3M Company operates as a diversified technology company worldwide. The company's Industrial segment offers tapes; coated, non-woven, and bonded abrasives; adhesives; advanced ceramics; sealants; specialty materials; separation and purification products; closure systems for personal hygiene products; acoustic systems products; automotive components; and abrasion-resistant films, and paint finishing and detailing products. Its Safety and Graphics Business segment provides personal protection products, traffic safety and security products, commercial graphics systems, commercial cleaning and protection products, floor matting, roofing granules for asphalt shingles, and fall protection products. The company's Health Care segment offers medical and surgical supplies, skin health and infection prevention products, inhalation and transdermal drug delivery systems, dental and orthodontic products, health information systems, and food safety products. Its Electronics and Energy segment provides optical films; packaging and interconnection devices; insulating and splicing solutions; touch screens and touch monitors; renewable energy component solutions; and infrastructure protection products. The company's Consumer segment offers sponges, scouring pads, high-performance cloths, repositionable notes, indexing systems, home improvement and care products, protective materials, and consumer and office tapes and adhesives. The company serves automotive, electronics and energy, appliance, paper and printing, packaging, food and beverage, construction, medical clinics and hospitals, pharmaceuticals, dental and orthodontic practitioners, health information systems, food manufacturing and testing, consumer and office retail, office business to business, home improvement, drug and pharmacy retail, and other markets directly, as well as through wholesalers, retailers, jobbers, distributors, and dealers. The company was founded in 1902 and is headquartered in St. Paul, Minnesota.
Business Analysis of 3M
The Industrial Goods & Services Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how 3M compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by 3M to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of 3M with an interactive chart.
- Revenue Growth: 3M reported a revenue growth of -0.5% year-on-year during 2016. Industrial Conglomerates Industry grew at 3.8% in the same period
- COGS share of Revenues: As a percentage of revenue, 3M spent 50.0% of its total revenues on COGS. Industrial Conglomerates industry average (COGS share of revenue) in the same period was 67.0%
- R&D share of Revenues: As a percentage of revenue, 3M spent 5.8% of its total revenues on R&D. Industrial Conglomerates industry average R&D spending in the same period was 1.1%
- SG&A share of Revenues: As a percentage of revenue, 3M spent 20.3% of its total revenues on Sales, Marketing, and General Administration (SG&A). Industrial Conglomerates industry average SG&A spending in the same period was 16.9%
- Inventory share of Revenues: As a percentage of revenue, 3M spent 11.2% of its total revenues on Inventories. Industrial Conglomerates industry average Inventory spending in the same period was 14.7%
- Accounts Payable share of Revenues: As a percentage of revenue, 3M invested 6.0% of its total revenues on Accounts Payable (A/P) Industrial Conglomerates industry average Accounts Payable investment in the same period was 12.8%
- Accounts Receivable share of Revenues: As a percentage of revenue, 3M invested 14.6% of its total revenues on Accounts Receivable (A/R). Industrial Conglomerates industry average Accounts Receivable investment in the same period was 25.5%
- PP&E share of Revenues: As a percentage of revenue, 3M invested 28.3% of its total revenues on Property, Plants, and Equipments (PP&E). Industrial Conglomerates industry average PPE investment in the same period was 34.0%
- Intangibles share of Revenues: As a percentage of revenue, 3M invested 38.1% of its total revenues on Intangibles. Industrial Conglomerates industry average Intangibles investment in the same period was 71.2%
- Net Margins: 3M Net Margins in the year 2016 were 16.8%. Industrial Conglomerates industry average Net Margins in the same period were 9.3%
Sector and Industry Association of 3M
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries. For high-level analysis purposes, related/similar sectors are grouped into sector groups.
3M is associated with Industrials Sector Group, Industrial Goods & Services Sector, and Industrial Conglomerates Industry.
Industrial Goods & Services sector is comprised of the following industries: Industrial Conglomerates; Industrial Machinery; Electrical Components & Equipment; Electronic Equipment & Parts; Containers & Packaging. The definitions for each of the industries is as follows:
- Industrial Conglomerates industry includes Industrial companies engaged in three or more classes of business within the Industrial industry that differ substantially from each other.
- Industrial Machinery industry includes designers, manufacturers, distributors and installers of industrial machinery and factory equipment, such as machine tools, lathes, presses and assembly line equipment. It also includes makers of pollution control equipment, castings, pressings, welded shapes, structural steelwork, compressors, pumps, bearings, elevators and escalators.
- Electrical Components & Equipment industry consists of manufacturers and distributors of electrical parts for finished products, such as printed circuit boards for radios, televisions and other consumer electronics. It also includes makers of cables, wires, ceramics, transistors, electric adapters, fuel cells and security cameras. Manufacturers of Electric motors and generators and mechanical motion control products are also part of this industry.
- Electronic Equipment & Parts industry includes companies offering Manufacturing and Design services for Engineered Components and Products used in different industries. Companies providing Laser-based manufacturing products are part of this industry.
- Containers & Packaging industry includes producers and distributors of cardboard, bags, boxes, cans, drums, bottles, jars and glass used for packaging. Specialty Packaging Products and Pressure-Sensitive Materials producers are also part of this industry.
Industry Ranking of 3M
With $30.1 billion revenues, 3M ranked number 3 of all the companies in the US Industrial Conglomerates industry. There were a total of 10 public companies in the US Industrial Conglomerates industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Industrial Conglomerates industry by revenues during 2016 were:
- General Electric ($123.7 billion)
- Honeywell International ($39.3 billion)
- 3M ($30.1 billion)
- Danaher ($16.9 billion)
- Icahn Enterprises ($16.3 billion)
- Illinois Tool Works ($13.6 billion)
- Trinity Industries ($4.6 billion)
- Roper Technologies ($3.8 billion)
- Carlisle Companies ($3.7 billion)
- CSW Industrials ($319.8 million)
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.