Businessmodel of Eastman

Customer Segments

Eastman has a mass market business model, with no significant differentiation between customer segments. The company targets its offerings at firms across industries and sizes.

Value Proposition

Eastman offers four primary value propositions: accessibility, innovation, risk reduction, and brand/status.

The company creates accessibility by providing a wide variety of options. It manufactures products with applications in a broad range of industries, including Agriculture, Appliances, Building & Construction, Food & Beverage, Personal Care, Electronics, Housewares, Infant Care, Medical, and Transportation. It also provides many development and commercialization services through its Custom Manufacturing business, with analytical, development, process, and synthesis capabilities.

The company embraces innovation as part of its culture. One of its core technologies is its Glass Polymer family of cosmetic materials, touted as an innovative alternative to traditional polymers and glass for packaging. The family’s key benefits include the following:

• Sustainability – All products in the family are Bisphenol-A (BPA) free and are free of substances such as Sulfur, Halogens, Nitrogen, Mercury, Lead, Cadmium, and Hexavalent chromium. Polymers are produced from 45% sustainably harvested softwood trees and cotton. Benefits of these qualities include longer shelf life, better process yield, and improved recyclability.
• Performance – Products in the family can be processed into any shape, through processes ranging from extrusion to injection blow molding. Still, their tough nature can support thick or thin walls. Other benefits include chemical resistance, precision fit, and reduced overall cycle times. The company reduces risk by maintaining high safety standards. It supports and complies with the European Union‘s Regulation EC 1907/2006, which concerns the Registration, Evaluation, Authorisation, and Restriction of Chemicals (REACH). REACH’s main purpose is to determine the hazards of chemicals and carry out risk assessments to protect human health and the environment.

The company has established a powerful brand due to its success. It serves customers in over 100 countries, has 15,000 employees worldwide, and generated revenues of $9.6 billion in 2015. Also, it has won many honors, including the following:

• Recognition as One of the Best Places to Work in 2016 by Glassdoor
• Recognition as one of the World’s Most Ethical Companies by the Ethisphere Institute (2015)
• The ENERGY STAR Partner of the Year Award from the U.S. Environmental Protection Agency (EPA) for five consecutive years ### Channels

Eastman’s main channel is its direct sales team, whose members operate in over 40 countries. It also sells its products through distributors, contract representatives, and its website. The company promotes its offering through its social media pages and participation in conferences.

Customer Relationships

Eastman’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees. The company’s website provides many useful resources such as product literature (safety data sheets/sales specs/technical data), tools (solvent comparison tool/solvent reformulation tool/TPE resin selector), and answers to frequently asked questions.

Despite this orientation, there is also a personal assistance component in the form of its close working relationship with clients through its Custom Manufacturing business.

Key Activities

Eastman’s business model entails designing, developing, and manufacturing products for its clients, as well as providing related services.

Key Partners

Eastman’s key partners are the suppliers that provide it with the raw materials and energy it needs to manufacture its products. It utilizes multiple suppliers for most materials. It forms contracts with these companies that last from two to five years. Key raw materials include cellulose, propane, paraxylene, propylene, polyvinyl alcohol, methanol, natural gas, and various precursors for specialty organic chemicals. Key energy sources include coal, natural gas, and electricity.

Eastman also maintains important partnerships with academia. It operates the Eastman Innovation Center at North Carolina State University, which combines the company’s industrial expertise with the school’s research resources. It also works with the University of North Carolina-Chapel Hill to obtain staff with strong chemical competencies for the center.

Key Resources

Eastman’s main resources are its human resources, who include the scientists and engineers that design, develop, and manufacture its products.

It also depends heavily on its physical resources, which include the more than 50 manufacturing sites it operates in 16 countries across the United States, Europe, Asia-Pacific, and Latin America. Furthermore, the company maintains the Paint Spray Facility, which develops and tests innovative coating additives, and the Color Technology Center, which blends colors and additives with copolyesters, cellulosics, and polyester alloys.

Lastly, the firm places a high priority on intellectual property, with more than 700 active U.S. patents, over 1,900 active foreign patents, and more than 5,000 active worldwide trademark applications/registrations.

Cost Structure

Eastman has a cost-driven structure, aiming to minimize expenses through significant automation. Its biggest cost driver is cost of sales, a variable cost. Other major drivers are in the areas of sales/marketing, research/development, and administration, all fixed costs.

Revenue Streams

Eastman has one revenue stream: revenues it generates from the sales of its products and services to customers. Sales typically occur through the formation of long-term contracts.