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CASE ASSIGNMENT As the end of his first year comes to a close, George Buckley (CEO) is evaluating his strategic approach and its ability to drive desired results for 3M during the upcoming year. He has asked you to prepare a report assessing strategic performance during 2006 and to make recommendations for enhancing strategic competitiveness in 2007. You will have a 10 minute meeting with Buckley to highlight your findings, so you should prepare 3-5 Power Point slides to provide an overview of your written report and to summarize the results of your analysis and supporting exhibits.
Your report and overview should address the following key strategic issues: 1. Establish criteria for judging strategic performance by comparing past successes and strategies. Use a Balanced Scorecard framework to make sure that both financial and strategic controls are used to assess performance. 2. Define the company's core competency. 3. Determine if the company has a sustainable competitive advantage. If you determine that a sustainable advantage exists, support your claim. If you find it lacking, recommend actions that would secure a sustainable competitive advantage. 4. Identify any external environmental forces that have strategic implications in the future. 5. Evaluate the success of 3M's strategy in 2006 based on the criteria identified for judging strategic performance. 6. Evaluate 3M's Acquisition strategy. 7. Recommend an integrated and coordinated set of commitments and actions which will exploit the company's core competencies, strengthen its competitive advantage, and maximize value.
1 3M: Cultivating Core Competency
3M: Cultivating Core Competency
STRATEGIC MANAGEMENT INPUTS 1. Establish criteria for judging strategic performance by comparing past successes and strategies. Use a Balanced Scorecard framework to make sure that both financial and strategic controls are used to assess performance. Criteria for assessing strategic success can be determined by looking at the company's historical strengths, performance, problems (weaknesses), and strategic goals. The following table is an extensive look at the historical competencies and successes of 3M. [This table is available on the Instructor's CD in an Excel spreadsheet, which includes a worksheet with a blank template that can be provided for the student.] Strengths 1907 Aggressive, customerMcKnight/ oriented salesmanship Bush Niche in growing auto industry One of first corporate R&D divisions in US 1923 1930's 1940's 1952 Carlton 1980's 45% profits into R&D Understanding markets Product research Innovations Major product innovation Performance Product discovery Problems Strategic Goals
First large-scale consumer product Tripled in size $100 million sales Lost cassette tape market 10,000 employees Low-tech marvel: Post It Notes Major competitor threats on multiple fronts Filling market niches Abandoning markets where it could not set its own prices
2 3M: Cultivating Core Competency
35% revenues from products within past 4 yrs.no major breakthrough in 2 decades Culture becoming more short-term Difficulty acting on 15% Rule 3 3M: Cultivating Core Competency . . Workforce reduction of 5000 Strengths 2001 McNerney Performance Increased efficiency Problems New CEO from outside the company Underperforming Problems Declining revenues/profits Focus shifted from research Strategic Goals R&D teamed with marketers Transformation of existing technology into commercial products Percentage of sales from new products 1991 DeSimone 1992 1994 1997 1998 Restructuring 6 Business Segments Continued commitment to innovation Strategic Goals Balance science of management against innovation Control the use of resources for product development without killing "crazy" ideas Quality control and improvement initiative cost cutting and reducing errors/defects Channeled product development funds on most promising ideas Dropping weaker ideas earlier in the process Getting best ideas to market faster Retain culture of innovation Lacking direction Fewer hits from vaunted research facilities .3M: Cultivating Core Competency Strengths Product development Performance New product turnaround time reduced Invention of customerdriven products International sales over 50% of total sales Over $1 billion of $15 billion in sales to firstyear products 30% sales from products within past 4 yrs.many high tech.
3% sales 2004 2005 R&D $1.industrial increase) division Net Profit $3.8 billion performance revenue (10.9% sales Performance Anemic revenue growth (1-5%) while markets expanding Declining personal care segment .14 billion .5% .7% driven by increase acquisition R&D $1. solving after intellectual customer needs. and capturing new positions were segments built 3M: Cultivating Core Competency .5. markets only customization. for faster sales 4 Strategic Goals Growth strategy based on enhanced core competency and building long-term competency Technology and innovation as the engine to grow and develop existing markets through disruptive (natural substitute) technologies.price pressures in Europe Decreased demand for some older products Problems Strengths 2006 50.000 products Buckley with diverse endUpon user segments Arrival based on both hightechnology and low-technology Founder and leader in many technologies .6.more than 40 technology platforms Continual new markets built through "technical adjacency machine" Strong knowledge and understanding of technologies yielding innovative products globally and consistently Cycle time to commercializ ation reduced from 4 yrs. to 2-1/2 yrs.5. entering niche property segments.9% Strong $3. stronger key Often entered customer partnership. higher-growth markets Acquisitions to generate growth Realigned R&D to customer-development divisions to enhance responsiveness and growth Growth driven by acquisition 2003 Increasing sales and operating margin R&D $1.3M: Cultivating Core Competency Strengths 2002 Performance Problems Underinvestment in growth platforms and overemphasis on boosting short-term profits Strategic Goals Reorganization to improve access to larger. logical developments and extensions of existing products.2 billion .19 billion . and "out of the garage" technology developments Grow core business through the strength of constant reinvention.2 products billion .
and extensive promotion of invention Maintain innovative culture . investment in small tech companies. engineering.make a little.demand and capacity to benefit from scale in core product categories* and to gain relative share in targeted markets** Innovative culture Strong capabilities in science. niche markets Strong R&D with an annual budget over $1 billion Performance Problems Strategic Goals Emphasize product localization using mix of brands and local acquisitions Speed growth through strategic licensing. sell a little leading to complex supply chains and costly logistics between operations Deeply conservative values Incremental capacity and planning Chronic underinvestment in core capacity . and manufacturing (world class) with efficient plants World class materials science and surface chemistry capability Less risky capital investments through flexible machining Intersegment technology sharing across products and markets Cross-business use of central technologies historically yielded participation in high-margin niche markets "Invent and Experiment" approach .follow 15% rule Accurately measuring sales growth potential .3M: Cultivating Core Competency Strengths Buckley Brand ownership Arrival Participation in Cont.lost sales growth opportunities where it was readily available Accurate capacity planning *Core Product Categories: • Scotch brand industrial/office tapes • Abrasives • Automotive • Optical films • Face masks and respirators • Medical tapes and drapes • Post-It Notes • Traffic signage **Markets aiming for relative share: • Dentistry • Orthodontics • Office supplies • Roofing granules • Commercial graphics and adhesives 5 3M: Cultivating Core Competency . University alliances.
3M: Cultivating Core Competency Strengths Buckley 3M Lattice . AmCan 9% Health care (21% revenue) and Industrial accounting (19% revenue) Strategically manage portfolio Inward focus brought margin benefits Inward focus Maintain premium hindered growth margins and good longrange planning 6 3M: Cultivating Core Competency .unique Arrival model of technologies Cont. EurMidEAfr 25%. AsiaPac 27%.unique shared technology model US 39%. and manufacturing "adjacency lattice" with shared basic technologies and manufacturing processes across businesses. markets and product lines connection between all basic businesses making 3M a powerful and enduring industrial competitor Interdepartmental cooperation Diversified (and balanced) operation in multiple industries and geographic regions 6 key businesses Performance Problems 3M Lattice makes managing for optimal growth difficult Strategic Goals Competitive Advantage .
lowering Add 'digital' oriented 3M's targeted price competencies over time points through launch of secondary Divestiture or closure brands .EPS increase over Graphics business localization (concentrating 20% launch of new on BRICP. or base restraints on oiltechnology at "end life" and derived raw cannot be refreshed materials Acquisitions "Tuck in" Acquisition $350-400 million of strategy that closely reflects $22.3M: Cultivating Core Competency Strengths Buckley Successfully After reinvigorating First engineering Year culture and technological foundation Innovation sparked Morale boosted Investments focused on core competencies Performance Sales $21. E&W Europe. using dual branding in upper Sept .record 1st qtr products. international sales and profits expansion and penetration (over 10% increase) Display and with greater emphasis on .8 billion in and supports strategic plan sales and adjacencies. differentiation not Oil . more than 20% differentiation.5% (private labels) at private labeling excluding reduced prices to acquisitions) consumer. and Australia) June . application in emerging across multiple lines of markets business.missed targets. and renewed focus on innovation. and fills smaller purchases openings in geography and at least 2 in each of channel capacity 6 business units 7 3M: Cultivating Core Competency .sales increase Retailers offering middle market 7.2 billion Problems Strategic Goals Waiting to see Revitalize competitive growth accelerate at advantages through 60% sales outside core businesses technological US. offers 16 acquisitions quick value by quickly (equal to that of adding technology to past 4 years) company.reducing where scale or relative margins from 45% share cannot be built over to 20% time.3% (organic sales branded goods Thoughtful extension of were up 6. optical film factory Japan. new April .price increase possible through and supply technology. driving Misread demand Defend created markets stock prices down for LCD TV's against new entrants.
In addition to a growth strategy based on enhancing core competency. Filling market niches.Customer Internal Business Processes Customer Financial Strategic . and Related Cost Measures for Acquisitions Investments in Core Competency and Competitive Advantage 8 3M: Cultivating Core Competency Control Type Financial Financial Strategic .6% of corporate sales ($375 million out of $22. suggested criteria for evaluating Buckley's strategy include: Balanced Scorecard Performance Measure Sustainable Sales Growth Sustainable Profit Margins Increased Solutions to Customer Needs Number of New Patents Number of New Products from Customer Collaboration Sales from New Products Number of New Market Niches Served and Market Share Markets Abandoned after Margins Prove to be Unsustainable Innovation Measured by: Achievement of 15% Rule R&D Budget as Percentage of Sales (See New Product Measures Above) Sales. 3M has more recently employed an acquisition strategy to take quick advantage of technology opportunities and to fill openings in geographic markets and channel capacity. this new strategy has not been fully tested for success.Customer Strategic . Abandoning markets where desired prices (and margins) cannot be maintained.8 billion in sales). This suggests that drawing from 3M's successful past is a critical component to planning future strategic moves.Learning & Growth Internal Business Processes Financial Financial Strategic .Internal Business Processes Strategic . with 16 new acquisitions generating only 1.3M: Cultivating Core Competency Buckley is charged with revitalizing the company's competitive advantage and core competency. the following strategic initiatives and internal capabilities have been instrumental in securing past successes for 3M: Developing technology-oriented solutions to satisfy customer needs. Based on the detailed strategic analysis above.Learning & Growth and Financial . Debt. While acquisitions make a logical strategic option for 3M. Establishing and fostering a culture of Innovation. Although detailed data for many of the following measures is not available in the case material. The criteria for evaluating Buckley's 2006 strategic actions should emphasize the achievement of sustainable growth and the strengthening of core competencies and competitive advantage. Generating a high percentage of sales from new products.
The company's technology platforms hold together its diverse business activities. support your claim. and premium brands. market segments. According to Buckley.S. minerals extraction. 3. This competitive advantage is a sustainable advantage in that it meets the qualifications for sustainability . rare. emerging markets offer untapped growth and niche opportunities. brands. Referred to as the 3M Lattice. 9 3M: Cultivating Core Competency .possessing capabilities which are valuable. emphasizing the importance of 3M's international focus to achieve premium margins. If the company's innovative technology portfolio and superior manufacturing process capabilities are 3M's core competencies. oil and gas. Growth and technology trends in areas such as electronics and software. He identified six competitive platforms giving 3M an edge over its competitors: low cost. If you determine that a sustainable advantage exists. The trend for lower margins in the U. its competitive advantage derives from the company's practice of cooperatively sharing technology across operations. In addition. scale and relative share. Define the company's core competency. giving pursuits in these regions a fit with Buckley's strategy of entering niche markets and capturing new segments. Identify any external environmental forces that have strategic implications in the future. The case provides an extensive definition of 3M's core competency.3M: Cultivating Core Competency 2. border crossing and security. If you find it lacking. which is based on its invention and manufacturing capabilities to solve and deliver unique solutions for industrial and commercial customers. and nonsubstitutable. pristine service. market (driven by retailers and private labeling) and price pressures in Europe can be expected to continue. the unique business model is a competitive advantage that offers a steady stream of groundbreaking product opportunities in adjacent businesses where less obvious applications are discovered. costly-to-imitate. processes which were both developed internally. 3M's fundamental core competency is in applying coatings to backings. and regions. customer value chain. 4. Determine if the company has a sustainable competitive advantage. recommend actions that would secure a sustainable competitive advantage. RFID/Wireless/GPS. food safety. and consumer electronics offer acquisition opportunities to support 3M's strategic plan and to take advantage of extensive knowledge in adjacent technologies to stimulate product development.
054 10 3M: Cultivating Core Competency Percentage of Change in Net Sales Over Previous Year 8. track and trace. energy and minerals extraction. Price increase and supply limitations for oil and oil-derived products will continue to impact performance of products dependent on these inputs if price increases cannot be passed on to the end customer. Again. these areas offer strategic opportunities for internal development. 3M's core competency and strategy are well-aligned to this external condition. The general environment is experiencing rapid advancements in technology.7% 11. Sales Growth. 3M's strength in industrial segments places the company in a good position to minimize the impact of reduced opportunities and performance in the commercial segment. Evaluate the success of 3M's strategy in 2006 based on the criteria (Balanced Scorecard) established above for judging strategic performance. Combined with 3M's available adjacent technologies and the company's ability to share across segment lines.923 2005 Sales = $21.011 2003 Sales = $18.35%.7% -- . The 5-year growth rate for 3M is 7.167 2004 Sales = $20. In millions 2006 Sales = $22. This observation should be taken into consideration when allocating resources and making strategic decisions. annual sales growth rates for the past 6 years are provided in the table below. Based on financial information provided in the case and 2006 financial results.3M: Cultivating Core Competency Business opportunities with high growth potential are emerging in the areas of filtration. and potential technology developments (such as nanotechnology applications in materials science and digital technology applications) indicate continued tech-based growth opportunities for 3M in the foreseeable future. and food safety.7% 9. STRATEGIC ACTIONS: STRATEGY FORMULATION & IMPLEMENTATION 5.332 2001 Sales = $16.6% 1.3% 5.232 2002 Sales = $16. It is also worth noting declines experienced in the personal care segment.
5% and 8% were exceeded in 2006.828 2004 $4. Despite a 49% increase in interest expense (due to debt funding of acquisitions in 2006). Buckley's identification of capacity planning issues.8% 20. Buckley's first year of margin results show an impressive gain. with strong projections through 2011. A watchful eye should remain on sales results. and his attempt to improve 3M's ability to accurately measure sales growth potential should also provide greater benefits of scale (with greater margin results) in core product categories. Profit Margins. Feedback in the case study indicates that Buckley has been successful reinvigorating an engineering culture with a technological foundation.005 Profit Margins 24. which shows attempts to maintain profit margins to be successful.625 2005 $4. Annexure IV in the case indicates that Pending and Existing Patents are steadily rising. but indications of strategic success are evident. boosting morale. but should be employed by Buckley's team using the previous benchmark of 30-35% of sales from products new to 3M in the past 4 years. Buckley has projected exceeding a 10% annual growth rate by 2011. which will require an acceleration of the progress made to date.555 2003 $3. The Sales from New Products figure is not available in the case. the company did miss scale opportunities (misreading demand for LCD TV's). This strategic action offers the added advantage of increasing relative market share in target markets. This will provide a good measure of the successful use of technology and innovation to drive 11 3M: Cultivating Core Competency .1% 18. However. sparking innovation. This measure has steadily increased over the past 5 years. the measurement of developing new product solutions for customer needs. and stimulating autonomous strategic behavior. and innovativeness cannot be performed.8% 22. For the sake of this case study. Operating Income (in millions) 2006 $5.5% 22.4% Profit margins in the table above are calculated by dividing Income before Taxes into Net Sales. which indicates that additional attention to this capability is still required for success. Solutions to Customer Needs and Serving Market Niches.657 2002 $3. serving market niches. His focus on high margin niches should continue to have a positive impact on this measure of financial success. and expectations set between 5. However.3M: Cultivating Core Competency Concerns that revenue growth has stagnated to between 1% and 5% are not founded in actual annual growth rates experienced by 3M.
Thus. which is discussed more fully in the section below.232. Again. Without statistical evidence.00 6. with an expressed divestiture strategy. Investments in Core Competency and Competitive Advantage. Investing in acquisitions (external innovation) rather than R&D (internal development) has strategic implications for 3M over the long run. and 12 3M: Cultivating Core Competency . and is even down since 2002.5 Invention has been specified as one of 3M's core competencies. but acquisitions in 2006 matched the previous four years of acquisition activity at 3M. Innovation. logical developments and extensions of existing products.00 6. and realize gains more quickly. This is probably due to acquisition investments now being made to secure radical innovations. The Research and Development budget as a percentage of sales has remained flat for several years. Without investment numbers. Divestiture and Closure. it can be assumed that increased investment in the company's acquisition strategy has been incurred in an effort to quickly impact sales growth through this strategic initiative. See the table below for calculations.102.00 1. 2006 Net Sales R&D Exp. and his action to sell the pharmaceutical business in November.066.00 1.3M: Cultivating Core Competency sustained revenue growth. Acquisitions. Detailed numbers on acquisition debt and costs are not available in the case text.0 2004 20.352. R&D as % of Sales 22. 2006.00 1.923.011. it is difficult to determine whether Buckley is successfully abandoning markets when margins prove to be unsustainable. It was previously noted that initial sales of acquired businesses and technologies represent less than 2% of total sales.143. 3M is still putting out both incremental and radical innovative products.167. As of Buckley's arrival.00 1. As the case does not highlight any acquisition problems.00 5.7 2003 18. yet the company has not increased investments in Research and Development to stimulate sales growth. without accurate numbers in the case.332. enter new markets. Buckley's strategic goals to • grow and develop existing markets through disruptive (natural substitute) technologies.00 5. we can assume that early expectations are being met. However.00 1. it is difficult to assess early return results.274. and "out of the garage" technology developments.0 2002 16.00 6. it should be assumed that actions are being taken to follow through on this strategic goal.9 2005 21. and interest expense grew to $122 million from $82 million in 2005.
Targeting acquisitions to fill openings in geography and channel capacity is consistent with the company's other strategic efforts and should provide synergy when acquisitions are complementary to the company's core businesses and capabilities. This cautious approach also fits with the company's conservative values. primarily because it is a diversion away from the goal of tapping core competencies to achieve growth. 3M must invest in building this core competency for a long-term acquisition strategy to be viable. an earlier look at Research and Development investments highlights that they have remained flat over the past 5 years. Research indicates that firms with sustained and consistent emphasis on R&D and innovation have achieved long-term competitive advantages through successful acquisitions. the success of acquisitions can be tampered by integration difficulties. and the inability to achieve synergy. and the company's competency at successfully acquiring technology is not yet fully developed. The use of acquisitions to satisfy strategic goals is well-chosen. entering niche segments. Not an existing capability. Were it not the case. The single biggest component of Buckley's strategy that requires attention is his Acquisition strategy. 3M's use of strategic licensing and investments in small technology companies that readily "tuck in" to their existing businesses can protect the company from common problems that interfere with successful acquisitions. rapidly access markets (particularly untapped local markets) and meet expectations for sustainable growth. • 6. Although 3M certainly possess this emphasis. cost-effective way to develop new products. solving customer needs. and capturing new segments indicate that he has likely supported these initiatives with investments in 3M capabilities to achieve these goals. success will hinge on the company's ability to execute an effective integration process. customization. the recommendation to Buckley during this review would be to correct the oversight to increase the likelihood that implementation of his strategy will meet with success. Despite this well-defined and well-selected strategy. excessive debt. In addition to identifying the correct acquisitions. 3M's acquisition experience is limited. build technology. However. Acquisitions offer 3M a low-risk. 13 3M: Cultivating Core Competency .3M: Cultivating Core Competency grow core business through the strength of constant reinvention. stronger key customer partnerships. 3M must include the potential costs of some acquisition failure into its projections and continue with cautious selection of complementary acquisition targets that are not over-priced. with clearly-successful acquisition rates estimated at only 20%. research indicates that acquisitions do not consistently produce above-average returns. Evaluate 3M's Acquisition strategy.
3M's competitive advantage of sharing basic technologies signifies a cooperative internal environment with skills to successfully integrate acquired technologies. both financial and strategically. Recommend an integrated and coordinated set of commitments and actions which will exploit the company's core competencies. 7. It is integrates 3M's strengths and capabilities with environmental conditions and attempts to correct current areas of weakness. strengthen its competitive advantage. One way to minimize this risk is to keep focus on strategic control. developing these skills as a core competency will be critical to employing a successful acquisition strategy over time. With that said. extending 3M's innovative prowess by accessing both internal and external technological innovations opens up additional strategic opportunities consistent with 3M's goals and capabilities and is an excellent growth strategy. Directing investment funds to acquisitions rather than R&D has significant strategic implications. it might be assumed that 3M does not possess the ability to effectively conduct due diligence and to select healthy target firms for acquisition. A key risk of acquisitions is that a firm may substitute an ability to buy innovations for an ability to produce innovations internally. Buckley's strategy is a well-conceived plan to exploit the company's core competencies. effective integration of new technology will determine whether a culture of innovation is enhanced or dissolves over time. through the Balanced Scorecard framework. Close attention must be given to building the ability to effectively integrate new technologies into 3M's unique lattice of technologies and manufacturing adjacencies. 14 3M: Cultivating Core Competency . strengthen its competitive advantage. Based on the analysis. and maximize value. This analysis provides Buckley and his management team with the assurance that his strategy is on track to achieve desired results. It will also be important to avoid hostile acquisitions that can introduce difficulties and uncooperative behavior. 3M's approach to managing new technology development that is acquired rather than home-grown will be critical moving forward. rather than too much attention on financial control. and maximize value. Again. Given the company's difficulties in accurately measuring sales growth potential (demand) and the company's chronic underinvestment in core capacity needed to maximize the benefits of scale and gain attainable market share.3M: Cultivating Core Competency Internal innovation is a core competency within 3M. sales growth and profit margin results are initial indicators of a successfully implemented strategy. At the end of 2006. It also establishes a standard for measuring success. Again. the following points should be highlighted during the overview presentation to Buckley.
consideration should be given to a long-term strategy of avoiding (or replacing) such input items with more affordable or more readily available input materials. Customer involvement in innovative process. Additions to Strategic Plan • • Reinstitute or more aggressively pursue strategic actions to abandon markets where desired prices (and therefore. High margin niches to continue to drive up margins. Additional Attention Necessary in the Following Areas: • • • Arriving at an accurate measure of sales growth potential. This does not fit with 3M's strategic goals. Attentiveness to impact that prices for oil-derived inputs have on margins. As the problem of oil prices and supply is unlikely to rectify itself in the near-term. particularly in light of increased acquisition efforts. margins) cannot be maintained. Evaluate Research and Development budget as a percentage of sales to determine if it is being adequately financed for a growth strategy. Reestablish use of "Percentage of Sales from New Products" as a standard for measuring innovativeness and tracking results. and the practice of attempting to extend the life of dying products or segments at lower margins should be discontinued. Allocation of resources toward industrial segments and cautiously away from personal care markets where retailers can drive down margins and declines have been experienced. It is extremely important to build competency and skill sets for a long-term acquisition strategy to be a viable source of competitive success to 3M. these protective measures should be taken: 15 3M: Cultivating Core Competency . In the meanwhile. Improvements to demand and capacity planning capabilities to maximize benefits of scale and fully realize market opportunities. Acquisition-Related Advice Note that 3M's acquisition strategy is a change in focus for the company and comes with some risk. Pursuit of technological growth trends and new technological developments. Retreat or Abandon the Following Efforts: • Reconsider dual branding in upper middle markets and the extension of private labeling.3M: Cultivating Core Competency Recommendations Continued Focus in the Following Areas: • • • • • • International markets to maximize margins and capture emerging growth opportunities.
00 5.851.06 16 3M: Cultivating Core Competency .851. SUPPORTING EXHIBITS AND FINANCIAL ANALYSIS Current Financial Information Revenue & Reported Earnings Revenue ($mil) (2006) 5-Year Annual Revenue Growth Rate (%) Income From Continuing Operations ($mil) (2006) Income From Total Operations ($mil) (2006) Diluted EPS From Continuing Operations ($)(2006) Diluted EPS From Total Operations ($)(2006) 22.00 7. Avoid hostile acquisitions. be cautious about restructuring used during the 1990's.06 5.923. Although some structural changes may have helped to create networks that now enhance sharing.00 3.35 3. While integrating acquired businesses. Continue to emphasize the importance of correct acquisitions based on compatibility. taking into account possible failure (or loss) rates along with potential upside gains. Pay close attention to integrating new technologies into 3M's unique lattice of technologies and manufacturing adjacencies. build skills to effectively conduct due diligence and to select healthy target firms to acquire. In short order.3M: Cultivating Core Competency • • • • • • • Use realistic estimates to buffer financial expectations. and integration considerations. complimentary. Direct focus onto strategic controls rather than being too focused on financial measures. want to avoid the risk of upsetting delicate shared networks that provide 3M with its sustainable competitive advantage.
21 2.22 11.51 18.97 29.27 30.92 Efficiency Asset Turnover Inventory Turnover 1.17 36.72 1.24 20.3M: Cultivating Core Competency Dividends Fiscal Year Dividend Rate ($) Yield Yield .12 15.92 2.33 38.18 1.41 17 3M: Cultivating Core Competency .96 8.15% 1.96 5.84 13.09 4.80 2007 1.51 16.78 22.5 Year Average (%) 5-Year Annual Dividend Growth Rate (%) Profit Margins Operating Margin (%) Net Profit Margin (%) Valuation Ratios P/E Price to Cash Flow Ratio Price To Sales (TTM) Price To Book Per Share Ratios Dividend Per Share Book Value Per Share Revenue Per Share Financial Strength Quick Ratio Current Ratio LT Debt to Equity Total Debt to Equity Return on Equity (ROE) Per Share Return on Assets (ROA) Return on Invested Capital (ROIC) 0.
00 5.00 1.00 1.711.00 7.00 477.329.946.579.00 9.00 17.723.00 336.00 446.00 n/a 3.757.00 15.00 138.00 706.162.158.00 1.00 2.00 17.437.00 20.720.00 n/a 760.00 2.708.00 2.127.00 212.com.00 5.00 2. Net Property.294.534.00 3.00 5. Balance Sheet Highlights in millions of USD As of Assets Cash Marketable Securities Receivables Total Inventories Raw Materials Work In Progress 1.790.070.816. Plant & Equipment.017.00 29.693.00 n/a 670.00 2.00 571.058.00 471.00 2.00 n/a 906.00 381.897.601.00 2.931.016. Gross Accumulated Depreciation Interest and Advance to Subsidiaries Other Non-Current Assets Deferred Charges 8.167.00 20.00 n/a 755.00 947.00 n/a 3.232.00 16.235.00 677.00 1.00 759.3M.00 48.00 n/a 2.00 Total Current Assets Property.00 795.00 Intangibles Deposits & Other Assets 4.00 15.110.00 n/a 3.00 10.00 618.00 10.00 8.00 329.841.609.541.00 10.00 1.00 921.00 15.00 5.357.593.00 2006 2005 2004 2003 2002 Finished Goods Notes Receivable Other Current Assets 1.00 Total Assets 21.00 n/a 1.00 33.00 311.00 1.3M: Cultivating Core Competency Data Provided by Thomson Financial and available at www.00 305.840.00 Liabilities 18 3M: Cultivating Core Competency .600.00 437.00 7.050. Plant & Equipment.115.00 1.072.00 266.121.836.720.00 4.00 5.00 591.00 6.00 253.00 596.00 16.00 84.311.00 373.621.00 11.011.00 406.907.059.290.00 614.932.00 763.00 3.162.00 299.447.
114.503.00 70.00 1.00 1.835.457.00 15.00 896.00 12.00 1.993.390.959.00 880.00 4.933.00 253.00 n/a 9.00 5.885.00 770.057.00 171.00 294.00 17.00 9.00 1. Capital Leases Other Long-Term Liab.00 543.00 4.00 19 3M: Cultivating Core Competency .378.00 556.00 1.00 n/a 1.00 -1.00 n/a 134.00 4.00 -64. Long-Term Debt Curr.00 507.00 1.284.00 291.00 n/a 9.00 63.00 542.00 9.641.00 Total Liabilities 11.818.590.00 -589.958.082.405.00 Total Current Liabilities Mortgages Deferred Charges/Inc. Convertible Debt Long-Term Debt Non-Curr. 7.00 885.00 8.767.00 n/a 9.965.00 4.224.00 883. Cap Lease Accrued Expense Income Taxes Other Current Liabilities 1.00 5.00 5.780.00 1.00 2.985. Port.00 Total Shareholders Equity 9.00 n/a 1.238.00 580.00 492.387.00 627.00 9.010.00 10.00 4.00 322.00 2.00 550.100.00 1.00 386.00 528.00 854.00 287.485.00 1.00 5.00 757.077.484.00 n/a 5.00 539.071.456.395.00 2.00 10.00 230.715.00 71.00 353.00 2.00 1.00 n/a 830.00 884.00 1.649.00 14.141.00 1.00 -2.00 15.011.711.339.00 n/a 1.00 608.3M: Cultivating Core Competency Notes Payable Accounts Payable Curr.225.748.00 892.901.042.182.869.00 n/a 498.00 287.00 998.00 n/a 9.00 6.323.00 864.00 -2.00 2.00 n/a 458.00 Shareholder Equity Minority Interest Preferred Stock Common Stock Capital Surplus Retained Earnings Treasury Stock Other Liabilities 278.00 553.00 7.00 311.488.00 n/a 925.413.00 2.00 6.00 10.
00 n/a n/a Net Income Before Extra Items Extra Items & Disc.00 17.00 62.851.00 7.00 1.00 69. Ops.828.146.00 n/a 3.329.00 10.00 4.00 Gross Profit R & D Expenditure Selling.00 n/a 28.00 Income Before Taxes Prov.3M: Cultivating Core Competency Total Liabilities & Shareholders Equity 21.3M.00 10.974. Income Statement Highlights in millions of USD Period Ended Net Sales Cost of Goods Sold 2006 2005 2004 2003 2002 22.143.00 1.00 10.990.00 3.00 -35.00 2.759.851.com.00 1. Non-Operating Income Interest Expense 11.724. 20 3M: Cultivating Core Competency .066.657.232.102.00 n/a Net Income 3.210. 3.00 1.00 n/a 1.053.00 3.958.00 n/a n/a 4.00 52.00 15.00 1.00 4.00 20.00 n/a 39.00 1.00 1.00 11.713.274.com.011.00 16. For Inc.00 1.00 966.162.00 n/a 2.00 8.294.00 8.723.00 Data Provided by Thomson Financial and available at www.631.408.503.403.00 84.00 1.132.00 n/a n/a 3.00 2.625.3M.00 9.836.00 n/a 46.285.005.974.947. General & Admin Expenses Depreciation & Amort.600.332.00 55.202.708.00 2.00 9.00 20.627.00 n/a 51.555.00 122.00 n/a 56.00 n/a n/a 4.00 51.496.00 1.00 n/a n/a 3.00 82.332.00 4.00 21.541.00 Data Provided by Thomson Financial and available at www.403.923.00 80.00 65.111.00 20. Taxes Minority Interest Realized Investment (Gain/Loss) Other Income 5.00 4.00 18.990.352.167.
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