External Analysis 3m Company

3M Company: Display and Graphics

Display and Graphics is a business segment of Minnesota Mining and Manufacturing Company (3M). This business segment creates products in films that brighten the displays on electronic products, such as flat-panel computer monitors, large print graphics, cellular phones, and LCD televisions (1). This section of the company is in the adhesive and sealant industry. This industry has become increasingly competitive since 2005, and the greatest advances occurred in Asia. Producers of adhesives and sealants have strategically located their production facilities at sites that combined three factors: ready availability of raw materials, nearby customers' production facilities, and a skilled workforce (2). This market includes industries in automobiles, housing, aircraft, and packaging.

The Porter's Five Forces Framework indicates that the adhesive and sealant industry has potential to grow in the future. Barriers to entry are high because the industry has a strong competitive nature and government policies. The economic recession decreased the demands for sealants as well. However, focusing on declining infrastructure may fuel adhesive demand, along with innovative packaging (2). Since the raw materials and energy costs were high, the companies in this industry changed its products and expand the product lines to serve new market trends. The adhesive prices rose because cost of raw materials increased. Additionally, the adhesive industry has been developing new product formulations that meet environmental standards (2). Consequently, the new firms will have to adapt to these new standards.

The threat of rivalry is high because the industry conditions include a large number of competitors and slow growth. Because of weakening demand in high raw material costs, many companies in the industry began cost cutting, consolidation, global expansion, and product diversification. However, new uses for adhesives continued to positively affect the North American and Western European markets. Companies settled on acquisitions as a way to diversify product lines and expand into higher-margin product offerings, such as those in the medical industry. One of the main competitors of 3M is Henkel KGaA, a German adhesive industry. Henkel made small purchases to diversify its product line, and it consolidated by divesting failing businesses. 3M ranks prominently in the United States' adhesive industry and internationally. Sales outside the United States accounted for about two-thirds of the company's revenues in 2006. 3M Chairman, President, and CEO George W. Buckley indicated that the firm must minimize costs and drive revenue where opportunities exist during hard economic times. 3M's other competitors in the adhesive and sealant industry are H.B. Fuller Company, National Starch and Chemical, Bostik Inc., Rohm and Haas Company. (2)

The threat of substitutes