Businessmodel of BASF

Customer Segments

BASF serves more a customer base of more than 300,000, comprising businesses of all sizes, ranging from major multinational groups to independent local workshops. The Company’s five operating segments provide services targeted primarily at customers operating within the following industries:

• Agriculture, providing biotechnology and crop care products to large agricultural companies, as well as industrial and domestic urban and rural pest control products;
• Automotive and Transportation, including products for aviation and aerospace, automotive, logistics, and mass transport companies;
• Chemicals, including products for textile, cosmetics, oilfield, and construction companies;
• Energy and Resources, including products for mining, refining, metal treatment, and renewable energy companies;
• Paints and Coatings, providing chemical products for producers of industrial, architectural and decorative coatings;
• Plastics and Rubber, providing products to plastics processors. BASF includes among its customers a number of well-known brands, such as Shell, Honda, Yamaha, Sibur, and ABB.

BASF’s principal market is Europe, which accounts for around half of the Company’s sales.  Europe. The Company also does significant business with customers in North America and Asia Pacific, as well more limited business with customers across South America, Africa, and Middle East.

Value Propositions

BASF provides value to its customers in the following ways:

• Its reputation and industry standing, with the Company having an established brand name in its industry, serving a number of high-profile clients such as Tesla Motors, ABB, and Honda;
• Its broad selection of products and industry reach, with the Company offering a wide range of chemicals products for companies operating across multiple sectors, including the automotive, agricultural and energy industries;
• Its global presence and sales reach, with the Company serving customers across Europe, the Americas, Asia, Africa, and the Middle East through its own facilities and its partners; and
• Its commitment to innovation and development, with the Company committing substantial financial and personnel resources to research and development activities. ### Channels

BASF operates a website at www.basf.com, through which it provides information to customers on its various services, products, and target markets. The Company also operates its own WorldAccount webshop, through which customers can access product literature, place orders and track order status.

BASF makes the majority of its sales through its own in-house direct sales teams, which are organised both by operating segment and geographic region. The Company operates through facilities across its operating regions in Europe, the Americas, Asia, Africa, and the Middle East, including offices and sites in Mexico, Canada, the US, Kazakhstan, Japan and New Zealand.

BASF also serves customers through a number of joint venture companies that typically operate on a regional basis, including co-owned entities such as Kolon Plastics in Korea and Avantim in the Netherlands.

Customer Relationships

BASF provides certain products to customers on a self-service basis through its webshop service, which allows for online ordering and account management without the need for direct interaction with BASF staff.

BASF makes its sales primarily through its own direct sales personnel, who interact closely with clients to ensure their individual requirements are met. BASF maintains close relationships with companies operating within its target industries, and positions itself globally in order that it can directly supply customers in all regions.

BASF provides personal assistance to customer throughout the sales process. It also provides product information, news and media resources, and various business publications on its website, and is able to interact with customers through its social media accounts, including with mainstream networks Facebook, Twitter and LinkedIn, as well as with Flickr and Slideshare.

Key Activities

BASF is a chemicals company. Its operations are split into five operating segments: Chemicals, comprising the Company’s consists of the Petrochemicals, Monomers and Intermediates divisions; Performance Products, comprising the Company’s the Dispersions and Pigments, Care Chemicals, Nutrition and Health, and Performance Chemicals divisions; Functional Materials and Solutions, comprising the Company’s Construction Chemicals, Coatings and Performance Materials divisions; Agricultural Solutions, comprising the Company’s Crop Protection division; and Oil & Gas, comprising the Company’s Exploration and Production division.

BASF’s product portfolio includes solvents, plasticisers, glues, and electronic chemicals, as well as materials for use in the production of detergents, plastics, textiles and paints.

Key Partners

BASF collaborates with a number of companies that support and supplement its business operations. The Company’s partners can be categorised as follows:

• Supplier Partners, comprising suppliers of resources, materials and services;
• Joint Venture Partners, with which the Company collaborates on various operations through co-owned entities; and
• Strategic and Alliance Partners, comprising a range of industrial and chemical companies, as well as academic and research organisations, with which the Company shares resources, and collaborates on joint projects. BASF has a partnership with North America Center for Research in Advanced Materials to research innovative materials for the automotive, building and construction, and energy sectors; with The California Research Alliance to develop new inorganic materials; with Meiji Seika to develop and insecticide to control biting insect pests; and with the US Department of Energy to deliver advanced battery materials.

Key Resources

BASF’s key resources are its technologies and intellectual properties, its manufacturing facilities and physical infrastructure, its supply chain, its various strategic and joint-venture partnerships, and its personnel.

BASF operates 338 production sites worldwide that are key to the Company’s operations. The Company also has a number of patents in place to protect its proprietary technologies, that are an important component of the Company’s business. In 2015 BASF filed 1,000 new patents worldwide, heading the Patent Asset Index in 2015 – which compares patent portfolios industry-wide – for the year.

Searches of records published by the US Patent and Trademark Office identified numerous applications filed in BASF’s name, including applications entitled ‘Method for producing amino acids’, Process for preparing formic acid’ and ‘Carrier system for fragrances’.

Cost Structure

BASF incurs costs in relation to its research and development activities, the operation of its production facilities – including the acquisition of supplies and consumables, the maintenance and operation of its physical infrastructure – including logistics and warehousing, the management of its partnerships and the retention of its personnel.

In 2015 BASF’s cost of materials and merchandise amounted to €37.32 billion, while its expenses for services purchased and energy costs amounted to €14.79 billion. The Company’s personnel expenses – comprising the payment of salaries and benefits to the Company’s 110,000 employees – amounted to €9.98 billion, and research and development costs were recorded at €1.95 billion.

Revenue Streams

BASF generates revenue through the sale of its portfolio of chemicals products – including intermediates, monomers, pigments, catalysts, conversions and performance chemicals – across its five operating segments.

In 2015 BASF recorded annual sales revenue of €70.45 billion, down almost €4 billion on the €74.33 billion generated by the Company in 2014. The Company’s Functional Materials and Solutions segment generated the largest portion of the Company’s sales revenue, recording annual sales of €18.52 billion. This was followed by the Performance Products, Chemicals, and Oil and Gas segments, each of which recorded more than €12 billion in sales revenue for the year.