Businessmodel of Honeywell

Customer Segments

Honeywell serves a range of customers across its three operating segments, primarily comprising industrial and corporate clients.

Honeywell’s Aerospace segment produces products and solutions for aircraft manufacturers, airlines, aircraft operators, military services, and defense and space contractors. Its sales are primarily made to original equipment manufacturers operating within the in the air transport, general aviation aircraft, and automotive and truck manufacturing industries segments. It also provides spare parts and after-market maintenance services to aircraft operators. The Company’s Automation and Control Solutions segment provides products to companies operating within the petroleum refining, gas processing, petrochemical industries, while the Performance Materials and Technologies segment targets homes, commercial buildings and industrial facilities.

Sales to aerospace customers make up around 39% of Honeywell’s total sales, with sales to commercial aerospace original equipment manufacturers making up around 8%. The US Government is among the Company’s largest customers, accounting for around $3.74 billion in sales in 2015. The US is by far the company’s largest market, followed by Europe, with sales across the rest of the world amounting to around 15% of total sales.

Value Propositions

Honeywell provides value to its clients in the following ways:

• Its industry experience and expertise, with the Company able to attract experienced executives and well-trained specialist personnel across its three operating segments;
• Its brand recognition and reputation, with the Company being the largest, most well-known and most established firm operating in its industry;
• Its security and reliability, with the Company providing, professional, secure and reliable services to its customers; and
• The quality of its products and manufacturing process, with the Company providing a range of high quality products. ### Channels

Honeywell operates a website at www.honeywell.com, through which it makes information on its various products, services and activities available to its customers. The Company, however, does not operate an online sales channel.

Honeywell makes the majority of its sales through its own in-house sales force, with the Company operating through more than 1,200 sites across 70 countries worldwide, spanning the Americas, Europe, Asia Pacific, Africa and the Middle East.

Honeywell also provides products and solutions through a network of residential and commercial distributors, both domestically and internationally.

Customer Relationships

Despite its online presence, Honeywell does not make any of its products or solutions available to customers on a self-service basis.

The nature of Honeywell’s business requires that it establish collaborative relationships with its customers, consulting directly with customers in order to establish a clear brief that covers their individual needs and budgets. Honeywell aims to establish longstanding relationships with its customers that span a number of years, generating recurring business across its operating segments.

Honeywell provides various after-market support and maintenance services to its customers, who are able to contact the Company’s sales and support teams through an online contact form in order to receive personalised assistance. The Company also provides a range of online technical support resources, including product manuals, FAQs and video guides.

Customers are also able to interact directly with Honeywell, and stay up to date with its operations and developments, through its social media accounts with Twitter, YouTube and Google+.

Key Activities

Honeywell is a technology and manufacturing company.

Its operations are organised into three separate business segments: Aerospace, which supplies aircraft engines, integrated avionics, systems and service solutions, and related products and services for original equipment manufacturers within the aviation and defense sectors; Automation and Control Solutions (ACS), which a range of environmental, energy solutions, productivity, security, and industrial safety solutions for homes, commercial buildings and industrial facilities; and Performance Materials and Technologies, which develops and manufactures materials, process technologies and automation solutions for companies operating across the natural resources industries.

Key Partners

Honeywell collaborates with companies across multiple sectors to enhance its own business segment offerings. The Company operates two principal partner programs:

• Channel Partner Program, comprising resellers, independent software vendors, resellers, distributors, independent sales agents that assist the Company in selling and distributing its products and solutions, particularly within jurisdiction the Company does not have a significant presence; and
• Performance Partner Program, comprising technology, software, marketing, integration, and production partners that supplement the Company’s own offering and provide services on the Company’s behalf. Honeywell’s Performance Partner Program is divided into silver, gold and platinum levels, organised by the quality and quantity of services provided.

Honeywell has recently launched a partnership with Palo Alto Networks to offer joint solutions to help customers protect industrial control systems and with Pearlstone Energy to boost UK grid stability. The Company also has partnerships with Dematic Real Time Logistics, Renovotec, ImageWare Systems, and Precise Biometrics.

Key Resources

Honeywell’s key resources are its technologies and intellectual properties, its research and development facilities, its manufacturing and production infrastructure, its supply chain, its distribution and logistics networks, its partnerships, and its personnel.

Honeywell considers its various patents, trademarks and licenses to be important to our operations, but the Company does not deem any individual patent, trademark or any licensing or distribution rights to be of material importance to its total business.

Searches of records published by the US Patent and Trademark Office identified numerous patent applications filed in the name of Honeywell and its subsidiaries, including applications entitled ‘Methods and apparatus for interpreting received speech data using speech recognition’, ‘System and method of speaker recognition’ and ‘Systems and methods for aircraft on-ground determination’.

Cost Structure

Honeywell incurs costs in relation to the operation of its research and development facilities, the management of its supply chain, the production and storage of its products, the sale and distribution of its products, the management of its partnerships, and the retention of its personnel.

Honeywell accrues substantial research and development costs, with its research activities – primarily located in the US, India, Europe and China – amounting to $1.86 billion in 2015. The Company also accrues significant general and administrative costs, comprising the payment of salaries and benefits to its 129,000 employees and the payment of rental and utility fees across its international network of offices.

Revenue Streams

Honeywell generates revenue through its three operating segments, divided as follows:

• Aerospace Sales, including revenue derived from the sale of commercial original equipment, the provision of after-market services, the sale of defense and space products and the sale of transportation systems;
• Automation and Control Solutions Sales, including revenue derived from the sale of energy, safety and security products, and the sale of building solutions and distribution services; and
• Performance Materials and Technologies Sales, comprising revenue derived from the provision of process solutions, the sale of advanced materials, and the sale of oil products. In 2015 Honeywell recorded total net sales of $38.58 billion, down slightly on the $40.30 billion recorded the previous year. Aerospace sales accounted for $15.24 billion, Automation and Control Solutions sales accounted for $14.11 billion, and Performance Materials and Technologies sales accounted for $9.24 billion.