3MCompanyProfile_McConnell

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3M Company

Profile Jennifer

McConnell

Blue Group

BUS112

12/4/13

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Table of Contents

Industry Survey Overview 3

5 year plan

Corporate Overview 3

History

Company Values (4)

Company Facts 4

Marketing Strategies 5

Products and Services (6)

Target Markets

Industry Position

Pricing

Marketing Materials

International Business 6A

SWOT Chart 7

SWOT Analysis 7

Corporate Culture 9

Corporate Social Responsibility 9

Stocks 10

Current News 12

Final Analysis 13

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Industry Survey Overview

3M (MMM on the NYSE) categorizes itself into six sections: Industrial and

Transportation, Health Care, Display and Graphics, Consumer and Office, Electro and

Communications, and Safety, Security and Protection. In 3M’s future, new product

launches and a rising demand of renewable resources are some of their opportunities

for growth. Changing technology and governmental regulations prove to be threats for

3M. 3M also has to be weary of the economy, and monitor changes in the tastes of its

consumers (3M Company Snapshot).

Five year plan

3M has planned to grow its earnings by nine to eleven percent in the next five

years. I t plans to do so by getting involved in developing markets, focusing on the

industries it’s in, like mining and energy, increasing its research and development

budget, and having market share in already developed markets. 3M wants to have an

“average worldwide industrial production growth of 3-4% per year from 2013 to 2017.”

3M expects its organic sales to increase between four and five percent each year over

the next five. 3M also plans to increase organic sales by buying other companies. I t

plans to spend between one and two billion dollars a year on acquisitions (Trefis Team).

Corporate Overview

History of 3M

3M started out as a sandpaper manufacturer, the Minnesota Mining and

Manufacturing Company, which almost went bankrupt multiple times due to raw

materials and huge competition. The business, started in 1902, was failing in 1905, when

two investors paid off debt and invested in the company. They were determined to

make 3M work. They, Edgar Ober and Lucius Ordway, moved the company from Two

Harbors, Minnesota to Saint Paul, Minnesota by 1910. 3M eventually became involved

with Henry Ford, creating a sand paper that could withstand the friction caused by

Ford’s assembly lines. Next, a water proof and dust-free sandpaper was invented. 3M

boomed. In the 30s, 3M workers found a way to combine an adhesive to clear

cellophane or as we know today, transparent Scotch tape. Scotch tape helped 3M

grow, even during the Great Depression. Clientele shifted from production facilities to

supplies store after the invention of a portable tape dispenser. During WW11, 3M

focused on understanding markets, rather than shifting production to that of war

materials. Bonds were offered in 1947, and stock was offered starting in 1946. In the 50s,

3M focused on research and development when most other companies hadn’t started

yet. The 60s, 70s and 80s were filled with ups and downs. During the 60s, 3M continued

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to grow, but in the 70s, there was controversy involving a slush fund that funded Nixon’s

campaign. The 80s produced the Post-I t Note. The 90’s brought difficulties-3M wasn’t

producing enough new products fast enough. Foreign sales comprised half of the

company’s sales in 92, for the first time ever. In 1996, 3M reconstructed, to get rid of the

Information, Imaging and Electronics division- it was losing too much money on that

section of production. 3M also cut audio and v ideotapes. By the late 90s, 3M

reconstructed, again, into six categories- focusing more on higher technology areas. In

the early 2000s, 3M made an effort to become more efficient and cut costs and began

to let its employees work on independent projects. In 2002, 3M was officially named

“3M Company,” taking its nickname on as its formal name. In 2003, 3M reconstructed to

bring its scientists closer to its consumers. In ’05, 3M acquired CUNO, a purification

company. I t sold its pharmaceuticals div ision in 2006, and in 2008, 3M purchased Aearo

Holding Corporation, a manufacturer of safety products. 2008 had a huge impact on

3M-while business still grew, it did not grow as much as prev ious years. In 2010, 3M

decided to increase its R&D budget to grow through product development. At the end

of 2010/beginning of 2011, 3M purchased Cogent Inc., a security identifications system

(3M Company Snapshot).

3M was founded in 1902 and its trademark is “3M.” The current CEO is Inge G.

Thulin and people on the board of directors include Linda Alvarado, Thomas Brown,

Vance Coffman, Michael Eskew, James Farrell, Herbert Henkel, Muhtar Kent, Edward

Liddy, Robert Morrison, Aulana Peters, and Inge Thulin. There are 87,677 employees, with

2,200 employed by Cogent and almost 500 employed by CUNO. 3M’s NAICS codes

include Coated and Laminated Paper Manufacturing (322222), Stationery, Tablet, and

Related Product Manufacturing (322233), Plastics Material and Resin Manufacturing

(325211), All Other Rubber Product Manufacturing (326299), Telephone Apparatus

Manufacturing (33421), Appliance and Supplies Manufacturing (339113), and Dental

Equipment and Supplies Manufacturing (339114). 3M’s headquarters are located in

Saint Paul, Minnesota, with subsidiaries located in Pasadena, California and Meriden,

Connecticut. The corporate website is www.3m.com (3M Company Snapshot).

Company Values

Behave with complete honesty and integrity in everything done.

Meet customers’ needs with advanced technology and the best quality, value

and serv ice.

Through sustainability and world growth, give customers an attractive return.

Respect the environment, both socially and physically around the globe.

Value employees, and help to develop their strengths-having initiative and being

leaders.

Earn the approval of everyone that is associated with 3M globally.

(About Us: Who We Are)

Company Facts

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2012

Sales

Worldwide … ….. 29.904 billion

International … … .. 19.376 billion – 65% of 3M’s total sales

Net Income

NI … ….. 4.444 billion

Percent to Sales … … .. 14.9 percent

Earnings per Share – diluted … ….. 6.32

(Corporate Profile: 3M Performance)

2011

Sales

Worldwide … ….. 29.611 billion

Net Income

NI … ….. 4.283 billion

Earnings per Share – diluted … ….. 5.96

(2011 Annual Report)

Overall, 3M has done well the last five years. There was a dip in net sales during

2009, as a result of the 2008 bank fiasco. 3M has recovered well though, increasing sales

by 4 billion dollars since 2008.

In 2012, Inge Thulin came to be the President and CEO of 3m, after George

Buckley, former President and CEO, decided to “close the chapter” of his career with

3M (2011 Annual Report).

Marketing Strategies

Products and Serv ices

3M is considered to be in the conglomerate sector. It offers products in the fields

of industrial and transportation, health care, display and graphics, consumer and office,

electro and communications, safety, security and protection. Most of the company’s

products “involve some form of coating, sealant, adhesive, film, or chemical additive

that increases the product’s overall functionality and usability for customers.” Some of

3M’s products include “pressure sensitive tapes abrasives, specialty materials, filtration

products, energy control products, supply chain management software and solutions,

insulation components, films, masking tapes, fasteners and adhesives (3M Company

Profile: Business Summary).”

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3M manufactures and sells “pressure-sensitive tapes, abrasives, adhesives, specialty

materials, filtration products, energy control products, supply chain management

software and solutions, insulation components, films, masking tapes, fasteners and

adhesives,” “optical films for LCD electronic displays, computer screen filters, reflective

sheeting, commercial graphics sheeting, architectural surface and lighting solutions,

mobile display technology,” and serves” medical and surgical, pharmaceutical, dental,

health information systems and personal care, with a variety of medical and surgical

supplies including infection prevention, pharmaceutical, drug delivery systems, dental,

personal care(3M Company Profile: Business Summary).” Manufacturing occurs all over

the United States, with multiple locations in California, Connecticut, Georgia, Indiana,

Minnesota, Michigan, Massachusetts, North Carolina, Ohio, Texas, and Wisconsin, to

name just a handful. There are almost 90 locations that produce or manufacture 3M

products.

Target Markets

3M’s main markets are the United States Military, outdoorsmen, exterior workers,

and families (Pratik).

Industry Position

3M’s fortune rating is 101. Some of 3M’s major competitors are Johnson&Johnson,

Dupont, Bayer AG, Kimberly-Clark, GE, and Honeywell among others (3M Company

Snapshot).

Pricing

Scrolling through Google’s Shopping tab shows that prices start at 5 cents for a

“Bumpon” and can go up to $12,735 for a “Re/Desensitizer Staff Workstation”.

Depending on what a customer is looking for, is what the price depends on.

Marketing Materials

3M offers a variety of promotional materials. Included are pens with business

names on them, Post-I t note cubes, poster papers, and pop up dispensers.

(3M Promotional Markets)

SWOT Chart

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Strengths Improved Operational Performance

Product Innovation

Business Diversity

Weaknesses Declining Profitability Ratios

Legal Proceedings

Opportunities Growing Aged Population

Rising Demand for Renewable Energy

Sources

New Product Launches

Threats Changing Technological Trends

Competitive Landscape

Government Regulations

SWOT Analysis

Strengths

-Better Operating Performance:

Revenues increased, as did the net income and operating income. This can be

attributed to a growth in 3M’s industrial and transportation section, safety, security and

protection section, and health care section. Better operating performance would boost

3M’s market position and help to grow its business.

-Product Innovation:

3M can increase its competitive advantage and better its brand equity by

devoting resources to research and development. By focusing on technology

improvements, 3M can work to introduce new products and improve existing products

to its markets, allowing it to be a front runner in its sectors.

-Business Diversity:

3M works in many different sectors, allowing it to diversify. I t runs six segments:

Consumer and Office, Display and Graphics, Electro and Communications, Health Care,

Industrial and Transportation, and Safety, Security, and Protection. Because 3M

operates in many different segments, it can be a worldwide brand, and increase sales

and profit margins. 3M sells its products in over 200 countries, and has room to grow.

Weaknesses

-Decreased Ratio of Profitability:

3M’s profit margins have decreased in recent years. Gross margin decreased by

1.1%, the net profit margin decreased by .9%, and the operating margin decreased by

1.4% in 2011. This was caused by an increase in operating costs of 1.4%. These

decreases mean that 3M didn’t not take full advantage of the growth of 2011.

-Legalities:

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3M has been involved in many legal battles which could hurt the company’s

reputation. Lawsuits involve product liability, commercial claims, and intellectual

property issues. Some lawsuits have been brought forth by anti-trust laws and

environmentalists. They have been dealing with lawsuits arising from masks and

respiratory products, and even though these sorts of lawsuits are to be expected, they

are bad for the company’s reputation.

Opportunities

-Growing Population of Older Generations:

The number of people reaching age 60-65 is increasing, and those people are

going to need medical treatment. The United Nations Population Div ision estimates that

the number of people aged 60 or older will reach 2 billion by 2050 and will account for

22% of the world’s population. The population growth of elderly increases at a rate of

2.6% every year, with the expectation that it will grow in the next seven years in

developed countries like the US, the UK, France, Germany, and Japan. The increased

medical needs of the elderly prov ides a great opportunity for the growth of 3M.

-Increased Demand for Sources of Renewable Energy:

Recently, 3M dipped its toe into the renewable energy market, to try to protect

the environment and reduce the effects of greenhouse gases. Because future energy

could mostly be provided using solar power generators, 3M has already began

producing solar, wind, geothermal, and biofuel solutions to decrease the cost of

renewable energy. 3M’s products, such as films, tapes, coatings, etc. help manage loss

of energy, improve productivity, and help the environment. This prov ides the possibility

of growth for 3M.

-New Products:

Putting new products on the market can have the possibility of attracting new

customers and keeping usual customers around. 3M has produced several new

products in the last several years that grab new customers’ attention and bring back

existing customers. Because 3M can adapt, and produce new products, there is room

for growth.

-Acquisitions:

3M has expanded in recent years by buying existing business. By doing so, 3M

can expand its knowledge base and experience, while also working to provide more

products to its customers.

Threats

-Ever Changing Technology:

Because technology is always changing, keeping up can be difficult, especially

because 3M works in many different markets. 3M must introduce innovative products

and technologies, and update current products to meet their markets’ demands.

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Doing so could have a negative financial impact on the company, by devoting money

and time on products that might not satisfy customers.

-Competition:

3M works in many different markets, and is not specialized in just one. Other

smaller companies that are specialized in one market may be better able to keep up

with the demands of their markets.

-Government Regulations:

3M must comply by local, state, federal, and foreign laws, along with the FDA,

DEA, NRC, and the Department of Health and Human Serv ices to name a few. By not

following the standards set, or by not getting the right licenses, or permits, the company

could be negatively affected.

-Slow Economy:

The economy is still recovering from the crisis of 2008 and the world’s economy is

projected to grow just by 2.5% in the next year. Although the US is starting to do better,

the rest of the world is still recovering. Because the economy is unpredictable,

consumer’s spending habits are different, and can decrease the profit margins of the

company.

(3M Company-Financial and Strategic Analysis Review)

Corporate Culture

At 3M, what is sold is just as important as what the company stands for. 3M has

operated for over a century based on honesty and integrity. In 1988 3M introduced its

first code of conduct, which is still found in its Business Conduct Policies today. The

policies intact today are backed by the honesty and integrity that started 3M. Hpnesty

and integrity define everything that 3M does (Corporate Profile: Business Conduct).

Corporate Social Responsibility

3M does not pride itself just on its financial performance, but on how it runs its

company as well. 3M was one of the first manufacturers to discuss solutions to

environmental issues. Those solutions came from its employees, creating the Pollution

Prevention Pays program. Running a socially responsible company is an ongoing

process. 3M doesn’t just want to improve sales year after year, 3M wants to protect the

environment through sustainability. I t is 3M’s vision to aid in sustainable development

through protecting the environment, being socially responsible, and making economic

progress. 3M aims to satisfy customers and have success according by having social,

economic and environmental values. 3M’s social values include making lasting

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relationships with customers by having simple, easy solutions to their challenges. 3M’s

environmental values are to deliver practical answers to environmental questions and

obstacles, not only for customers but for the business itself. 3M is socially responsible by

getting its stakeholders involved, and moving to improve 3M’s sustainability (About US:

Corporate Responsibility).

CSR Activities

Just recently, 3M set aside $100,000 to help in the Philippines, where Typhoon

Haiyan hit. The money will be split between the American Red Cross and CARE. 3M

Philippines is encouraging volunteers, matching employees’ donations, and getting

products ready to be donated before relief organizations ask for them.

3M also worked with teens to set up an online science website for teens. Sparticl

is a free website where teens can, in a way, “google” anything about science. 3M is

working to add new articles and sections of interest every day. Sparticl is updated by

experts and is made sure to be a safe online environment for teens (3Mgives).

3Mgives

3Mgives is a portion of 3M that gives back. I t consists of monetary gifts, donation

of goods, and encouraging employees, both present and past, to volunteer. 3Mgives is

involved in education, communities where they do business, and in environmental

programs. 3Mgives donated almost 57 million dollars, cash or products, to American

educational programs and charities in 2012 alone (Corporate Profile: 3M Performance).

Stocks 3M

MMM S&P 500 NYSE

Date Open High Low Close Volume Adj

Close* $

change %change

23-Sep-13 $120.43 $121.47 120.37 121.11 3,468,500 121.1 $0.68 0.56%

24-Sep-13 $121.24 $121.87 120.69 120.8 3,528,100 120.8 -$0.44 -0.36%

25-Sep-13 $120.89 $121.21 120.17 120.2 2,173,400 120.2 -$0.69 -0.57%

26-Sep-13 $120.60 $121.00 119.92 120.66 2,240,900 120.66 $0.06 0.05%

27-Sep-13 $119.97 $120.30 119.26 120.22 2,028,100 120.22 $0.25 0.21%

30-Sep-13 $119.39 $119.96 118.67 119.41 2,104,700 119.41 $0.02 0.02%

1-Oct-13 $119.69 $119.82 118.8 119.62 1,854,800 119.62 -$0.07 -0.06%

2-Oct-13 $119.13 $119.59 118.44 119.2 2,056,500 119.2 $0.07 0.06%

3-Oct-13 $118.71 $119.11 117.89 118.55 2,525,800 118.55 -$0.16 -0.13%

4-Oct-13 $118.37 $119.71 118.13 119.4 1,983,700 119.4 $1.03 0.87%

7-Oct-13 $118.56 $119.27 118.28 118.69 1,931,200 118.69 $0.13 0.11%

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8-Oct-13 $118.72 $119.22 117.1 117.16 2,869,000 117.16 -$1.56 -1.31%

9-Oct-13 $117.27 $117.96 116.65 117.57 2,499,200 117.57 $0.30 0.26%

10-Oct-13 $118.60 $119.34 118.32 119.34 2,688,800 119.34 $0.74 0.62%

11-Oct-13 $119.16 $120.77 118.39 120.72 2,492,700 120.72 $1.56 1.31%

14-Oct-13 $120.26 $121.70 120 121.4 1,866,800 121.4 $1.14 0.95%

15-Oct-13 $121.28 $121.38 119.79 119.82 2,720,500 119.82 -$1.46 -1.20%

16-Oct-13 $120.86 $120.94 120.14 120.94 2,602,800 120.94 $0.08 0.07%

17-Oct-13 $120.74 $122.87 120.71 122.62 2,791,700 122.62 $1.88 1.56%

18-Oct-13 $122.87 $123.45 122.4 122.84 2,590,500 122.84 -$0.03 -0.02%

21-Oct-13 $122.79 $123.31 122.68 123.25 1,747,400 123.25 $0.46 0.37%

21-Oct-13 $122.79 $123.31 122.68 123.25 1,762,200 123.25 $0.46 0.37%

22-Oct-13 $123.36 $124.32 123.28 123.8 2,053,500 123.8 $0.44 0.36%

23-Oct-13 $123.43 $123.73 122.5 123.2 2,337,500 123.2 -$0.23 -0.19%

24-Oct-13 $122.96 $124.96 122.7 123.49 3,851,100 123.49 $0.53 0.43%

25-Oct-13 $123.05 $124.46 122.87 124.42 2,054,300 124.42 $1.37 1.11%

28-Oct-13 $124.13 $125.32 123.8 124.92 2,358,400 124.92 $0.79 0.64%

29-Oct-13 $125.08 $125.48 124.62 125.28 1,986,700 125.28 $0.20 0.16%

30-Oct-13 $125.57 $125.98 124.76 124.79 2,107,700 124.79 -$0.78 -0.62%

31-Oct-13 $124.97 $126.38 124.95 125.85 2,327,200 125.85 $0.88 0.70%

1-Nov-13 $126.76 $126.93 125.12 125.9 1,676,600 125.9 -$0.86 -0.68%

4-Nov-13 $125.98 $126.49 125.56 126.32 1,741,500 126.32 $0.34 0.27%

5-Nov-13 $125.75 $126.46 124.86 126.12 1,757,900 126.12 $0.37 0.29%

6-Nov-13 $126.46 $127.32 126.23 127.13 1,910,300 127.13 $0.67 0.53%

7-Nov-13 $127.15 $127.88 126.23 126.41 3,188,900 126.41 -$0.74 -0.58%

8-Nov-13 $126.03 $128.02 126.03 127.99 2,234,300 127.99 $1.96 1.56%

11-Nov-13 $127.54 $128.17 127.25 127.95 1,751,500 127.95 $0.41 0.32%

12-Nov-13 $128.15 $128.59 127.55 128.36 2,428,600 128.36 $0.21 0.16%

13-Nov-13 $127.86 $128.66 127.43 128.59 2,426,300 128.59 $0.73 0.57%

14-Nov-13 $128.97 $130.12 128.8 129.79 2,569,800 129.79 $0.82 0.64%

15-Nov-13 $129.15 $130.00 128.98 129.85 2,360,400 129.85 $0.70 0.54%

18-Nov-13 129.91 130.5 129.78 130.13 2,148,200 129.49 $0.22 0.17%

19-Nov-13 130.02 130.78 129.92 130.05 2,532,500 129.42 $0.03 0.02%

20-Nov-13 129.5 130.3 128.55 129.18 2,691,800 129.18 -$0.32 -0.25%

21-Nov-13 129.69 130.41 129.59 130.35 1,576,100 130.35 $0.66 0.51%

22-Nov-13 130.36 132.55 129.82 131.02 1,644,800 131.02 $0.66 0.51%

25-Nov-13 131.8 131.87 130.94 131.23 2,496,300 131.23 -$0.57 -0.43%

26-Nov-13 131.45 132.64 131.33 132.15 4,229,600 132.15 $0.70 0.53%

27-Nov-13 132.63 133.65 131.94 133.5 2,433,500 133.5 $0.87 0.66%

29-Nov-13 133.51 134.16 133.34 133.51 2,029,000 133.51 $0.00 0.00%

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2-Dec-13 131.67 132 127.39 127.68 6,897,900 127.68 -$3.99 -3.03%

3-Dec-13 126.06 127.39 125.15 126.6 7,864,500 126.6 $0.54 0.43%

Stock Quote

Current Price: 126.60

52 week low: 89.60

52 week high: 134.16

12 month target price: 127.14

[3M Company (MMM)]

S&P STARS

Standard and Poor’s gives 3M a 3 star rating and recommends that stockholders

hold their stock (3M Company).

Current News “3M Putting Emphasis Back on R&D”- September 18, 2013

Increasing 3M’s research and development allows 3M to come up with new and

better products. This allows for 3M to expand into new markets, while still keeping

established markets interested. Thulin plans to increase 3M R&D budget from 5.3% of

sales to 6%. While that doesn’t seem like much, it’s means billions of dollars. Post-I t notes

and Scotchgard went through major renovations, to improve the product and work to

preserve the environment by eliminating harmful chemicals. 3M is looking to grow in the

field of identification tools, like pass ports, driver’s licenses, etc. It is also working to be a

player in the field of touchscreens with displays and protective films. The renewable

energy field is a big opportunity for growth, especially with solar energy. 3M has not

dipped its toe into the solar energy water, but is working to do so.

“New Gloves from 3M Protect Hands While Improv ing Dexterity”-

October 8, 2013

R&D paid off. 3M’s new gloves help to protect contractor’s and electrician’s

hands while improving their dexterity. OSHA claims that full protection, like 3M’s gloves,

could prevent over 700,000 days of lost work per year. There are three kinds of 3M’s

latest development: General Use Comfort Grip, Cut Resistant Comfort Grip and

Gripping Material Work Glove.

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“3M tops Dow losers on Morgan Stanley downgrade”- December 2,

2013

3M’s stock dropped .85% as a result of Morgan Stanley downgrading them from

equal weight to underweight. The downgrade was based on 3M’s decrease in

performance.

Final analysis

I , personally, would invest in 3M. I read somewhere, that if someone had invested

$10,000 five years ago, it would be worth over $22,000 now. In the last few months, 3M

has had more gaining days than losing days in the stock market. In the last year, 3M

was able to pay out over $6 per share. I fully believe that their R&D will produce many

new products and keep improving current products to keep the company growing. I

think the time to invest was right after the government shut down, and stock was down

to $116 per stock. In the week after the shutdown, stocks climbed $8. I f 3M can keep

that growth growing, they would be the company to invest in. And, I think 3M can

recover from Stanley Morgan downgrading them. They’ve lasted over one hundred

years for a reason. They made it through the Great Depression, they made it through

the Great Recession, and they can certainly make it through a downgrade.