Answered: 1. Out of the 3 levels of…

Management, Loose-Leaf Version

13th Edition

ISBN:9781305969308

Author:Richard L. Daft

Publisher:Richard L. Daft

Chapter8: Strategy Formulation And Execution

Section: Chapter Questions

Problem 2EE

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It was celebration time at 3M! The company completed 100 years in business in 2002. For many, 3M represented the house of innovation. For 100 years, 3M formula for growth - recruit the right people, provide them with the right environment to work and let them do their things - resulted in around 55,000 products and over thousands of patents for the company. By the late 1990s, 3M's growth rate started slowing down. According to reports, the stock price of 3M dropped from $83.00 in 1996 to $71.13 in 1998 and the price-earnings ratio (P/E ratio) of the company also declined considerably It was reported that during 1995-2000, earnings per share grew at an average of only 8.8% and shareholder returns fell far behind Dow and the S&P 500. Analysts felt that 3M was unable to respond to market conditions. Commenting on 3M's performance during the decade, Bob Burgstahler (Burgstahler), chief of Business development, said, "We have not produced elite results that correspond to the view that this is an elite organization." In December 2000, 3M announced the appointment of James McNerney of General Electric as its CEO. In 2001, James McNerney took over as Chairman and CEO of 3M and announced several initiatives to revive the stagnating growth rate of the company. McKnight tried to create an organization that would encourage its employees to take the initiative and come up with new ideas. He initiated cost cutting measures, rationalized purchases, and implemented process improvement programs in the company. He gave a centralized direction to the company from its earlier laissez-faire working style. By thus nurturing the talents of its employees and fostering a climate of innovation, 3M became one of the most innovative companies in the world. All of this creates a community of collaboration, and it ensures that everybody has some skin in the innovation game. And because their senior leaders have grown up in this culture, they continue to nurture and protect this highly collaborative, enterprising environment. Cultures are unique and extraordinarily difficult to duplicate. 3M allocates $1-$2 billion annually for acquisitions to boost inorganic sales growth. 3M's last acquisition was Ceradyne Inc in 2012, a global leader in development and production of advanced technical ceramics. The company is a disciplined buyer and has yet to announce a deal this year; though it possesses the financing capacity for a deal, it apparently has yet to find a target. 1. Out of the 3 levels of strategies, which strategy is playing a vital role in improving the performance of 3M? 2. What difference/s do you find in the 3M’s organizational structure after the appointment of Mc Nerney as a new CEO?

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