Businessmodel of Freudenberg

Customer Segments

Freudenberg has a diversified market business model, with customer segments that have very different needs:

• Businesses – The company supplies manufacturers with intermediate products to be used for further processing or manufactured in final goods.
• Consumers – The company provides consumers with finished goods such as household products. ### Value Proposition

Freudenberg offers three primary value propositions: accessibility, innovation, and brand/status.

The company creates accessibility by providing a wide variety of options. It develops products and solutions in over 30 markets for thousands of applications; these include seals, nonwovens, medical products, specialty chemicals, filters, cleaning products, and vibration control components.

The company has embraced innovation throughout its history. Its groundbreaking efforts include:

• Tanning leather that uses chromate instead of tanbark
• The first leather seal
• The Simmerring, a radial shaft sealing ring with a leather sealing lip
• First large-scale production of Viledon artificial leather
• First market launch of nora shoe soles made of synthetic rubber
• Development of a new method for manufacturing spun-bonded nonwoven fabrics
• Development of the first vibration control hydraulic bearing
• Launch of the first automotive cabin air filters
• Development of the first components for fuel cells The company has established a strong brand due to its success. It sells its products in 60 countries and generated sales of €7.5 billion in 2015, with over 40,000 employees. Lastly, it has won a number of awards, including recognition as a “Top Employer Germany“ by the CRF Institute and as one of the ten best employers for interns in Germany by Absolventa and Clevis.

Channels

Freudenberg’s main channels are retail stores for consumers and direct sales personnel for businesses. The company promotes its offering through its website, social media pages, and participation in expos, symposiums, and conferences.

Customer Relationships

Freudenberg’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees. That said, there is a personal assistance component in the form of phone and e-mail support.

Key Activities

Freudenberg’s business model entails designing, developing, and manufacturing its products for customers.

Key Partners

Freudenberg’s key partners are the suppliers that provide it with the equipment and materials it needs to manage its operations. The company also maintains a longstanding joint venture partnership with NOK Corporation, based in Tokyo, Japan.

Key Resources

Freudenberg’s main resource are its human resources, who include the product experts in 60 countries it utilizes to develop cutting-edge solutions for 30 market segments and the engineers that develop and manufacture the solutions. The company also maintains important physical resources in the form of over 25 manufacturing sites in 14 countries.

Cost Structure

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

Revenue Streams

Freudenberg has one revenue stream:  revenues it generates from the sales of its products to its business customers and consumers.