This example of a SWOT analysis of 3M is designed to help you understand how to prepare an structure a SWOT for strategic input.
Contents
Company Overview for 3M
The brand name of 3M comes from its original name of the Minnesota Mining and Manufacturing Company. It is a large, global and diversified company with its head office in Minnesota, USA.
As a conglomerate, 3M operates in the fields of electronics, security, transport, office, healthcare, manufacturing, government and others.
It is a very large organization with revenues in excess of $30 billion. 3m is commonly highlighted in marketing textbooks and case studies as being highly inventive, particularly in regards to new product development, with their development of Post-it Notes being a commonly portrayed example.
Their global operations reach more than 65 countries and they utilize a broad range of distribution channels including wholesalers, retailers and online purchases.
Link to their website:
Example SWOT for 3M
Strengths for 3M
Diversity
By operating in multiple markets and industries across the globe, 3M has effectively diversified their operations. This has the advantage of reducing cycle risks and the impact of market downturns. This provides significant financial stability and enables more accurate planning and more robust evaluation of product and market development.
Innovation
3M has a strong reputation in product innovation and heavily invests in the area of research and development. This provides the natural strategic advantage of more successful new products, more differentiated products, and greater access to new markets. And as 3M has developed expertise across a range of industry areas, their collective innovation in research and development skills can be leveraged right across the organization.
Brand equity
3M has had a long presence in the marketplace and has also built many strong individual brands. Overall they have high brand awareness and strong brand equity in the markets in which they operate. This brand equity allows them to access for channels, gain greater market share, and adopt a premium pricing approach in many markets.
Retailer relationships
Across the globe, they have established many strong distribution channels and created strong channel relationships. This strength provides them with stability, a lower cost structure, and it allows them to more successfully launch new products, continue to build their brands, and ensure good in-store placement and uptake of point-of-sale material.
Financial backing
Like many large companies, 3M has the backing of strong cash flows, profitability and reserves. This allows them to adopt a stronger market position and be engaged in innovation, market expansion, brand building and competitive actions.
Global operations
As they operate across 65 countries or so, 3M has greater sources of revenue, have more opportunity for organic growth opportunities, as well as enabling greater cross-learning throughout the organization, especially in terms of success competitive marketing strategy initiatives. In 2013, it was generating around two thirds of its revenues from outside of the United States.
Global expertise
In addition to operating across multiple countries (above), 3M have developed substantial expertise in entering new countries and markets, often setting up local manufacturing operations, sourcing local suppliers and accessing the relevant marketing distribution channels.
Weaknesses for 3M
Diversity
Diversity of operations is both a strength and weakness. It is also a weakness because it forces the organization to compete in multiple industries and markets and against multiple competitive sets. Many of their direct competitors would have the advantage over them of being industry specialists.
Multiple Competitors
3M would be face with a very broad range of competitors across many markets. While this in itself is a threat, it also represents a weakness in the way that the organization has been structured. In other words, this is a business portfolio decision of choice that has created this situation.
Lack of focus
The firm would need expertise across a whole range of industries, technologies, markets, technology developments, and so on. The end result is that they cannot focus on one particular area and would constantly have their resources stretched across these requirements.
Exposed to all environmental factors
Being across multiple markets and industries, 3M needs to proactively monitor all environmental factors and regularly adapt their strategy to suit the changing conditions. As a consequence, they would have less stability in their ongoing activities and planning.
Continual investment requirements
Being a significant manufacturer and a utilizer of technology, with a reputation for innovation and new product development, 3M would be required (from a strategic viewpoint) to continually invest in a range of development and expansion areas. This approach would have the impact of creating a higher cost structure for the organization.
Opportunities for 3M
Natural market growth
3M would have multiple opportunities across many industries. For instance, they are heavily involved in health care, security, and electronics – all of which are in growth phase in many countries.
New product development
Operating across many industries and global markets, there would be constant opportunities for expansion of the product line and targeting new consumers and business segments. This is clearly an opportunity area that 3M generally seeks to exploit.
Further market development
Although they are in over 65 countries already, there still would be other countries that they could look to enter, particularly as emerging economies obtain more purchasing power and become more financially viable in their own right.
Possible acquisitions
As a diversified organization, potentially they can enter a number of new industries via an acquisition of a major firm. Unlike a more focused firm, this strategic move would be well within 3M’s scope as a conglomerate.
Threats for 3M
Multiple competitors
3M has a challenge of competing in many markets against a whole range of competitors. This threat would be far more significant than the competitive threat faced by more specialized firms who only need to focus on one market or industry. This threat may have the impact of 3M being constantly challenged for market share by niche or specialist players.
Political issues
When operating multiple countries, there is always a risk of change in the political attitude to foreign companies. Therefore, some countries, from time to time, may represent a significant risk for 3M and its ongoing ability to do business in that location.
Currency fluctuations
This is probably a minor threat to 3M and they would probably have appropriate financial controls in place. However, significant fluctuations in currency can affect the level of profitability from operations in certain countries from time to time.
Environmental concerns
As a manufacturer across a range of industries, the shift to more environmentally-friendly manufacturing may be difficult transition for the firm or may result in increasing cost structure.
Changing technology
The speed of technology change not only impacts consumers and individuals, but it also impacts the manufacturing and supply process. The constant need to stay up-to-date with technology would have the impact of a significant cost drag and the need to regularly review to existing operations.
