3m Corporation

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CASE #4: 3M Canada: Industrial Business Division

PROBLEM RECOGNITION

* The target is to increase growth rate from 3-5% to 12-15% in 18 months * OEM market is mature with limited prospects of expansion * Ultimately shifting overall focus from OEM market to MRO market * High unfamiliarity and low exposure to the MRO market

* IBD’s share of distributor sales was 2% of distributors’ revenue * Transitioning focus from Special and Niche accounts to Large National accounts * OEM is a volatile customer group influenced by the economy and inflation

SITUATIONAL ANALYSIS

Strengths:
* Highly diverse product line and product development serving the industrial markets (seven divisions) * Continuous net income growth of $3.324B in 2005, $2.990B in 2004, and $2.403B in 2003 * Diversified geographic presence and product specialization – over 69,000 employees, companies in over 60 countries, and plants in 139 locations world wide * Strong R&D orientation helped grow the Special and Niche categories * Strong operational efficiencies as sales growth is increasing with declining costs of sales

Weaknesses:
* Maturity of focused segment (OEM) has gradually resulted in low sales performance * IBD sales model was highly product/division centric lacking customer specialization * Emotional and cultural disconnection to the 3M brand and lack of unity between business managers and frontline sales-force * 3M policy discourages lateral inductions and external hiring thus only taking people only at entry levels and promoting from within

Opportunities:
* Growing core business – progressively increasing investments with $272M in 2005 from 2004 ($227M) and 2003 ($218M) * Pursuing acquisitions to expand current product portfolio (I.E. acquisition of Cuno Incorporated in the U.S.) * Concentrating on emerging business opportunities (I.E. Large National accounts presenting most-versed qualities) * Doubling...
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