Strategic Analysis of 3M Australia: A Management Report, BUS300

This report provides a comprehensive strategic management analysis of 3M Australia. It begins with an introduction outlining the objectives, followed by an environmental analysis using PESTEL and Porter's Five Forces frameworks to assess the macro and industry environments. An organizational analysis examines 3M's strategy, performance (financial, consumer, and internal), and capabilities. The financial performance section includes a detailed analysis of various financial ratios, while the consumer performance section analyzes 3M's ability to meet consumer needs. The report then provides specific recommendations for improving 3M's strategic position, including enhancing its innovation strategy and developing solutions for self-driving cars. The conclusion summarizes the key findings and recommendations, emphasizing the importance of continuous innovation and strategic adaptation. The analysis aims to provide insights into 3M's strengths, weaknesses, opportunities, and threats, ultimately guiding the company toward enhanced competitiveness and profitability.

Running head: STRATEGIC MANAGEMENT ANALYSIS
Strategic Management Analysis of 3M Australia
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1STRATEGIC MANAGEMENT ANALYSIS
Table of Contents
1. Introduction......................................................................................................................2
2. Environmental Analysis...................................................................................................2
2.1. Macro-Environment: PESTEL Analysis..................................................................2
2.2. Industry Environment: Porters Five Forces Analysis...............................................3
3. Organizational Analysis...................................................................................................5
3.1. Strategy Analysis......................................................................................................5
3.2. Performance Analysis...............................................................................................5
3.2.1 Financial Performance........................................................................................5
3.2.2. Consumer Performance.....................................................................................7
3.2.3. Internal Current Performance............................................................................7
3.2.4. Internal Long Term Development.....................................................................8
3.3. Capabilities...............................................................................................................8
4. Recommendations............................................................................................................9
5. Conclusion.....................................................................................................................11
References..........................................................................................................................12

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1. Introduction
Strategic analysis for a business is considered to be basic and efficient tools for strategic
business planning along with ritually analyzing the aspects of management process. Based on
such analysis a company can consider implementing a strategy that can improve operational and
its business position in the market (Baker, 2014). The objective of the paper is to conduct
strategic management analysis of 3M Australia and will also consider providing suitable
recommendations on providing with digital screens to the self driving cars for BMW Company.
Moreover, recommendations will be provided based on analyzing certain strategic issues faced
by the company in carrying out their international business operations.
2. Environmental Analysis
2.1. Macro-Environment: PESTEL Analysis
PESTEL analysis offers increased detail regarding the operating challenges faced by 3M
Company that is present in macro environment rather than competitive forces.
 Political- 3M Company operates within diversified machinery in several nations along
with exposing itself to distinct political environment along with political system risks.
Certain political factors must be evaluated by the company such as military invasion risk
and intellectual property protection (Bohnsack, Pinkse & Kolk, 2014).
 Economic- 3M Company uses a nation’s economic factors including growth rate,
inflation along with an industry’s economic indicators like diversified machinery industry
growth rate and customer spending in explaining growth trajectory of the industry and the

3STRATEGIC MANAGEMENT ANALYSIS
company (Sroufe & Joseph, 2017). The company must consider government intervention
within free market and associated industrial goods.
 Social- 3M Company has focused on realizing the needs of consumers within a given
market along with developing marketing messages for consumers of diversified
machinery industry (Chen, Delmas & Lieberman, 2015). This social factor that must be
considered by 3M Company includes demographics and capability level of the population
along with their leisure interests.
 Technological- Taxi industry is observed to have major players like Lyft and Uber. 3M
also considers that the car industry is moving fast and is getting automated by
Technology Company like Google and manufacturing that is disrupted by Tesla that has
presented an electronic automobile revolution (Peppers & Rogers, 2016).
 Environmental- 3M Company is aware of the liability clauses in a situation of
environmental disasters or mishaps. In addition several European nations offer healthy
tax breaks to organizations which operate within the renewable sector (Cusumano, Kahl
& Suarez, 2015). Moreover, the company must also consider certain environmental
factors that can impact the company such as climate change and waste management
within industrial goods sector.
 Legal- Before entering new market, 3M Company leadership considers discrimination
law, health and safety law and intellectual property law.
2.2. Industry Environment: Porters Five Forces Analysis
Porters five forces analysis of 3M Company can serve as a strategic management tool in
evaluating industry and realizing underlying profitability levers within the industry.

4STRATEGIC MANAGEMENT ANALYSIS
 Threat of New Entrants- 3M Company is capable of addressing threat faced by new
entrants through innovating new services and products (Deresky, 2017). New products
attract new consumers and facilitates in developing economies of scale so that the
company can decrease per unit fixed cost. New entrants are not likely to tap dynamic
industry n which renowned companies like 3M continue defining standards.
 Bargaining Power of Suppliers- Suppliers in string position can reduce margins that 3M
Company can attain within the market. The overall effect of increased supplier
bargaining power is that it decreases profitability of diversified machinery. The company
is capable to deal with high supplier bargaining power through developing effective
supply chain with numerous suppliers (Epstein & Buhovac, 2014).
 Bargaining Power of Buyers- Higher buyer bargaining power exerts increased pressure
on 3M Company. The smaller and string consumer base of 3M Company the high will be
their bargaining power along with their capability of attaining high offers and discounts
(Rothaermel, 2015). The company addresses high buyer bargaining power through
presenting new products that decreases defect on of present 3M Company’s consumers to
its business rivals.
 Threat from Substitute Products- Threat of substitute goods is high in case it offers
value proposition that is distinct from the industry’s current offerings (Fisher III &
Oberholzer-Gee, 2013). For instance, services namely Google drive and drop box are
substitutes to storage hardware drives.
 Rivalry Among Industry Players- If competition between the existing players within
industry is high then it will bring down prices and reduce total industrial profitability. 3M

5STRATEGIC MANAGEMENT ANALYSIS
Company is observed to operate within highly competitive diversified machinery sector.
Such competition does not impact the company’s long term profitability.
3. Organizational Analysis
3.1. Strategy Analysis
Generic strategy of 3M Company is localization in order to penetrate and increase
business growth in global market. Generic strategy of the company focuses on developing and
recognizing products for addressing local requirements (Frynas & Mellahi, 2015). Corporate
strategy of 3M Company is focused on taking acquisition decision for entering the new industry
and strengthening its position through continuous innovation and transforming products in a way
that can address other important needs. Several companies are the shareholders of 3M Company
and the company is observed to be committed towards al its shareholders for adding value to
them.
3.2. Performance Analysis
3.2.1 Financial Performance
Capital Structure
Ratios
Ratios 2016 Industry Average
Gearing Ratio 3.98 2.84
Debt Equity Ratio 0.61 0.2
Return in Equity 1.88 6.39
Asset Utilization
Ratios
Asset Turnover 1 1.13
Profitability Ratios
Net Profit 1.09 2.92
Profit After Tax 0.16 1.15

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Expense/sales % 0.76 0.55
Overall Performance
Ratios
Shareholders Return 55.44 52.22
Return on Equity 0 6.39
Return on Total Assets 5 3.31
Sales Growth -0.005 51.08
Gearing ratio of 3M Company is observed to be more than the industry average which
indicates the company is using a high amount of leverage in which it is using debt in order to pay
for its regular business operations (Galliers & Leidner, 2014). Debt to equity ratio is observe to
be high than the industry that signifies the company is using higher debts in for financing all its
assets in order to value shareholders equity. Return on equity ratio of the company is observed to
be lesser than the industry average which indicates that the company is failing to maintain
enough ability in gathering profits from its shareholders investments within the organization. It is
not attaining enough profit for every dollar generated by common stockholders’ equity. Asset
turnover of 3M Company is observed to be lesser than the industry average which signifies the
company does not have enough capability to gather sales from utilizing its assets (Johnston &
Marshall, 2016).
Net profit of the company is observed to be less in comparison to industry average that
signifies the company is no attaining high profit through increasing sales after all deductions like
sales allowances. Profit after tax is observed to be high than industry average which indicates the
company is earning enough revenue to pay its investors effectively. This signifies that the
company has strong financial position. Expense or sales percentage of the company is higher
than industry average which signifies the company is increasing sales of the company along with
increasing costs. Shareholder return of 3M Company is high than industry as the company is

7STRATEGIC MANAGEMENT ANALYSIS
ensuring high internal rate of return of all cash flows to its investors during the investments
holding period (Morden, 2016). Return on equity is lower than industry average this is because
of the reason that the company does not have enough capability to generate profits from
investments of shareholders in the company. Return on total assets is high from industry average
as the company is employing its assets efficiently in gathering high earnings before which
contractual obligations are paid. Sales growth is decreased in comparison to industry average that
signifies the company is incapable to improve its financial performance through increased sales
and profits (Luthra, Garg & Haleem, 2015).
3.2.2. Consumer Performance
In satisfying its consumer needs, 3M Company has maintained a track record of
developing innovative technology solutions. For instance, the company facilitates its consumers
in optimizing parking operations through enabling fee collection automation along with other
processes. To enhance support for such highly expanding segment, the company is required to
automate its own data reporting and collecting (Haines, 2016). In addressing consumer needs and
improving consumer performance 3M Company has recently acquired parking and tolling assets
along with automatic license plate reader businesses along with necessary insights within such
acquisitions. The company makes attempts to involve its consumers within its innovation process
which indicates that the company focuses on associating its consumer needs with innovation
outcomes. However, considering fairness, the company just addressed needs of the overall
research teams and faced challenges in fulfilling needs of its target consumers. 3M Company is
facing challenges in recognizing involvement of consumers in innovation process that can
facilitate it in better identifying consumer needs and communicate with them before
implementing innovative ideas within new products (Harrison & John, 2013).

8STRATEGIC MANAGEMENT ANALYSIS
3.2.3. Internal Current Performance
3M Company is observed to grow through its diversified business like transportation,
industrial, electro and communications. Business of the company has encountered 30% growth in
revenues and attained 16% of total growth in sales (Grant, 2016). 3M Company has observed
high profit and revenue growth that has increased its revenue, dividends and net income over five
years because of its constant innovation and product development. To ensure its smooth business
operations, the company employs more than 7000 researchers in 35 distinct operations that have
laboratories all through the world (Tseng & Hung, 2014).
3.2.4. Internal Long Term Development
To improve its current international performance position, 3M Australia focuses on
addressing its international sustainability objective in order to increase the diverse talent pipeline
within management to develop diverse workforce. To ensure constant product development and
innovation the company is focusing on encouraging diversity along with developing an inclusive
surrounding which leverages diversity in communities (Govindan et al., 2014). In this company,
if technical employees desires to get prompted to management level, though undergoing training.
Moreover, the company also offers a wise way to provide its employees with necessary
incentives through developing such policy. This indicates that 3M Company respects its
workforce and offers them chances to make their personal occupational decisions. Business
operations of the company takes place all over US and it implements O2 program offers
advanced development through rapid training in advanced statistics, lean six sigma, supply chain
principles, applied learning and project leadership (Heizer, 2016).

9STRATEGIC MANAGEMENT ANALYSIS
3.3. Capabilities
Capabilities of 3M Company can be evacuated through conducting core competency
analysis of the company. The company is observed to have unique capabilities in solving and
offering exceptional solutions for commercial and industrial consumers (Gamble & Thompson,
2014). Major capabilities of the company are in implementing coatings to backings and
processes that were totally internally developed. Core competencies of the company
encompassing tangible, intangible and value chain are explained below:
Tangible
 Effective organizational culture
 Has efficient R&D department
Intangible
 High technology platforms
 Capabilities of superior manufacturing process
 Invention
Value Chain
 Effective operational process
 Intellectual human resource within R&D department
 Effective consumer relationship management
 Often developments in technology that is effectively aligned with external environment
 Weak management of inventory

10STRATEGIC MANAGEMENT ANALYSIS
4. Recommendations
Considering the financial and business position of 3M Company in Australia and all over
the world certain recommendations are provided to the company that can facilitate it in gaining
competitive advantages and to increase its profitability in the long run. These are
recommendations are explained under:
 3M Company is recommended to focus on enhancing its innovation strategy to develop a
fleet of self driving cars in the upcoming years that is already a collaborative move of
BMW Company. The company must use latest mobileye and Intel technologies at the
time of international trails starting in US.
 The company is recommended to focus its acceleration on rapid and highly effective new
products commercialization. This strategy can offer 3M Company with a process to give
importance to research and development investments and to ensure that the best and
increased priority with high likely opportunities that are totally commercialized and
funded.
 To improve its business operation process, the company is recommended to implement
six sigma strategies that can serve as the company’s primary initiative and presentenced
an innovative and data focused pathway in attaining effective improvement. Moreover,
all the employees must be trained to be involved in this quest for ensuring improvement
in costs, growth and cash which can be advantageous for 3M Company, its suppliers
along with its consumers.
 To increase effectiveness of its consumer service, 3M Company is recommended to
implement productivity strategy that can facilitate the company in attaining superior
advantages of web for increasing speed, improve consumer service and develop

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consumer relationships. This strategy is intended to use recent technologies for
decreasing high expenses along with accelerating international business or profitability
growth. In addition, the company must also focus on certain vital areas fir business
growth enhancement such as on brand image, consumer involvement in innovation
process and maintaining leadership in technology.
5. Conclusion
The objective of the paper is to conduct strategic management analysis of 3M Australia
and will also consider providing suitable recommendations on providing with digital screens to
the self driving cars for BMW Company. It was gathered from the paper that 3M Company
operates within diversified machinery in several nations along with exposing itself to distinct
political environment along with political system risks. Moreover, the paper also revealed that
addressing consumer needs and improving consumer performance 3M Company has recently
acquired parking and tolling assets along with automatic license plate reader businesses along
with necessary insights within such acquisitions.

12STRATEGIC MANAGEMENT ANALYSIS
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13STRATEGIC MANAGEMENT ANALYSIS
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