THE WORLD’S LARGEST COMPANIES: GLOBAL 500 – YEAR 2019
A recent report by the consulting company Brand Finance shows us the ranking of the most valuable and strongest corporate brands in the world, taking into account the relationship that exists between the strength of a brand and its performance in the stock market, taking into account that According to their research, that when investing in highly positioned companies, a return of practically double is obtained compared to the average of organizations that are outside the S&P 500. It is also a sample of the concentration of global economic power and the sectors economics that are at the forefront of global growth.
THE IMPORTANCE OF GLOBAL BRAND LEADERSHIP
Source: Global 500 BF
As can be seen in the previous graph, Amazon maintains the first position in the ranking as the most valuable brand in the world with a growth of 25% compared to the previous year and a market value equivalent to USD 187.9 billion, while Google and Apple make up the podium in second and third position, respectively. This shows the positioning of US companies on the list (which also includes Microsoft, Facebook, AT&T and Verizon), with the exception of Samsung which is from South Korea (5th place) and two Chinese banks that appear in 8th and tenth position.
Indeed, Amazon’s leadership is reinforced by initiatives such as the “Prime Day to date” where consumers can buy more than 100 million products and be the first company in the history of Wall Street to exceed USD 1 trillion. Likewise, it stands out for the diversification of its portfolio and its extension to new sectors by its founder and CEO, Jeff Bezos, although it is exposed to the reputational challenge of its recent divorce that may change the shareholding and, therefore, the risks that represents for the stability of the company. According to Brand Finance, this process could cause a loss range between 5% -10% of its current market value.
Beyond this, Amazon has become a direct competition that affects traditional retail companies, considering that it has given great impetus to e-commerce and payment through mobile devices as the main rising trends of modern consumers. . One of those that has felt this impact the most has been Walmart, which is no longer in the top 10 due to complications with product fulfillment as a result of increased transportation costs and low earnings on online purchases. In this sense, it serves as a warning for retail companies to improve their offer in the virtual channel and increase the experiences of their users within the stores or otherwise, they will end up losing to their e-commerce competitors.
Source: 2019 Brand Finance Report
Of what there is no doubt, is that technology companies dominate the top 10 and if we evaluate them from the 500 ranking, they make up 23.7% of all companies with a total added value of USD 1,631.6 trillion. In contrast to the good performance of Amazon, the apple company has been showing problems growing in key emerging markets and could show little interest in diversifying its portfolio (its main bet has been based on the sales of its flagship product iPhone), which could be an opportunity for Google to take second place in 2020. In fact, some analysts express some concern with the loss of innovation capacity that characterized Apple a few years ago and that is taking its toll on its latest financial results,
For its part, Microsoft has become the surprise of the ranking after experiencing an interesting comeback as a result of its digital transformation processes whose new business approach is based on cloud services and which has been registering an increase of 17% in its operating income in 2018. The case of the iconic window company is that while many analysts and users were betting on its decline and subsequent exit as an important player in the market, it has been able to successfully adapt to the changes demanded by disruption innovator of the technological giants and the new “star-ups”.
The same is not the case with Facebook that, although it remains in the top 10 of the list, its reputational market value has decreased as a result of the succession of several media scandals such as Cambridge Analytica, its role as a platform for the transmission of “ fake news ”and the questioning of the security in the treatment of the information of its users. For this reason, the company will be evaluated based on the measures it is able to take to recover its image before the public and the effectiveness in dealing with the deliberate distortion or bias of the information sources.
CHINA’S RAPID ADVANCE
Although US companies are still the majority in the ranking 500 (45.4% of the total list with an added market value of USD 3,124.2 trillion), Chinese companies have been climbing positions in a gigantic way that shows the path of the Asian giant to become the largest economic superpower in the next decade, although with a wide gap to be reached compared to the North American country (19% of the total with an added market value of USD 1,307.4 trillion). In addition, the positioning of these in the world has been displacing Japan and Germany, which marked a large part of the business development of the last century.
Source: 2019 Brand Finance Report
In other words, Chinese companies have been breaking the “status quo” by being new players in global markets and the technology sector is no exception to the rule in this global trend, breaking the USD 1 trillion barrier for the first time in the Brand Finance ranking. One of the most interesting cases is the company iQiyi (the equivalent of Chinese Netflix) whose business model is based on an online video platform whose main headquarters are in Beijing, while it has about 500 million active users – compared to 139 million from Netflix – as a result of the growing demand for content in the Asian country.
Continuing with the Chinese technology brands, WeChat also stands out as a “rising star” (the so-called Chinese WhatsApp) that has successfully built a digital ecosystem that not only allows the ease of instant messaging, but also integrates multiple services ranging from reading , virtual store, payments, taxis, etc., being the jewel in the crown of the technology giant TenCent, which is ranked 21st and its market value amounts to USD 49.7 billion. A separate case is that of Huawei (12th place), which continues to position itself in the segment of smartphones and the integration of 5G technology in the telecommunications sector.
But it is not only the technological giants that have been growing exponentially in the added value of Chinese brands. The financial sector is the only one that places two companies in the top 10 of the ranking, including the ICBC in position 8 (the largest bank in the world according to the number of assets and with a presence of 400 branches outside of China) and the CCB in position 10, whose success is attributed to their innovative developments in the digital banking revolution, being them the first self-service credit bureau that is serviced with robots that use facial recognition, artificial intelligence and virtual reality. Additionally, the other sectors that have benefited from the Chinese expansion are real estate,
However, Chinese companies face great uncertainty in the short term after the trade war unleashed with the United States, although the Asian giant hopes that they will be able to overcome these difficulties successfully on the global stage and will continue to be brands with high added value in each of the sectors where they are involved. This is confirmed by David Haigh, CEO of Brand Finance, who is confident that they will be the guardians of China’s positioning and capable of navigating the turbulent waters of the imposition of North American tariffs and charting their roadmap through the growing economic tension that is expected in the coming years.
THE LEADING COMPANIES BY GLOBAL REGIONS
Regarding the analysis by regions, the Brand Finance report divides companies into two categories: B2B (focused on business customers) and B2C (focused on general consumers). Amazon, confirmed as the most valuable company in the world, and IBM in position 40 on the general list, are leaders in the American continent and the latter has experienced positive changes after focusing on the development of new technologies such as cloud services and security software, instead of its traditional computing businesses that have been bringing losses of its position in the sector in front of the technological giants. However, no company in Latin America and the Caribbean even appears in the top 100 of the general ranking.
Source: 2019 Brand Finance Report
On the European side, the automotive sector stands out at the head of the German Mercedes-Benz (position 13 on the list) and the Dutch Shell (position 26 on the list) which belongs to the hydrocarbon sector. Mercedes-Benz continues its growth and popularity in emerging markets, as well as sales in China and its native Germany as head of the Daimler AG group; However, its biggest bet is the launch of the first all-electric vehicle as part of its EQ series, with which it seeks to compete with the Jaguar I-Pace and the Tesla Model X. Meanwhile, Shell has intensified its oil extraction activities and the development of projects related to alternative energies, albeit based mainly on a strategy of simplifying its portfolio at a global level.
In the Middle East, two companies from the United Arab Emirates stand out, among them the oil company ADNOC, which has announced plans to increase its production capacity to 4 million barrels per day by the end of 2020 and pointing to its 2030 strategy that seeks energy self-sufficiency in natural gas in that country. The other is the telecommunications giant Etisalat, which operates in 15 countries in the region and is known for its customer loyalty programs and sponsorships to sporting events, being a pioneer in the creation of digital experiences in that region. What is surprising is not seeing Saudi Aramco in this position, while Africa also has no members in the select group of Brand Finance’s Global 500.
With regard to Oceania, there are two Australian companies that top the list on this continent. The best positioned is Telstra, which continues to be the dominant company in the telecommunications sector in that country and its greatest achievement has been having reached agreements with the most important smartphone manufacturers in the world to integrate 5G technology that they will enjoy its users exclusively. On the other hand, there is the mining giant BHP that has been working hard to create a brand of corporate leadership based on growth and security.
In Asia, there is the South Korean Samsung (number 5 in the ranking) which is widely known for its sales of smartphones, other mobile devices and household appliances, but which has suffered because the sales of its new models Galaxy Note 9 and Galaxy S9 did not meet with market expectations in the high-end segment, while it continued to lose ground in the mid-range and low-end segment, which is why it is now committed to introducing 5G technology in its equipment with the aim of recovering its brand value in the future. . The other is the Chinese State Grid that belongs to the electricity sector whose business moves include the acquisition of the largest electric vehicle operator in China, indicating a change of the firm to expand its production capacities in alternative sources.
THE PRESTIGE OF THE MOST POWERFUL BRANDS
Regarding the results of the Brand Strength Indicator (BSI), the Italian luxury car manufacturer, Ferrari, occupies the first position of the top 10, being synonymous with style and performance combined to perfection, which has brought success to its diversification strategy in merchandising (glasses and caps, for example), theme parks and of course its hotel located in the headquarters of Maranello, Italy, without losing its nickname as a luxurious brand. Like Porsche and BMW, they are the only first-class companies in the automotive sector with wide market acceptance by their customers.
Another relevant aspect to highlight is the level of growth in Ferrari’s brand value, which increased by 27.3% equivalent to USD 8.3 billion as a result of the success in the sales of its limited models for 2018 (sold out since May of the year past), its presence as one of the most iconic brands in Formula 1 and the plans of its new CEO, Luis Camilleri, who has announced 15 new models that include hybrid vehicles to respond to the new trends in the automotive industry towards the transition of electric cars. In short, the Maranello company has an undeniable leadership in recognizing its brand as the perfect symbol of excellence, design and innovation in one place.
Graph 5: the most powerful brands in the world, year 2019
Source: Global 500 BF
Another case to highlight is the so-called group of the “big four” that stand out in the financial consulting and auditing sector ( big four, in English) which, like Ferrari, have a AAA + rating on their brand value. The most important is Deloitte (USD 29.6 billion, position 3) and followed by PwC (USD 24.9 billion, position 10), while those outside the top 10 are E&Y and KPMG, the latter involved in a controversy over the liquidation of the construction company Carillion in the UK. Beyond that, the “big four” have been hit by the winds of change forcing these companies to take leaps and bounds to modify their traditional business model. On the other hand, McDonalds and Coca Cola continue to enjoy great recognition of their brand as symbols of economic globalization,
THE BEST BUSINESS BRAND MANAGERS
The Brand Finance report also includes the list of the most important CEOs worldwide who have a significant influence on the positioning of their corporate brands. The ranking is headed by Jeff Bezos, CEO of Amazon which, as mentioned above, is the most valuable company in the world. He is recognized globally as the most successful brand manager among his peers due to his visionary spirit that guided Amazon’s growth from its humble beginnings and a pioneer in Internet book sales, the commitment to the then revolutionary Kindle and its investments. at companies like IMDB, Alexa, and Zappos. However, the extent of the negative repercussions of his divorce and the new shareholding of his ex-wife that would directly affect his market capitalization remains to be seen.
Source: Global 500 BF
This same situation also affects other CEOs of tech giants: Google’s Sundar Pichai (who occupies position 12 in the ranking) has seen his reputation affected as a result of his first appearance before the Legal Committee of the United States Congress after the indictment of several executives of sexual harassment, as well as a fine of USD 5 billion by the European Union due to the abuse of its dominant position through its Android operating system. Mark Zuckerberg of Facebook suffers a similar situation as a result of the Cambridge Analytica scandal, the biased treatment of information and the insufficient measures to counteract the avalanche of “fake news” on social networks. Without a doubt, a business storm for the greats of Silicon Valley.
Another striking data is that only 5 women were found in management positions within the 100 ranking, the most prominent being Ginny Rometty from IBM (position 6), Quinping Li from China CITIC Bank (position 8) and Mary Barra from General Motors ( position 37). This situation opens again the debate on the gender equity gaps in the management sphere, which is not based exclusively on the low number of women in managerial positions, but on the lack of policies that encourage gender quotas and equal pay compared to their peers. male.
Graph 7: top 100 CEOs by countries of corporate origin, year 2019
Although the United States continues to maintain the leadership in the number of CEOs worldwide, China has had a greater presence that has surpassed Japan and the countries of Europe in recent years, taking advantage of a fairly large domestic market in number of consumers and their experience. in the creation of aggressive expansion plans that have a lot of potential to exploit in front of the North American country, amid regulatory barriers. Several of these managers from the Asian giant now have the challenge of transforming excellent performance – but with low investment – into greater global positioning, including Robin Li (Baido), Pony Ma (Tencent) and Daniel Yong (Alibaba) who can give themselves to know better in the years to come.
“The development of a strong brand is much more important than ever before, not only for commercial success, but to achieve greater durability in the existing relationships between a brand and a company’s stakeholders. The role of the CEO has evolved to navigate the age of personality where he is exposed to public scrutiny, equal to that of a celebrity. It is no longer sustainable to maintain this vision for the future of the company alone. Now it is a question of forging a true public profile and reacting early to reputational crises ”. David Haigh, CEO of Brand Finance
