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3m Healthcare Division Financial Analysis

By:   •  April 16, 2019  •  Case Study  •  638 Words (3 Pages)  •  1,847 Views

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3M-Health Care Division

One of the major business segments of 3M corporation is the products it provides through its Health Care division. 3M health care division provides surgical and medical supplies, dental and orthodontic supplies, as well as health information systems infection prevention products (2017). According to 3M 2017 annual report, “Financial Information and other disclosures relating to 3M business segments and operations in major geographic areas are provided in the Notes to Consolidated Financial Statements (2017)”. The 2017 annual report also stated that their worldwide health care division sales increased 6 percent. In addition to the health care division sales increase, 3M operating income margins in the health care segment were up 31.5 percent (2017).

Based on the data regarding the profitability of 3M and the market that it provides its services to, Porter five forces framework shows 3M will continue to be a major supplier to the health care industry. The threats of new entrants are not likely due to the barriers of entry such as the patients that 3M and other existing heath care suppliers have outstanding. 3m having a long-established brand will also deter a new startup company from entering the market as their competitor. The threat of substitutes is also highly unlikely due to many consumers don’t want a second-best item when it comes to health care products. A consumer may want a product that uses the same technology but not a substitute to a product that is already on the market and working well in the industry. The bargaining power of its customers does have a great advantage. As far as the health care division the customers that 3M serve is hospitals, doctor offices as well as dentist offices. If major hospitals put pressure on 3M to lower its prices or provide a wider range of products this have an effect on the sales 3M generates.

The bargaining power of its suppliers can change the position that 3M serves in the market field of health care services. If 3M suppliers increase their costs 3M would have to increase their costs and this would drive the price up on the products they provide. If 3M prices increase at a faster rate than its competitors, this would cause them to possibly lose money and customers. One of 3M biggest competitive rivals in the health care division is Avery Dennison. The way Avery Dennison could increase its share of the market is if it found a way to provide an advantage in its products through innovation.

3M strengths is its name and the amount of years it has been in the business. 3M has been in the business

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