Businessmodel of Praxair

Customer Segments

Praxair produces and distributes a range of industrial gas products to customers across multiple operating sectors and jurisdictions. The Company’s core target industries are the following:

• Healthcare, comprising pharmaceutical and biotechnology companies;
• Refining and Chemicals, comprising petroleum refining companies and chemicals processing companies;
• Manufacturing, comprising oil and gas companies, additive manufacturing companies, and pulp and paper businesses;
• Consumer Goods, principally comprising companies active in the beverage carbonation market;
• Technology and Electronics, comprising solar energy companies, semiconductor manufacturers, and fiber-optics companies;
• Metals and Materials Processing, comprising steelmaking companies and other metals fabrication operators;
• Aerospace and Automotive, comprising manufacturers of automotive and aviation products and parts; and
• Water Treatment, comprising water treatment companies and utility companies. Praxair’s Surface Technologies segment serves an overlapping customer base, spanning the aircraft, energy, printing, primary metals, petrochemical, textile, and other industries.

Praxair serves customers around the world. It is the largest industrial gas supplier in North and South America, has a growing presence in Asia, and has strong, well-established businesses in Europe.

Value Propositions

Praxair provides value to its customers in the following ways:

• Its industry standing and track record, with the Company recognised as a market leader in its filed, having established a track record over a number of years as reliable supplier of high-quality products;
• Its portfolio of products, with the Company offering its customers a broad portfolio of products, spanning gas mixtures and speciality gases, including argon, dry ice, carbon dioxide, and gas handling equipment;
• Its technology-backed processes, with the Company committed to innovation, developing a range of unique technologies and processes that it uses to manufacture its various products;
• Its extensive international network of facilities, with the Company operating industrial gas production facilities across its multiple operating regions, enabling it to serve clients quickly and efficiently through nearby facilities; and
• Its industry expertise and experience, with the Company employing specialist personnel across its five operating segments, as well as a team of experienced industry executives. ### Channels

Praxair operates a website at www.praxair.com, through which it provides information on its products, its target industries, and locations. The Company also offers an online customer portal, through which customers can manage certain aspects of their accounts, as well as an online sales portal, which allows enables customers to place orders and make purchases online.

Praxair makes sales through its in-house direct sales force, which is organised by geographic region, with a separate sales team for the Company’s Surface Technologies segment. These sales personnel work out of the Company’s international network of offices and facilities, spanning the America, Asia Pacific, and Europe.

Praxair operates its own network of production and processing facilities. It then distributes its products to customers via three principal methods: on-site or tonnage, with the Company providing constant supply through on-site plants; merchant or bulk liquid, with the Company delivering products directly form its own plants by tanker trucks to storage containers at the customer’s site; and packaged or cylinder gases, with the Company providing gas in metal cylinders that can be delivered to the customer’s site or picked up by the customer at a packaging facility or retail outlet.

A substantial portion of the Company’s cylinder gases are distributed by independent distributors that buy merchant gases in liquid form and repackage the products in their own facilities.

Customer Relationships

Praxair provides a range of products and tools to its customers on a self-service basis. The Company’s online portal allows customers to access delivery history and order status, view invoices and shipping information, and access industry news, while the Company’s online sales channel enables customers to make product orders, without interacting directly with members of the Company’s sales personnel.

Praxair’s sales teams consult directly with clients in order to establish their individual needs and the most appropriate method of delivery in each case. The Company seeks to establish longstanding relationships with its customers, with supply contracts often running into multiple years.

Praxair provides ongoing support to its customers, many of which are afforded their own relationship management team. Customers can also access personalised assistance by contacting the Company’s support staff over the phone and via email. The Company also provides online resources such as store locators and safety information.

Customers are additionally able to interact directly with Praxair through its social media accounts, including with Facebook, Twitter, LinkedIn, and YouTube.

Key Activities

Praxair is a supplier of industrial gasses and related products to customers across multiple industries in north and South America, Asia Pacific, and Europe. The Company organises its activities into five reportable business segments, four of which are designated on a geographic basis: North America, Europe, South America, and Asia.

The Company’s fifth segment, Surface Technologies, is concerned with the supply of wear-resistant and high-temperature corrosion-resistant metallic and ceramic coatings and powders. Praxair provides its customers with a range of products, including atmospheric gases such as oxygen, nitrogen, and argon, and process gases such as carbon dioxide, helium, hydrogen, electronic gases, specialty gases, and acetylene. The Company additionally designs, engineers and builds equipment that produces industrial gases primarily for internal use.

Key Partners

Praxair works in conjunction with a range of companies and organisations across its operating segments and jurisdictions. These partners can be organised broadly into the following categories:

• Supplier and Procurement Partners, comprising suppliers of raw materials, equipment and tool that are utilised in the Company’s manufacturing and processing operations, as well as suppliers of services and technologies that are utilised across the enterprise as a whole;
• Distribution and Channel Partners, comprising various distributors and independent sales agents that supplement the Company’s in-house sales and marketing units and assist in reaching clients in certain jurisdictions;
• Joint Venture Partners, comprising various gas suppliers and processing companies with which the Company provides joint products and services through mutually owned entities; and
• Community and Social Partners, comprising various non-profits and charitable organisations, with which the Company collaborates on various social and community projects. Praxair has launched a number of partnerships in recent years. This includes a deal with Uno-X Hydrogen to install 20 hydrogen refueling stations covering all the major cities in Norway, and a tie-up with Iteris Inc to use the company’s lane guidance systems in its trucks.

Key Resources

Praxair’s key resources are its technologies and intellectual properties, its raw materials and supply chains, its production and processing facilities, its sales and distribution infrastructure, its online platforms, its IT and communications infrastructure, its partnerships, and its personnel.

Praxair owns or licenses a large number of United States and foreign patents that relate to a wide variety of products and processes. Searches of records published by the US Patent and Trademark Office identified a number of patent applications filed in Praxair’s name, including applications entitled ‘Gas compressor control system preventing vibration damage’, ‘High purity zirconia-based thermally sprayed coatings and processes for the preparation thereof’ and ‘Air compression system and method’.

Praxair also owns and or leases a number of physical properties that are key to its activities, notably its production and processing facilities across the US, Brazil, Mexico, China, and India.

Cost Structure

Praxair incurs costs in relation to the development of its technologies and intellectual properties, the procurement of materials and supplies, the operation of its industrial gas production facilities, the operation of its sales and distribution infrastructure, the implementation of marketing and advertising campaigns, the management of its partnerships, and the retention of its personnel.

In 2015 Praxair recorded cost of sales in the amount of $5.96 billion. The Company also accrued selling, general and administrative expenses – including the payment of salaries and benefits to its international workforce of 26,657 employees – totaling $1.15 billion for the year, and research and development costs totaling $93 million.

Revenue Streams

Praxair generates revenue through the production and sale of various industrial gases, gas mixtures, and speciality gases, including argon, dry ice, carbon dioxide, krypton, xenon, and nitrogen. The Company also generates a portion of its revenue from the sale of various resistant metallic and ceramic coatings and powders.

In 2015 Praxair generated annual sales of $10.78 billion, down slightly on the $12.27 billion recorded by the Company in 2014. The Company attributed this decrease of around 12% to negative currency translation impacts. The majority of Praxair’s sales for the year were attributed to its North America segment, which alone recorded sales for the year of $5.87. The remaining sales were dispersed relatively evenly across the Company’s other geographic segments, with the Surface Technologies segment recording $609 million.