Profitability of a Company Analysis - Essay Example

These factors also help the company to gain a competitive advantage in the market and to maintain its goodwill and credibility in the market.

It is the form of the corporate strategy adopted by the company to increase the profitability and market share of the firm by increasing its sales volume by expanding and diversifying its products and services as well as by opening new gates of profitability in new markets. It can occur at any level in a firm either at the single unit level in a business or a corporate level. At the business unit level, the firm would expand its operations into the new market by creating a new segment in the specific industry that the firm was already in. However, at the business level, the diversification of the firm includes the investing strategy. In this strategy, 3M would analyze the market situation to make sure either to invest in any promising business or to penetrate the market by creating a new segment for the expansion of the business and to gain a competitive edge over the other companies within the same industry.

As we know that vertical integration is the process of merging two businesses that involve different stages of production (Harrigan). If 3M would adopt this strategy of vertical integration with the other business excelling at different production levels; would enhance 3M’s capability and performance. As well as, it would help the company to control its costs, units of production, quality of the products, and delivery structure.

Strategic Alliance is the kind of approach used by organizations to form a corporate relationship between them. In this kind of relationship, a firm develops a strategic alliance with another firm to meet shared goals, needs, and objectives. Companies can strategically alliance with other companies for anything from benefiting with resources such as products to using the distribution channels, expertise, knowledge, machinery, and many more. Forming a strategic alliance with the other companies in the market would benefit 3M and its partner firms in fulfilling the goals, benefiting each other as well as it would help the companies to become more attractive to competition by the other firms.

In M&A strategy, the firms grow or expand in the same sector by acquiring or merging with the other firm to acquire, divide or merge with one or different operations within the firm. This strategy would benefit 3M to either merge or acquire with the other firm doing the same business in the industry. It would help the company to grow, expand its business processes or units, and to benefit from the knowledge, expertise, or production of the other company.

Divestment is the reverse of the investment. It is the corporate strategy in which the company fulfills its financial or social objectives or needs. Divestment would benefit 3M if the company wants to overcome its financial losses by divesting its particular subsidiary to remain focused on the core business of the firm.

Adopting all of the above discussed or any one of the strategies would help the company to grow its operations in the market. This would help the company to overcome its losses, and its weak areas and to remain ideally competitive in the market.