Businessmodel of Rockwell Automation

Customer Segments

Rockwell provides a broad range of products, services, and solutions that are utilised by commercial and industrial customers across multiples business sectors. The Company’s organises its customers across three principal markets:

• Consumer Industries, including customers within the food and beverage industry, the home and personal car industry, and the life sciences industry;
• Transportation, including customers within the automotive manufacturing industry, the aftermarket care industry, and the tyre manufacturing industry; and
• Heavy Industries, including customers across the oil and gas industry, and the mining and metals industry. Rockwell names a number of its customers on its website, including high-profile names such as Toyota, SOCAR, and Bradman Lake.

Both of Rockwell’s operating segments serve a global customer base. In 2015, sales to customers in the US accounted for around 55% of the Company’s total sales. Outside the US, the Company sells products across Latin America, Asia Pacific, Europe, Africa, and the Middle East, with its largest international sales recorded in Canada, China, the UK, Mexico, Italy, Germany, and Brazil.

Value Propositions

Rockwell provides value to its customers in the following ways:

• Its industry standing and track record, with the Company established as a reliable and effective provider of industrial automation products and solutions, having secured business from a number of high-profile clients across multiple industries, including Toyota and SOCAR;
• Its international sales reach, with the Company’s two operating segments selling and distributing products across all regions, with the US, Canada, China, the UK, Mexico, Italy, Germany, and Brazil being its largest markets;
• Its innovative and unique products, with the Company providing a broad portfolio of products that utilise proprietary technologies and designs and cannot be purchased from competing companies; and
• Its commitment to research and development, with the Company dedicating a significant portion of its resources each year to the design and development of new products and processes, in order to ensure that its customers receive state-of-the-art products. ### Channels

Rockwell operates a website at www.rockwellautomation.com, through which it provides information on its various products and solutions, locations, and activities. The Company also operates an online customer portal, which enables customers to manage their customer account details and access certain tools and resources. While the Company does not operate an online sales channel, customers are able to request quotes and pricing information through the Company’s website.

Approximately 70% of Rockwell’s sales are made through independent distributors, particularly in the US and Canada. These distributors do not typically carry products that compete with Rockwell’s own portfolio of products. Sales to the Company’s largest distributor in 2015, 2014 and 2013 were approximately 10% of total sales for the year. Rockwell also operates its own direct sales force, which is organized by segment and by geographic regions and works in conjunction with the Company’s network of distributors.

Customer Relationships

Rockwell does not make its products available for sale on a self-service basis. Customers, however, can make pricing and quote request independently through the Company’s website, and have access to the Company’s self-service online customer portal, which allows them to manage their accounts without interacting with sales or support personnel.

Rockwell’s direct sales force consults directly with customers to ensure that their individual needs are met, seeking to provide personalised assistance where possible. The Company aims to establish long-term relationships with its customers, with a view to securing recurring business.

Rockwell provides a broad range of support services to its customers. This includes technical support through a dedicated team of technical personnel, who provide personalised assistance on a case-by-case basis, maintenance and repair services, and on-site services. Customers are able to contact support staff over the phone or online. Rockwell additionally provides a range of resources to customers through its website, including user guides, product information, and technical and commercial publications.

Customers can stay up to date with Rockwell development and interact with the Company through its blog and its social media accounts, including with Facebook, Google+, LinkedIn, Twitter, SlideShare, and YouTube.

Key Activities

Rockwell Automation is a provider of industrial automation power, control and information solutions, primarily for manufacturing customers across multiple industries.

The Company aligns its business activities into two reportable segments: Architecture and Software, which relates to its development and provision of various hardware, software and communication components; and Control Products and Solutions, which relates to the development and provision of related software and value-added solutions.

The Company’s portfolio of products includes control platforms, low and medium voltage electro-mechanical and electronic motor starters, signaling devices, termination and protection devices, relays and timers. Rockwell serves a global customer base through a hybrid distribution model, comprising a network of third party distributors and the Company’s own direct sales force.

Key Partners

Rockwell works in conjunction with a range of companies and organisations in the development, distribution, and implementation of its solutions. These partners include:

• Supplier and Vendor Partners, comprising suppliers of raw materials, tools and resources that are utilised in the manufacture of the Company’s products, as well as services and equipment that are utilised enterprise-wide;
• Distribution and Channel Partners, comprising various independent sales agents and authorised distributors that work with the Company in selling and delivering the Company’s products to customers around the world;
• Manufacturing Partners, comprising various original equipment manufacturers that provide products and solutions that use Rockwell’s technologies;
• Technology Partners, comprising software developers and systems integrators that assist in implementing and delivering the Company’s products and integrating Rockwell functionality into third party solutions; and
• Strategic and Alliance Partners, comprising a range of market-leading companies across various sectors that collaborate with the Company on joint solutions and projects. Rockwell’s systems integrator partners include Accent Controls 2R Automation, and ABCON Electric; its original equipment manufacturer partners include Diamond Power International, NJM Packaging, and Qualtech; and its strategic partners include Cisco, Panduit, and Microsoft.

Key Resources

Rockwell’s key resources are its technologies and intellectual properties, its supply chain and materials, its manufacturing facilities, its sales and distribution infrastructure, its IT and communications infrastructure, its partnerships, and its personnel.

Rockwell owns and or leases a number of properties that are key to its ongoing activities. This notably includes its network of 12 manufacturing facilities across North America, Europe, and Asia, including in China, Switzerland, Mexico, and Poland.

Rockwell also own or licenses various patents and patent applications that are key to the development and provision of its proprietary products and solutions. Searches of records published by the US Patent and Trademark Office identified numerous patent applications filed in Rockwell’s name, including applications entitled ‘Motor control center unit withdraw with door closed’, ‘Remote industrial monitoring using a cloud infrastructure’ and ‘Remote object data property replication method and system’.

Cost Structure

Rockwell incurs costs in relation to the procurement of raw materials and equipment, the operation of its manufacturing and distribution infrastructure, the operation of its sales and marketing channels, the maintenance of its IT and communications infrastructure, the management of its partnerships, and the retention of its personnel.

In 2015 Rockwell recorded total cost of sales in the amount of $3.60 billion. The Company’s total selling, general and administrative expenses totaled $1.51 billion for the year, with the Company recording research and development costs in the amount of $307.30 million and rental expenses totalling $117.00 million.

Revenue Streams

Rockwell generates revenue through the development, manufacture, and sale of various industrial automation products and solutions across its two operating segments, including:

• Revenue derived from the sale of hardware, software and communication components; and
• Revenue derived from the sale of motor control and industrial control products and the provision of related value-added solutions and services. In 2015 Rockwell recorded total sales of $6.31 billion, down on the $6.25 billion generated by the Company in 2014. The Company’s Architecture and Software segment recorded annual sales of $2.75 billion, while its Control Products and Solutions segment recorded sales of $3.56 billion.