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2. ‘3M Russia’ electrics business development strategy

3. Our team comes from a wide range of regions of the Russian Federation and Belarus: Orsha… Mariya Tugina (Orsha, Belarus) Moscow State University, Faculty of Global Studies, International Relations Department. 3rd year Our team Key directioins Strategy Risks & potential ROI Implementation

4. Our team comes from a wide range of regions of the Russian Federation and Belarus: Kirovo-Chepetsk… Ekaterina Gorokhova (Kirovo-Chepetsk, Russia) Moscow State University, Faculty of Global Studies, International Relations Department. 3rd year Our team Key directioins Strategy Risks & potential ROI Implementation

5. Our team comes from a wide range of regions of the Russian Federation and Belarus: Kislovodsk… Dmitri Kondrashov (Kislovodsk, Russia) The Russian Presidential Academy of National Economy and Public Administration. Faculty of Real Estate Management. Department of Marketing. 3rd year. Our team Key directioins Strategy Risks & potential ROI Implementation

6. Our team comes from a wide range of regions of the Russian Federation and Belarus: Yuzhno-Sakhalinsk… Andrey Tugin (Yuzhno-Sakhalinsk) The Russian Presidential Academy of National Economy and Public Administration. Faculty of Real Estate Management. Department of Marketing. 3rd year. Our team Key directioins Strategy Risks & potential ROI Implementation

7. Having analyzed strengths, weaknesses, opportunities and threats, we have identified key directions for development of 3M’s electrics business The goal for the team – to develop a set of measures that would increase brand awareness and sales of electrical products for ‘3M Russia’ by 50% over the next 2 and more than 25% over the next 3 years. Deepen penetration of the business in central Regions. Increase 3M brand awareness through a complex of marketing communications. Capitalize on building long term mutually beneficial relationships with the ultimate consumers, including retail customers. Become more ‘Russified’ and ‘closer’ to the ultimate consumers. Extend production lines. Our team Key directions Strategy Risks & potential ROI Implementation

8. The strategy for 3M’s electric business development should effectively combine both marketing and sales activities Handout pp. 5-8 Sales strategy Marketing strategy & brand communications Private Housing Commercial Construction Industrial Enterprises Our team Key directions Strategy Risks & potential ROI Implementation

9. Most of the measures on B2B segment are of a relatively low risk but at the same time bring high return on investment Handout pp. 5-8 Investment Risks ROI Description Commercial Construction Industrial Enterprises low medium high Our team Key directions Strategy Risks & potential ROI Implementation

10. However, the core point of the strategy is concentrating on the development of the unrealized potential of B2C market PrivateHousing At present time, B2C segment makes up only 10% of ‘3M Russia’s’ electrics business (the chart above). Most of the population of the country consumes less than $1000 worth of goods per capita per month (the graph above). However, there is clearly a high demand for consumer goods, pertaining to the residential construction in the regions other than Central (e.g. Volga, South and Siberian). This is why we believe there is high unrealized potential in the economy segment of electrics business. Source of the graphs: case data, Troika Dialog Our team Key directions Strategy Risks & potential ROI Implementation

11. Developing client relationships on B2B market implicates positioning of 3M merchandize on lower than usual segments (middle-low and economy) Targeted positioning 3M Positioning now Х Х Х Price Price Quality Quality The current positioning of 3M’s products implicates operating on the high and middle-high segments. We recommend that 3M enters middle-low and economy price segments. Our team Key directions Strategy Risks & potential ROI Implementation

12. 3M might take into consideration three strategic alternatives for positioning on a new segment Our team Key directions Strategy Risks & potential ROI Implementation

13. However, the first two options are not beneficial for the company Our team Key directions Strategy Risks & potential ROI Implementation

14. However, the first two options are not beneficial for the company Our team Key directions Strategy Risks & potential ROI Implementation

15. We recommend that 3M enters low segment of Russian electrics market by acquiring a local wholesaler Our team Key directions Strategy Risks & potential ROI Implementation

17. Increase 3M’s presence in the regions of the country

18. Eliminate intermediary expenses

19. Integrate two businesses (production and distribution) vertically, which will let reduce costs and, thereby, cut prices to position the products on a lower segment

20. Let 3M control the merchandizing and the shelf life of its electrical productsOur team Key directions Strategy Risks & potential ROI Implementation

22. An opportunity to penetrate further into the regionsNizhniy Novgorod Kazan Yekaterinburg Novosibirsk St. Petersburg Krasnoyarsk Khabarovsk Our team Key directions Strategy Risks & potential ROI Implementation

23. The overall strategy implicates accepting a number of risks Level Description of the risk Measure Commercial Construction & Industrial enterprises Handout, pp.9-10 Private housing low medium high Our team Key directions Strategy Risks & potential ROI Implementation

24. Successful mitigation of the risks promises relatively high return on investment for the company Potential ROI Ways of mitigating the risk Measure Commercial Construction & Industrial enterprises Handout, pp.9-10 Private housing low medium high Our team Key directions Strategy Risks & potential ROI Implementation

25. January 2012 February 2012 March 2012 June 2011 July 2011 August 2011 September 2011 October 2011 November 2011 December 2011 Today DesigningaprojectСб 09.04.11 - Чт 05.05.11 Negotiating Delegatinglogistics Magazinesadvertizing. POS Displays Landing contracts for state-funded infrastructural projectsПт 06.05.11 - Вт 02.08.11 Start of the project Client Technological centre in Novosibirsk launched Industrial Automation Russia Electric Mains of Russia End DIT Market Client technological centre in St. Petersburg launched Buyout of ElektroMIR The active phase of the implementation of the strategy is expected to take around 10 months and will, in the most probable scenario, accumulatively bring the targeted profits by the year of 2014 Our team Key directions Strategy Risks & potential ROI Implementation

26. Ekaterina Gorokhova (Kirovo-Chepetsk) Moscow State University, Faculty of Global Studies, International Relations Department. 3rd year Mariya Tugina (Orsha, Belarus) Moscow State University, Faculty of Global Studies, International Relations Department. 3rd year Dmitri Kondrashov (Kislovodsk) The Russian Presidential Academy of National Economy and Public Administration. Faculty of Real Estate Management. Department of Marketing. 3rd year. Andrey Tugin (Yuzhno-Sakhalinsk) The Russian Presidential Academy of National Economy and Public Administration. Faculty of Real Estate Management. Department of Marketing. 3rd year. THANK YOU FOR YOUR ATTENTION. QUESTIONS?

27. Appx.