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Decision 5: Marketplace restructuring

We saw in Chapter 2 that electronic communications offer opportunities for new market 

structures to be created through disintermediation, reintermediation and countermediation 

within a marketplace. The options for these should be reviewed.

Decision 6: Supply chain management capabilities

(Supply chain management and e-procurement are discussed further in Chapters 6 and 7.) 

The main digital business strategy decisions that need to be reviewed are:

● 

How should we integrate more closely with our suppliers, for example through creating 

an extranet to reduce costs and decrease time to market?

● 

Which types of materials and interactions with suppliers should we support through 

e-procurement?

● 

Can we participate in online marketplaces to reduce costs?

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Chapter 5  Digital business strategy

Mini Case Study 5.4

3M was founded in 1902 at the Lake Superior town of Two Harbors, Minnesota, when five businessmen set 

out to mine a mineral deposit for  grinding‑  wheel abrasives. But the deposits proved to be of little value, and 

the new Minnesota Mining and Manufacturing Co. was formed to focus on sandpaper products.

Today, 3M is a diversified technology company known for product innovation, with a worldwide pres‑

ence in consumer and office; display and graphics; electro and communications; healthcare; industrial and 

transportation; and safety, security and protection services. In 2005 it had a turnover of $21 billion and 

69,000 employees. With 3M products sold in nearly 200 countries and over 60% of its turnover occurring 

outside its US base, 3M has risen to the challenge of using e‑channels to distribute its products and services 

worldwide.

The following are some of the strategies it has pursued to use online channels to change its relationship 

with its marketplace.

 Sell‑  side

● 

Disintermediation  ( sell-  direct)  strategy. 3M has traditionally sold through retail partners, but now offers 

some products direct through an e‑store (www.3mselect.co.uk).

● 

Create a new online intermediary (countermediation) strategy. This is a strategy 3M has not followed due 

to its diversity of products. Instead it has focussed on its destination site, www.3m.com, which has a 

tool to help potential customers to research and select products. Localised content is available for many 

countries, with ‘Where to Buy’ links to relevant suppliers in these countries. As an example of a coun‑

termediation strategy, in the banking sector, banks such as Barclays have created new portals, such as 

ClearlyBusiness (www.clearlybusiness.com), in this case to reach small, start‑up businesses online.

●