
ANALYSIS - Porter's 5 Forces

Although the intensity of competition has increased, the industry growth is an opportunity for 3M to keep competition low. 3M’s diversified product line provides opportunities for the company in most of the markets including the medical, housing, and electronic markets.
The threat of new entrants is low because barriers to penetrate the market are high, the industry requires a high capital investment and a high expertise realised by a team of qualified experts because 3M is focus on innovation.
The threat of substitutes is moderate because 3M has developed a brand recognition. What is more, the substitutes are quite limited and offer an inferior quality. Customers are a brand conscious these days and 3M is a well establish company to them. Hence it helps 3M to acquire a strong position on the market and become a market leader.
The power of buyers is moderate because of the customers’ price sensitivity and an expectation of very innovative products which are difficult to imitate. Indeed, 3M is focused on innovation in order to meet its customers’ expectations and follow the trend market.
The power of suppliers is low because they are concentrated and sell raw materials to 3M for the manufacture of its products. Nevertheless, raw materials have little differentiation that is why the price is quite similar for each supplier. This high level of competition among suppliers resulted in having low prices for their producers.
Finally, 3M has developed competitive advantages through high number of patents, diversification and high R&D spending. As a result, the company has developed an edge on its competitors while bringing innovative solutions to the world.