THE 25 MOST IMPORTANT COMPANIES IN THE WORLD
Why they matter and how you can invest
There are many ways to build a list that ranks the most important companies to people. In its most straightforward sense, for investors that are still in work, your employer or own business is almost certainly the most important company to you since they provide your source of income and contribute to your pension savings too.
Those in retirement might equally argue the case for the holder of their pension funds, or the fund managers with whom the bulk of their savings sit.
You could even make a firm case for the suppliers of certain products that fill your kitchen and bathroom cupboards or cabinets. Brands such as Domestos, Fairy, Heinz or Colgate would support claims for
Unilever (ULVR), Proctor & Gamble, Kraft Heinz and Colgate-Palmolive respectively.
What about the suppliers of core electricity, gas and water services, the operator of the trains that get you to work every day, your mobile phone network or perhaps, for some, the brewer of your favourite pint?
More typical ways to rate the relevance of the world’s top companies tend to concentrate on other factors; they might judge by market value, brand strength or sales revenue, and all of these are bona fide ways to rank the importance of businesses.
US publication Fortune even produces a list of the world’s most admired companies. Apple, Amazon and Alphabet (Google’s parent) occupied the top three positions in the 2018 vote, with Starbucks and FedEx also in the top 10, which might raise an eyebrow or two.
WHO IS IMPORTANT TO SHARES READERS?
Every year Fortune puts together a separate list of the top 500 global companies based on how much revenue each generates. Only 20 UK companies featured in 2017’s edition, down from 24 in the previous year, in a list predictably dominated by US (126) and Chinese companies (111), with Japan (52), Germany (32) and France (28) also prominent.
We’ve had to think globally to produce our list of the world’s best companies, picking 25 enterprises that we think have sweeping influence on the day-to-day lives of UK investors, and Brits in general. Our methodology is inclusive of some traditional metrics, such as scale and value, but with some subjectivity thrown into the mix.
Each selected company has been assessed on a number of factors and placed into what we believe is the most relevant grouping. There are three core sets – Mainstays, Enduring Brands and Disruptors.
Mainstays are companies that have been around for years providing services or goods that we can’t live without, and are likely to need in the years to come. These are not necessarily exclusive suppliers but they do, in our view, exert the most influence over people in the UK within a certain area.
Enduring Brands can be best described as supplying us with instant familiarity, where we know what we are getting immediately. Nike and Walt Disney are great examples where the name alone tells you pretty much everything you need to know. Perhaps McDonald’s is the best illustration, a restaurant chain where you could take a 10-year old child and they will know instantly what’s on offer.
Disruptors are companies that are either transforming existing business models, changing established practices, or are carving entirely new industry niches to exploit.
Think how Amazon has revolutionised buying stuff easily and cheaply online, or how Uber and Airbnb are turning urban mobility and the rooms for rent space on their heads.
Twenty years ago few people maintained friendships and connections on the internet (we’ll give a modest nod here to Myspace, remember it?). Now you can barely escape Facebook, which virtually invented social media as we know it today, and a million similar platforms.
A FUN PEEK INTO THE FUTURE
There is a final bunch of companies on our list under the category of Tomorrow’s World. We’ve stuck our necks out by predicting a handful of potential superstar influencers for the decade ahead. These are all privately owned, venture capitalbacked businesses so access for retail investors today is limited, although we have tried to provide names of funds that do own stakes where relevant.
To state the obvious, this is anything but a comprehensive collection of the world’s most important companies. A list 10 times as long would still struggle to cover all bases. Some may be prominent stock picks in your own portfolio, or held by funds or investment trusts you hold. Others may seem completely irrelevant to you.
In either case, why not send us some of the companies that are most important to you, via email at firstname.lastname@example.org with the subject line ‘Best Companies’.
We haven’t included Netflix on the list of the world’s best companies because we don’t think its proposition is unique enough and we’re not sure where it goes next strategically, beyond signing up more subscribers. A move into music streaming would be a natural extension, but Amazon has already beaten it to this game.
The streaming market is evolving and competition is likely to intensify. Netflix is burning cash and has significant financial liabilities, plus there are no barriers to stop customers cancelling their subscriptions.
It has managed to sweep up masses of new customers because the price point is low. At some point it will have to be more aggressive with pricing or accept advertising which may be a big turn-off for a large chunk of its audience. (DC)