3M is a company that is known for its innovation. They were founded in 1902, and since then has grown to become a global leader in a number of industries.
In this blog post, we will be performing a SWOT analysis on 3M in order to assess their strengths, weaknesses, opportunities and threats in 2022.
Overview of 3M:
3M is a publicly-traded company based in the United States with operations in 60 countries and revenues of $32.18 billion USD in 2020. 3M employs over 94,000 people worldwide and has a history of strong financial performance.
The company operates in six business segments:
Each segment has a different focus, but all of 3M’s businesses are based on the same core competency: innovation.
Since the founding of 3M, the company has been committed to innovation. 3M’s culture of innovation has led to the development of over 55,000 products, including such well-known brands as Scotch tape and Post-It notes.
Innovation is 3M’s lifeblood, and it has allowed the company to continue to grow and prosper for over a century.
3M SWOT Analysis from An Independent Viewpoint
Strengths of 3M
3M Company is one of the most prominent businesses in the sector, with a number of advantages that help it develop within the market. These internal elements assist to safeguard market share for the firm.
Here are some strengths of 3M Company –
- Mergers and Acquisitions (M&A) – It has a solid track record of combining compatible businesses through acquisitions and mergers. It has successfully integrated a variety of technology businesses in recent years to improve its efficiency and establish a solid supply chain.
- Strong Dealer Community – Distributors and dealers market the firm's items and conduct sales training so that customers may understand how to make the most of them.
- Skilled Workforce – The skilled workforce is developed through effective training and learning programs. 3M is devoting significant resources to the training and development of its team and employees, resulting in a highly qualified and motivated staff that is ready to achieve great things.
- Good Returns on Capital Expenditure – The firm enjoys a long-term revenue model with decreasing costs and an increasing consumer base. The company is doing quite well in terms of the execution of current projects and has delivered good returns on capital investment through the growth of new sales streams.
- Powerful Brand Portfolio – 3M Company has been developing a strong brand portfolio for the past three to four years. This is simply another example of how 3M Company's SWOT analysis validates this. If a business wishes to expand into new product categories, this brand portfolio may be quite helpful. The 3M firm has a strong reputation and excellent brand quality in the market.
- Finance and Distribution – 3M Company has strong free cash flows, which provide the company with the financial flexibility to expand into new projects. 3M Company has established a solid distribution channel over the last several years, allowing it to service most of its potential customer base.
Weaknesses of 3M
Weaknesses are internal factors recognised throughout the study of SWOT. 3M Company has a few weaknesses that should be noted.
- Days inventory – This is greater than the competition, allowing the business to invest in the channel and raise more money to put into it. This has a long-term negative impact on the industry leader.
- Demand Prediction – The firm's ability to anticipate product demand is poor, resulting in a significant number of missed chances versus its rivals. One of the most significant reasons for today's inventory being higher than that of competitors is 3M Company's poor demand forecasting, which results in excessive stock accumulation both in-house and through distributors.
- Research and Development Investment – Despite investing more in research and development than the industry average, 3M Company is unable to keep up with the sector's top innovators.
- High attrition rate – In comparison to other firms in the field and market, 3M Company has a higher attrition rate, and it must invest more money in the training and development of its workers than its rivals.
Opportunities for 3M
These are things that are beneficial to the brand's public image and sales but don't have anything to do with the company itself. For all businesses, recognizing and pursuing prospective possibilities is a must.
Following are opportunities 3M is presented with –
- New environmental policies – The introduction of new environmental possibilities will provide a level playing field for all the industry's competitors. It appears to be an excellent chance for 3M Company to take advantage of new technology and expand its market dominance in the new product category.
- Product Portfolio Expansion – The success of a firm's competencies in adjacent sectors may provide insight into its prospects. For example, GE healthcare research proved beneficial in the design of improved oil drilling equipment.
- Rising Technology – The ability of 3M Company to practice a unique pricing approach in the new market is made possible by the new technology. It will allow the firm to provide exceptional service to its existing customers and attract new ones through additional value-added terms.
- Reduction in transportation costs – When the cost of transportation is reduced as a result of cheaper shipping, the cost of 3M Company's goods can be lowered, providing a chance for the firm to improve profitability or spread expenses to customers in order to gain significant market share.
Threats to 3M
Finally, in the 3M Company's SWOT Analysis, we look at the company's Threats. These are circumstances that could harm the company's structure, prospects, and long-term strategies.
Following are some of the major threats 3M is exposed to –
- Nation Specific Laws – Given the impact of changes in policy in those countries, 3M Company may be subject to various responsibility and compensation laws and claims.
- Lack of new products – 3M has produced a number of goods in recent years, but they are frequent responses to the development of rival firms. When new items aren't being delivered on a regular basis, causing significant and little swings in sales over time.
- Isolationism – The growing isolationism in the American economy has the potential to induce similar behaviours from other governments, which is bad news for global sales.
- Inflation – 3M Company is also highly susceptible to inflation as the prices of its products have a direct correlation with the costs of production.
By understanding 3M's strengths, weaknesses, opportunities, and threats, we can see that the company is in a good position to take advantage of new environmental policies, product portfolio expansion, rising technology, and reduction in transportation costs.