Brand giants adapt strategies

11 July 2011

NEW YORK: Some of the world's largest companies, including Wal-Mart, BP and Nestlé, are adapting their strategies to reflect the challenges and trends emerging at home and abroad.

Fortune, the trade title, has released its latest rankings of the 500 largest corporations by worldwide sales. Wal-Mart led the list, with revenues hitting $422bn and profits of $16bn.

The organisation's like-for-like figures in the US have actually stuttered in the recent past, and Bill Simon, CEO of Wal-Mart US, suggested resolving this situation remains a core priority.

"Growth is a key element of everything that we do. We're absolutely committed to growth, particularly same-store sales growth," he said.

But Wal-Mart is also pushing into ecommerce, taking an international approach to talent management, and rolling out smaller store formats, such as Wal-Mart Express in the US.

"We're adding supercenters, it's still our primary growth vehicle. The new formats or small format ... is a great place to be, and multi-channel we believe gives us a competitive advantage," said Simon.

In an example of the firm leveraging its worldwide capabilities, Simon also reported that learnings from unusual sources had been employed in developing Wal-Mart Express.

"We've worked collaboratively with our international operations where they've got a vast amount of expertise on effectively and efficiently operating a small format as we do so well in Costa Rica with Pali and in Mexico with Bodega," he said.

Elsewhere, energy companies dominated the upper echelons of the Fortune 500, as Shell delivered sales of $378bn, Exxon Mobil secured a turnover reaching $355bn and BP attained $308bn.

However, BP actually made a loss of $3.7bn in 2010 after setting aside funds to deal with the Gulf of Mexico oil spill.

It also recently ran its first TV ads in the UK for five years, tied to a sponsorship programme covering the 2012 Olympics.

"We thought now people were in the mood to listen to message about the Olympics," Duncan Blake, director of brand at BP, said.

"We had to be thoughtful about the project and the brand, and to get the voice right. I'm confident people will see BP in a positive way."

Next up in Fortune's table was Sinopec Group, on $273bn, China National Petroleum, logging $240bn, and State Grid, yielding $226bn.

All of these businesses are based in China, which has seen its representation in the Fortune 500 rise from just 12 firms a decade ago to 63 at present.

By contrast, the US witnessed a decline from 185 to 133, and while Japan claims second spot, on 68, its position is increasingly under threat from China.

Automaker Toyota was the leading Japanese enterprise, on $222bn, followed by Japan Postal Holdings, with $204bn.

In terms of profitability, Nestlé headed the charts on $32bn, having enjoyed a 242% improvement on 2009, and generated revenues of $105bn, leaving it in 42nd place on this measure.

The Swiss food group is currently ramping up its activity in geographies such as India and China, where it is seeking to invest in Hsu Fu Chi, the country's biggest confectionary manufacturer.

Paul Bulcke, the Nestlé's chief executive, argued this kind of focus results from rapidly-changing realities.

"Thirty or 40 years ago, 'developing' meant other countries lagging behind Western countries, trying to get in the footsteps of the developed world, and trying to catch up. They never did," he said.

"What you see now is that the developing markets, the emerging markets, are [building] their own future with an amount of confidence that is really refreshing."

Data sourced from Fortune, Wal-Mart, Globe & Mail, Brand Republic; additional content by Warc staff