chains Help Increase Efficiency And Bring Down Costs
3M has deployed 'Supply Chain Centers of Excellence' globally to help
consolidate and manage its supply chain with a regional focus rather than
country by country.
promote better management of manufacturing & engineering activities and
the distribution channels in a more effective way.
As a result, there are improvements in working capital requirements,
overhead costs and tax rates.
Switzerland, Singapore and Panama that cater to EMEA, Asia-Pacific and the
Americas respectively.
These centers have integrated and dedicated Enterprise Resource Planning
solutions like SAP to maximize productivity and efficiency within the region.

65. 3M in developing and developed
Markets
3M's Wide Range Enables It To Establish Presence In Developing And Developed
Markets
3M has a wide range of products that can cater to every phase of a markets'
economic growth.
Developing countries are more focused on infrastructural growth and manufacturing
operations, whereas developed countries purchase more consumer and healthcare
goods.
In 2012, developing markets contributed 39% to revenues in 3M's Industrial, Safety &
Graphics, and Electronics & Energy Businesses, and 20% in the Consumer and
Healthcare Businesses.

66. The bottom line Statement of 3M
“ Research is the transformation
of money into knowledge. “
“Innovation is the transformation
of knowledge into money.“

67. THANK YOU 