re: Fortune's Global Most Admired Companies 2002 All-Stars
As FORTUNE presents its annual list of the World's Most Admired Companies, the global economy remains in a funk while high-profile bankruptcies, accounting malfeasance and the sins of Enron dominate the news. In this environment, is anyone out there worthy of respect? In fact, yes. In today's tough business climate, admirable qualities like leadership, innovation, and fiscal responsibility are more important than ever. The companies on this year's list have proved themselves in those areas and, thanks to a clear, focused strategy, were able to execute effectively during a chaotic year.
Nokia ranks number 24 in the top 50, down from number 8 last year but still the top company headquartered outside the US.
>> The World's Most Admired Companies 2002
March 4, 2002
Christine Y. Chen
FORTUNE
There isn't much congratulatory backslapping going on inside executive boardrooms these days. Not with high-profile bankruptcies, accounting malfeasance, and the sins of Enron dominating the news. Or with the global economy still in a funk. It may be time for FORTUNE to present its annual list of the World's Most Admired Companies, but is anyone out there worthy of respect?
In fact, yes. In today's tough business environment, admirable qualities like leadership, innovation, and fiscal responsibility are more important than ever. The companies on this year's list have proved themselves in those areas and more. Many names--like GE, Wal-Mart, and Microsoft, our top three--are familiar. Indeed, some on our list have decades of consistent, robust execution under their belts. But as executives at Arthur Andersen, Kmart, and Tyco can attest, past reputation is not enough. "The companies that continue to prosper ensure that their internal processes and programs are well understood and well honed," says Mel Stark, a vice president of the Hay Group, a management consulting firm that has conducted the survey for FORTUNE since 1997. "This year's Most Admired Companies have a clear and focused strategy and were able to execute effectively during a chaotic year."
The annual survey of 10,000 directors, executives, and analysts in different industries and from all over the world rates companies on the basis of nine attributes, including quality of management, innovation, and financial soundness. In previous years the survey was conducted during the second quarter of the year, and the results were published in October. Although no list of the World's Most Admired Companies was published last year, this year's rankings are based on a survey conducted during the fourth quarter of 2001, after the terrorist attacks on the U.S. and as Enron was collapsing. The change was made so that the list would coincide with the U.S. publication of America's Most Admired Companies.
Candidates include all companies on the FORTUNE Global 500 list, plus 100 additional companies with revenues of at least $8 billion that are leaders in their industries. (That's up from $3 billion in the last survey.) Only the 15 largest companies in each of 26 industry groups were eligible for ranking, but all companies in an industry meeting the revenue criterion could vote. Of the 318 eligible companies, 130 are American and 188 are based outside the U.S.
The All-Stars--the top 50 companies from across all industry groups--played a game of musical chairs, with GE retaining its No. 1 spot for the fourth survey in a row, despite a change of CEOs and a failed acquisition last year. Wal-Mart, the retail behemoth, boosted its ranking to No. 2 (it was No. 5 last time) after a period of sustained growth. And Microsoft held on to its No. 3 position, even though Bill Gates is still engaged in battle with the Justice Department. The reason: The software giant's stock price rose 53% in 2001.
Naturally, the news wasn't good for everyone. Cisco, No. 2 last time, dropped to No. 10 after losing more than $1 billion in its most recent fiscal year. And, Microsoft notwithstanding, market forces hurt most of the technology companies on the list. "What's most respected are companies that were able to maintain profitability and aggressiveness in tough times," says Bill Alper, a Hay Group vice president who conducts employee and public-opinion research. "For those companies that didn't--well, they got punched." A good example is Lucent. Its inability to find a permanent CEO last year accelerated its rapid descent. Last time out, Lucent was No. 12; this year it didn't make the top 50, and it's now a punch line for late-night talk-show hosts. Even tech companies that performed relatively well were hurt. Dell, still the No. 1 PC maker in the world, dropped from No. 7 to No. 23. Nokia, one of the few profitable telecom equipment giants in the world last year and still the highest-ranking company outside the U.S., dropped from No. 8 to No. 24.
Speaking of falling from grace, Enron, No. 25 last time, also disappeared from the All-Star list. "No company illustrates the transformative power of innovation more dramatically than Enron," we wrote last year. Never mind. We meant "fiction," not "innovation."
Another company that dropped in the ranking was Walt Disney; plagued by declining ad revenue and amusement-park attendance, it slid from No. 22 to No. 31. And Ford plummeted from No. 19 to No. 46 after its Firestone tire fiasco and the firing of CEO Jacques Nasser.
The U.S. may have felt economic pain last year, but its recession wasn't as severe as the rest of the world's. Only seven non-American companies made it into the top 50, compared with ten last time. "When people took the survey, they were thinking about late 2000 and 2001 performance, when the U.S. economy was comparatively ahead of other regions of the world," explains Alper. Switzerland's Nestle was the only non-U.S. company to hold its ground, at No. 39. Even esteemed Singapore Airlines fell, barely hanging on at No. 50. Brisk sales of PlayStation2 weren't enough to save Sony: Its stock dove from a high of $86 in May to $38 in October, and its ranking fell from No. 6 to No. 28.
Not surprisingly, old-economy companies flourished as consumers and investors, jittery from a recession and the Sept. 11 terrorist attacks, returned to businesses that touted security, nesting, and healing. Warren Buffett's Berkshire Hathaway jumped from No. 14 to No. 4; Home Depot rose from No. 9 to No. 5; and Johnson & Johnson leaped from No. 17 to No. 6. <<
- Eric - |
