2011 global reptrak 100 report
TRANSCRIPT
©2011 Reputation Institute, All Rights Reserved.
The Global RepTrak™ 100A Study of the World’s Most Reputable Companies in 2011
REPUTATION INSTITUTE
©2011 Reputation Institute, All Rights Reserved.2
RepTrak™ PulseReputation Institute (RI) has been studying the dynamics of corporate reputations since 1997. A global project to measure the reputations of the ‘most visible companies’ in the world was implemented each year from 1999 to 2005 with the collaboration of RI in numerous countries, including Australia, Denmark, France, Germany, Italy, Japan, Netherlands, Norway, Sweden, the U.K., and the U.S.
In 2006, Reputation Institute conducted a multi-national study to understand how reputations had evolved over the preceding decade. Based on this research, the Global RepTrak™ was developed and the RepTrak™ Pulse study was launched in March 2006. The results of this study are published worldwide through Forbes.com as well as through local partners in the now 32 countries included in the study.
What is important to note is that most polls on industries address the public’s expectations of business overall and/or their ratings of business conduct in general. The Global RepTrak™ Pulse study, by comparison, measures public perceptions of specifi c companies. Through the survey, consumers are asked to opine on the reputation and conduct of individual companies based in their countries. The data here on the industry overall is compiled from how the public sees specifi c companies in their home country.
REPUTATION INSTITUTE
©2011 Reputation Institute, All Rights Reserved. www.ReputationInstitute.com 3
Companies increasingly compete for market share and mind share in all corners of the world. Having a strong and favor-able reputation with consumers plays a critical role in helping a company to differentiate itself from rivals. At the same time, consumers want to know more about the companies that stand behind the products and services that they buy. A well-respected corporate brand can signal credibility, trust, and support, which can help generate returns.
The 2011 Global RepTrak™ 100: The World’s Most Reputable Companies summarizes the results of a comprehensive analysis of the world’s 100 top-rated companies based on input from over 50,000 consumers in 15 countries. The study identifi es the powerhouse companies that dominate the list, and analyzes the factors that have enabled a select group of companies to consistently earn high marks from consumers. (It is a subset of a larger study of 2,800 companies in 41 countries, in which each company was evaluated by consumers only in its home country.)
The results of the 2011 Global RepTrak™ 100 confi rm something we already suspected: That many companies have done a very good job of building reputation capital in their home markets. The results also tell us, however, that not all successful companies have effectively exported their reputation capital to other competitive markets. Consequent-ly, the report provides a rare glimpse into the global market positions of some of the world’s largest companies. It helps explain why so few companies have managed to build a large reservoir of goodwill around the world. It also shows how understanding what these successful companies have done can provide managers with valuable insight to understand the challenges they face in navigating the rough waters of the rapidly emerging “Reputation Economy.”
Welcome to the Reputation Economy!If the 1990s were the “age of innovation” and the 2000s were the “risk decade,” then what can we say of our new decade? A battery of fi ndings suggests that in the brave new world of the 2010s, it’s not only what you sell, but also what you stand for and how you conduct business that matter most. The prolonged global fi nancial crisis of the past few years has led some pundits to declare a “new normal” environment char-acterized by permanently changed consumer behavior—a change primarily driven by increased awareness and scrutiny of our primary engine for doing business, the corporation. From this standpoint, the 2010s are already speaking to us about the emergence of “co-opetition,” an ecosystem point of view that sees companies involved as much in collabora-tion as competition. In this new environment, perceptions of companies drive investor behavior as much as the “reality” of their fi nancials, and consumer perceptions drive traffi c to or away from a company’s products and jobs at least as much as the characteristics of the products and services themselves.
Products epitomized by their brands represent only a fraction of the story, and companies need to compete successfully in terms of the corporate personas they evoke. Do people believe companies are doing good things in their communities: Do they make charitable contributions or sponsor local groups? Are they environmentally conscious? How well does a company treat its workers, and does it provide them with a fairly run and safe work environment? Do investors believe the company is well run? Do they trust managers to deliver bottom-line results? Effective leadership and corporate ethics, evidenced by such factors as executive pay, the composition of the board, and the transparency of management decisions and operations, are all coming under close scrutiny, not only from regulators, but by all of a company’s stakeholders.
The Global RepTrak™ 100:A Study of the World’s Most Reputable Companies in 2011
©2011 Reputation Institute, All Rights Reserved.REPUTATION INSTITUTE4
Consider these facts from studies conducted by Reputation Institute in 2011:
■ Fifty-eight percent of people’s willingness to recommend a company is driven by their perception of the company; only 42% depends on perceptions of the company’s products and services.
■ Two-thirds of C-suite executives at the 150 largest U.S. companies believe we have already entered theReputation Economy.
■ Among the 150 largest companies in the US, 25 percent now coordinate their reputation strategy and enterprise story through the CEO’s offi ce.
■ Companies with excellent reputations are two and a half times more likely to have CEOs setting the strategy for enterprise positioning than those with weaker reputations.
Taken singly, these trends justify and confi rm the impor-tance we are attaching to the emergence of the Reputation Economy. Staff engagement fi gures prominently in this effort, because employees are a company’s public face. Think of bank tellers, store clerks, and customer service reps. A good experience at the basic level can help win the loyalty of the initial customer, and is likely to spread more widely through the web of connections consumers make across the ecosys-tem. Today, that network can have a huge impact because of the rapid spread of information through social media.
CEOs, who are at the top of the staff pyramid, must play an active part in supporting and managing reputation by making it a strategic priority and communicating that. Board buy-in is just as important, along with a focus on addressing reputation at an enterprise-wide level and with a cross-func-tional approach.
Corporate social responsibility is a fundamental component of stakeholder engagement in the Reputation Economy. Corporations around the world are embracing sustainability, effective waste management, and CO2 reduction.
Just as positive efforts can improve reputation, negative events can hurt it. As an energy company, BP has faced signifi cant challenges in developed countries over the years. But it was the company’s Gulf of Mexico oil spill that sank its reputation in 2010. The overarching message that comes through from Reputation Institute’s 2011 study is that perceptions matter more than ever in the wired and connected global village we now inhabit. To meet the challenges of this fast and sometimes furious world, corporations are allocating larger portions of their budgets to reputation manage-ment. While some companies approach it defensively as a part of “crisis management,” that’s only part of the story. Done right, reputation management creates value. The 2011 Global RepTrak™ 100 report shows us how.
How Did We Measure “Reputation”?In 2006, Reputation Institute set out to assess the health of corporate reputations around the world. We created a proprietary tool called The RepTrak™ System. It’s based on the simple notion that a reputation develops from the emotional bond that stakeholders feel for a company: its Pulse. The RepTrak™ Pulse actually measures the degree of Admiration, Trust, Good Feeling, and Overall Esteem that respondents express about companies.
Extensive international fi eldwork conducted using the RepTrak™ System since 2006 indicates that seven key dimensions drive corporate reputation: Products/Servic-es, Innovation, Workplace, Governance, Citizenship, Leadership, and Performance. The RepTrak™ System evaluates the degree to which a particular dimension affects the emotional bond between a particular stakeholder group and a company. We care about this because a better reputation drives the level of support that consumers will express for a company through the recommendations they make, as well as their willingness to give a company the benefi t of the doubt during a crisis.
www.ReputationInstitute.com©2011 Reputation Institute, All Rights Reserved. 5
The RepTrak™ 100—Which Companies Made the Cut?Aware that companies increasingly view the entire world as a marketplace (and others hope to), the RepTrak™ 100 report focused on consumer perceptions of companies across multiple countries and regions.
To be included and evaluated as one of the 100 fi nalists, companies had to meet four specifi c criteria:
1. They were among the largest companies in their home country in terms of annual revenues.
2. They had earned an above-average reputation score based on our global database of home-market RepTrak™ scores gathered from 2006 to 2010.
3. They could claim either a multinational presence or a global footprint in production and distribution around the world.
4. They had high familiarity with consumers in the following 15 countries and four regions:
■ Asia-Pacifi c: Australia, China, India, Japan, and South Korea
■ Europe: France, Germany, Italy, Russia, Spain, and the United Kingdom
■ Latin America: Brazil and Mexico
■ North America: Canada and the United States.
The 100 corporate fi nalists have broad geographic origins with 40% headquartered in Europe, 37% in the U.S., 20% in the Asia-Pacifi c region, and 3% in Latin America and Africa. They operate principally in the automotive, electronics, computer, consumer goods, and food sectors. To rate the 100 fi nalists, Reputation Institute conducted an online global survey in April 2011 that gathered over 165,000 responses from more than 50,000 consumers around the world. Survey Sampling International and Toluna collected the data. For each company, at least 100 members of the general public rated a company on the RepTrak™ scorecard if they were at least somewhat familiar with it. The distribution of respondents in a given country represented its population’s age, gender, and region.
The RepTrak™ System
Performance
Lead
ersh
ip
Citizenship
Governance
W
orkpla
ce
Innovation
Products/Services
SupportiveBehavior:
©2011 Reputation Institute, All Rights Reserved.6
The 2011 Global RepTrak™ 100: The World’s Most Reputable Companies
Company Company
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
79.99
79.77
79.51
79.42
79.26
79.05
79.03
78.07
77.56
77.33
77.29
76.92
76.84
76.75
76.17
76.01
75.90
75.75
75.72
75.20
75.09
75.01
74.84
74.68
74.66
74.62
74.41
74.27
73.99
73.92
73.88
73.83
73.63
73.60
73.49
73.21
73.14
73.09
73.08
72.99
72.99
72.84
72.76
72.75
72.70
72.68
72.68
72.34
72.20
72.16
72.15
72.04
72.00
71.77
71.77
71.57
71.53
71.50
71.37
71.26
71.11
71.11
71.04
70.99
70.97
70.66
70.65
70.52
70.39
70.31
70.15
69.80
69.66
69.51
69.45
69.36
69.30
69.29
68.65
68.36
68.33
68.26
68.19
68.02
67.94
67.91
67.72
67.19
65.27
65.24
65.08
64.96
64.92
64.73
64.01
64.01
63.51
62.52
62.25
59.54
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
Apple
The Walt Disney Company
BMW
LEGO
Sony
Daimler
Canon
Intel
Volkswagen
Microsoft
Nike, Inc.
Panasonic
Johnson & Johnson
Nokia
Nestle
Hewlett-Packard
Michelin
L’Oréal
Kellogg’s
Goodyear
Ferrero
Philips Electronics
3M
Nintendo
Colgate-Palmolive
IBM
The Coca-Cola Company
Honda Motor
Danone
Pirelli
Ikea
Amazon.com
Dell
Sony Ericsson
Bridgestone
Swatch Group
Xerox
Marriott International (USA)
Cisco Systems
Eastman Kodak
Deutsche Lufthansa
Samsung Electronics
Procter & Gamble
Toshiba
FedEx
Fujifi lm
Siemens
UPS
Hilton Worldwide
LVMH Group
Barilla
DuPont
Sharp
Singapore Airlines
Boeing
HJ Heinz
Electrolux
Unilever
Toyota
Nissan Motor
Roche
Suzuki Motor
General Electric
LG Corporation
Hitachi
Heineken
Oracle
Marks & Spencer Group
ACER INC
Kraft Foods Inc.
Virgin Group
Qantas Airways
Airbus
GlaxoSmithKline
PepsiCo
SAS
Fujitsu
Starbucks Coffee Company
General Mills
Avon
Zara
Hyundai
Carlsberg
Lenovo Group
Air France-KLM
Motorola
Sara Lee
De Beers
Diageo
Anheuser-Busch InBev
Vodafone
Petrobras
Carnival
Carrefour
SABMiller
Lockheed Martin
Tsingtao Beer
Haier Group
BHP Billiton
USA
USA
USA
Germany
Denmark
Japan
Germany
Japan
USA
Germany
USA
USA
Japan
USA
Finland
Switzerland
USA
France
France
USA
USA
Italy
The Netherlands
USA
Japan
USA
USA
USA
Japan
France
Italy
Sweden
USA
USA
United Kingdom
Japan
Switzerland
USA
USA
USA
USA
Germany
South Korea
USA
Japan
USA
Japan
Germany
USA
USA
France
Italy
USA
Japan
Singapore
USA
USA
Sweden
Netherlands / UK
Japan
Japan
Switzerland
Japan
USA
South Korea
Japan
Netherlands
USA
United Kingdom
Taiwan
USA
United Kingdom
Australia
France
United Kingdom
USA
Sweden
Japan
USA
USA
USA
Spain
South Korea
Denmark
China
France
USA
USA
South Africa
United Kingdom
Belgium
United Kingdom
Brazil
USA
France
United Kingdom
USA
China
China
Australia / UK
Country CountryRank RankScore Score
REPUTATION INSTITUTE
©2011 Reputation Institute, All Rights Reserved.
The Best of the BestWhat makes a company truly “world class”? Across the 15 countries of the study, Google ranked as the top-rated company by consumers for the second year in a row, followed closely by Apple, The Walt Disney Company, BMW, and LEGO. Sony dropped to sixth place from its second place fi nish in 2010. Joining the tech-heavy ranks along with Canon and Intel, veteran automakers Daimler and Volkswagen rounded out the top 10.
The 2011 Global RepTrak™ study found that nine of the top-10 companies scored well across most, if not all, of the seven reputation dimensions: Products/Services, Innovation, Workplace, Governance, Citizenship, Leadership, and Performance. It confi rms our observation that world-class reputations are characterized by the breadth of their platforms—not just products and services. People care more and more about the enterprises behind the things they buy. Canon was the sole company in the top 10 that placed among the best of the best in only a single dimension.
Consider Google and Apple, the companies on which consumers lavished the highest praise. Both companies performed exceptionally well on all reputation dimensions, and each received top scores in three of these measures. Google was number one in Citizenship, Governance, and Workplace, while Apple was the top-ranked company in Leadership, Performance, and Innovation, suggesting that these corporations are admired not just for the products they offer, but for the enterprises they’ve built. For example, Google strives to keep its employees happy with lavish employee benefi ts, and the company is also well known for supporting community initiatives and promoting transparency. Apple’s consummate management team has been credited with developing some of the world’s most desired tech products, all of which have contributed to the fi rm’s stellar fi nancial performance.
WHAT HAPPENED TO SONY?
The Top Ten
7www.ReputationInstitute.com
Corporate reputations can be precarious assets. Warren Buffet framed it as such when he famously said, “It takes 20 years to build a reputation and fi ve minutes to ruin it.”
Despite Buffett’s pithy remark, it turns out that corporate reputations may be more resilient than they might at fi rst appear. Take Sony, for example. Over its 65 years in business, Sony has built one of the strongest reputations in the world. Results from our 2010 RepTrak™ study placed Sony as the second most reputable company in the world (just behind Google). And an impressive 71 percent of respondents indicated they would give Sony the benefi t of the doubt in times of crisis, a testament to the company’s loyal stakeholders and, presumably, its ability to maintain its enviable reputation in diffi cult times.
Sony’s resilience was tested in April 2011 when the company faced its largest reputation crisis in years. Hackers stole a wealth of sensitive user data from the PlayStation network. To make matters worse, Sony waited more than a week to disclose the security breach, explaining that user data, perhaps including credit card information, had been compromised. Users were confused and outraged. They criticized the company for questionable security practices and slow communication in responding to this critical issue. The media followed suit, transforming the PlayStation community’s angst into the fuel for a crisis.
The effects of crises have been visible in Sony’s stock price since March 2011. The fi rst decline could be traced to the effects of the Tsunami that ravaged Japan and lowered assessments of the fi rm’s ability to supply and deliver its products and services—it arguably demonstrates an 8% drop in Sony’s market value. The second drop can be traced to the Hacker attack that struck in the media in May 2011.
While Sony’s stock price dropped, its reputation has largely weathered the storm. A post-crisis measurement of Sony’s RepTrak™ Pulse placed it sixth among the most reputable companies in the world. Although this represents a drop of several places from last year, Sony still ranks among the top 10. It scored high at 79.05, less than 2 points lower than its 2011 pre-crisis score. A re-sounding 72.1% of respondents continue to say that they would give Sony the benefi t of the doubt during a crisis. Despite a host of problems—allegations of communication failure, a well-publicized threat to the company’s performance fundamentals and supply chain from the March tsunami, and frustrated consumers who still don’t feel adequately compensated—Sony’s reputa-tion remains robust and resilient.
The tables below indicate how differently Sony’s reputation was affected across markets. In most Western economies, Sony ex-perienced a signifi cant decline in reputation of up to 6.6 points. Oddly, however, in the BRIC markets Sony’s reputation remained either unchanged (in Russia and China) or increased by up to 3.8 points (in Brazil and India). The reputation boost following the hacker crisis was highest in Mexico. The results confi rm the importance of closely examining the societal context within which companies like Sony operate.
WHAT HAPPENED TO SONY? (CTD)
Brazil
Canada
China
India
Mexico
Russia
74.84
78.05
75.83
76.46
74.19
85.81
78.65
79.13
77.31
80.03
78.44
85.98
3.81
1.03
1.49
3.56
4.25
0.17
Markets Where Sony’s Reputation Improved
Brazil 74.84 78.65 3.81
India 76.46 80.03 3.56
Canada 78.05 79.13 1.03
Mexico 74.19 78.44 4.25
China 75.83 77.31 1.49
Russia 85.81 85.98 0.17
Australia
France
Germany
Italy
Japan
South Korea
Spain
United Kingdom
USA
88.52
82.30
83.58
84.25
78.23
69.34
84.55
89.14
82.81
83.49
81.39
78.09
82.45
73.39
67.97
82.24
85.52
78.78
-5.03
-0.91
-5.49
-1.80
-4.84
-1.37
-2.31
-6.62
-4.03
Country RepTrakTM Pulse RepTrakTM Pulse Difference
Country RepTrakTM Pulse RepTrakTM Pulse Difference
April 2011 May 2011
April 2011 May 2011
Markets Where Sony’s Reputation Declined
The Tsunami Effect:8% Drop in Sony’s Market Value
The Hacker Attack:Sony Drops another 7%
or $2 billion
S&P 500
8REPUTATION INSTITUTE ©2011 Reputation Institute, All Rights Reserved.
www.ReputationInstitute.com©2011 Reputation Institute, All Rights Reserved. 9
Performance
Lead
ersh
ip
Citizenship
Governance
W
orkpla
ce
Innovation
Products/Services
Performance
Lead
ersh
ip
Citizenship
Governance
W
orkpla
ce
Innovation
Products/Services
12.6% 18.6%
13.1%
13.4%
15.6%
13.9%
12.8%
Factor Adjusted Regressionn = 18,000
Adj-R2 = 0.692
The Regional FavoritesThe results vary geographically when comparing each region’s top fi ve to their global counterparts, and when making comparisons across regions.
■ North American consumers give top honors to Kellogg’s, LEGO, Johnson & Johnson, Nintendo, and Nestle, showing a preference for food, amusement, and consumer product goods. Among these fi ve, only one, LEGO, also appears in the global top fi ve.
■ Europeans also like LEGO, awarding it the number one spot, with Google, Canon, BMW, and Sony rounding out the top fi ve. Three of the European choices also appear among the global top fi ve.
■ Latin America favored Google as its number one, matching the company’s global standing. The region also favored Sony, Apple, Hewlett-Packard, and Nestle, showing a 40 percent overlap with the global standouts.
■ The Asia-Pacifi c region placed The Walt Disney Company at the top, with Microsoft, Daimler, Apple, and Nike following to complete the top fi ve. Like Latin America, the Asia-Pacifi c region had a 40 percent overlap with the global choices.
In addition to differences based on geography, a comparison of global, emerging-market, and developed-country results shows interesting variations. Developed countries correlated more strongly with global results, putting LEGO, the Walt Disney Company, Google, and Apple (which are four of the global top fi ve), among their top fi ve, too. Sony was the sole outlier; it achieved top-fi ve status in the developed countries, but only a top 10 ranking globally.
With lower overlap, BMW, Google, and Apple scored among the top fi ve both globally and among emerging-market respondents. But the number one emerging-market pick,
Nokia, didn’t even make it to the global top 10. And Intel, the fi fth emerging-market choice, scored only among the top 10 globally.
Dimensions Do the Driving The results also suggest that to achieve an outstanding global reputation, companies must rank high on all seven dimensions, which can be grouped into three categories. Consumer experience includes Products/Services and Innovation; corporate social responsibility covers Workplace, Governance, and Citizenship; and corporate enterprise deals with Leadership and Performance.
Consumers want quality and reliability, and so gave the German auto industry high marks in the Products/Services dimension. BMW came in at number one and Volkswagen at number 10. Respondents gave the German carmakers yet another vote of confi dence by choosing Daimler as number 2. Five of the other top slots went to Apple, Sony, Google, Intel, and Cannon, representing the electronics and computer industries that have become indispensible. LEGO and Nike, which help in exercising the mind and the body, respectively, rounded out the top 10.
In a decade of rapid change, companies need to evaluate and improve their offerings on an ongoing basis. Innovation, therefore, is important. Electronics and computers dominate this dimension of reputation. Apple, which fi rst won renown for its path-breaking computers and more recently for its mobile devices, took the prize for Innovation. Sony, Google, Microsoft, Intel, and Nintendo followed among the top 10. Luxury German carmakers BMW and Daimler scored high on this dimension as well, along with Nokia and The Walt Disney Company.
The Global Drivers of Reputation 2011
REPUTATION INSTITUTE10
HOW DIFFERENT ARE THE BRIC COUNTRIES?
10
Beyond consumer experience, the results indicate that societal factors have become a major consideration in how people perceive and judge companies. The public favors fi rms that provide employees with a good working environ-ment, run their enterprises ethically, and make the world a better place. Taking fi rst place in Workplace, Governance, and Citizenship, Google swept the corporate social respon-sibility category. Apple, Microsoft, Daimler, The Walt Disney Company, Sony, LEGO, and Volkswagen also appear among the top 10 on all three dimensions.Breaking the mold of re-peating companies in the top 10, Johnson & Johnson and Ikea each attained a place in the Citizenship dimension.
Finally, the dimensions of Leadership and Performance, which matter most to investors, also mattered to consum-ers. Even the public is asking for well-organized CEOs with vision as well as managerial skills. They expect sound fi nancial performance, which means profi table companies with strong growth prospects. Results for the two corporate enterprise dimensions show a high correlation. The same companies appear on both top-10 lists, with consumers praising technology icons Apple, Microsoft, and Google by giving them fi rst, second, and third place ratings on each. The Walt Disney Company, Daimler, Sony, BMW, and Coca-Cola hold the middle ground, and Intel and Nike bring up the rear.
With the rise of consumer purchasing power in the BRICs (Brazil, Russia, India, China), companies need strategies that can harness the potential of these promising markets. Each country, however, requires a specialized approach. Relative cultural, social, and political forces must be taken into account for a company to operate effectively. Recognizing these powerful trends, businesses have started to shift their approach when doing business in BRIC countries, because what matters to stakeholders in developed countries may not be as important to their counterparts in emerging markets.
According to the 2011 Global RepTrak™ Pulse survey, both BRIC and developed countries viewed Products/Services as the most important driver of reputation, suggesting that stakeholders’ perceptions of a company are largely infl uenced by its tangible out-put. Governance ranked as the second most important gauge of reputation for both groups. This reveals a nearly universal desire for more accountable and transparent enterprises behind the products and services companies offer.
But where do the markets differ, exactly? Performance was revealed as a much more important driver of reputation in BRICs than in developed markets. Financial prosperity for BRIC companies can have noticeably more tangible effects on consumer lifestyles. As such, the ability to generate profi ts and increase fi nancial growth has a more signifi cant impact on stakeholders’ Trust, Re-spect, and Admiration in the BRICs.
The rest of the drivers also vary greatly in importance. Innovation, for example, was the least signifi cant dimension for the BRIC countries, while Leadership was near the bottom for other nations. Knowledge of the differences between markets can be lever-aged when determining localized strategies. Companies should equip themselves with the tools to succeed in whichever regions they choose to do business.
Performance
Lead
ersh
ip
Citizenship
Governance
W
orkpla
ce
Innovation
Products/Services
12.6% 18.6%
13.1%
13.4%
15.6%
13.9%
12.8%
Performance
Lead
ersh
ip
Citizenship
Governance
W
orkpla
ce
Innovation
Products/Services
15.0% 17.4%
11.4%
13.4%
15.6%
14.1%
13.1%
BRIC GLOBAL
The Global Drivers of Reputation 2011
REPUTATION INSTITUTE ©2011 Reputation Institute, All Rights Reserved.
www.ReputationInstitute.com©2011 Reputation Institute, All Rights Reserved. 11
Beyond Globalization: What Drives Reputation Regionally? Both globally and regionally, the Products/Services dimension had a dominant impact on consumer perceptions. It had the highest infl uence on the perceptions people have of companies in three out of four regions, although specifi c driver percentages varied. Its impact was highest in Latin America, followed closely by Europe.
The Products/Services dimension comes in second in North America, behind Governance and just ahead of Citizenship. The North American results appear consistent with refocused priorities on ethical business behavior and corporate social responsibility. It may well have been induced by the economic crisis that began in 2008, which has severely affected consumer perceptions in the U.S.
Two of the four regions, Asia, and Europe, mirrored the global results: There, the Governance dimension turns out to be the second most important dimension, with third place going to Citizenship. Again, consumers appear insightful: Doing the right thing as a business and as a member of society is recog-nized as important for companies to succeed in these regions.
Governance also came in second in driving perceptions of companies in Latin America. But the region breaks ranks on the third-place dimension, with Leadership rated higher than Citizenship. Latin America also differed from the other regions by giving two dimensions, Performance and Innova-tion, scores below 12%. Some of these regional differences may be because the countries in Latin America are emerging markets, while the nations in the other regions are largely, but not entirely, developed nations.
Do the Global RepTrak™ 100 Outperform?The results of The RepTrak™ 100 confi rm that companies that have built a strong emotional bond with consumers realize tangible benefi ts. Across the 15 largest markets in the world, companies with strong reputations receive, on average, three times the support of their less reputable competition. Reputation can be used to drive this support: If a company improves its RepTrak™ Pulse score by 5 points, public recommendation increases by seven percent. For an enterprise to build its reputation, this year’s study showsthat there is tremendous value in telling its corporate story.
If support is higher for better-regarded companies, then their long-term fi nancial performance should be higher, too. To examine whether this is so, Reputation Institute retrieved fi nancial data about the Global RepTrak™ 100 and juxtaposed it against the results of the study. The table below indicates that there is a signifi cant correlation between a company’s reputation and its fi nancial performance on a number of key indicators. Among the RepTrak™ 100, better-rated companies enjoyed a 9 percent return on assets, compared to the lower-rated companies that posted a 6 percent ROA. Despite facing similar risk profi les (the market volatility measure of beta was 1.1 for both groups), investors tended to reward better-regarded companies by bidding up the price of their shares.
Companies with higher RepTrak™ Pulse scores had both higher price-earnings ratios and earnings per share than lesser-regarded companies in the RepTrak™ 100. The results therefore confi rm that even among the RepTrak™ 100, which are the world’s most reputable fi rms, consumers and inves-tors are aligned. The better the reputation of a fi rm, the more support it earns from consumers, the better the company’s operating performance, and the more money investors are willing to pay for their shares.
RepTrakTM Pulse
ROA
Price / Earnings
EPS
Beta
Higher Reputation
78.5
9%
19.7
6.2
1.1
Lower Reputation
70.7
6%
13.4
2.6
1.1
The Financial Performance of the RepTrakTM 100
©2011 Reputation Institute, All Rights Reserved.REPUTATION INSTITUTE12
AN AUTO INDUSTRY COMEBACK?
The automotive industry, which was on the brink of collapse during the 2008-2009 fi nancial crisis, recently saw a galvanizing return to growth. But this return to form was not just fi nancial. Twelve companies from the automotive industry ranked among the Global RepTrak™ 100. BMW stood out as a shining example for its peers. It earned the highest level of Trust, Esteem, Admiration, and Good Feeling in the industry and was ranked fourth globally in the 2011 RepTrak™ Pulse. Its German competitors, Daimler and Volkswagen, shared similar success.
Despite more than 10 million product recalls in the past few years, even Japanese automaker Toyota emerged from the crisis more robust than expected; its RepTrak™ Pulse score was above 70, a testament to the enduring strength of its corporate brand.
With stakeholder bonds rekindled and trust revived, automakers are seeing spectacular returns. Vehicle sales in emerging markets are healthy as ever, but it’s in developed markets, particularly in the U.S., that the industry is truly making a comeback. U.S. auto fi rms are hiring more workers, manufacturers are returning to profi tability, and exports of U.S. vehicles are again on the rise. After years of stagnation, U.S. automakers are now designing and producing some of the most technologically advanced and innovative vehicles in the world.
Moreover, some U.S. auto fi rms are fi ling for IPOs to tap the stock market and raise capital to expand operations. Delphi Automotive Plc, for example, the former units subsidiary of General Motors (GM), registered for an initial public offering in May 2011—signaling a renewed demand for automotive stocks. Reputations of other U.S. auto companies have followed suit. Goodyear (75.09) and General Motors (67.40), both U.S. fi rms, ranked among the Global RepTrak™ 100 for 2011. Once at the brink of failure, U.S. automakers have been revitalized. The industry is back.
In Conclusion: Navigating the Reputation Economy The world is an ever-changing place, and to compete successfully, companies have to be aware of these changes and how to respond to them. Establishing and maintaining a reputation that places a fi rm among the best in the world goes a long way toward accomplishing this goal.The Global RepTrak™ 100 study demonstrates that
reputation affects the bottom line: It drives support, which drives market share, which drives profi t. In today’s global village, the companies that fi gure out how to export their home emotional appeal will win market share. To do this, they must always remember that they don’t own their reputations—their stakeholders do. Senior managers should heed the call if they are to build winning strategies in this brave new world.
Welcome to the Reputation Economy.
Rank
1
2
3
4
5
6
7
8
9
RepTrakTM Pulse 2011
79.42
79.03
77.33
73.99
71.26
71.11
71.04
68.19
67.40
Company
BMW
Daimler
Volkswagen
Honda Motor
Toyota
Nissan Motor
Suzuki Motor
Hyundai
General Motors
Global Reputations in the Automotive Industry
www.ReputationInstitute.com13
©2011 Reputation Institute, All Rights Reserved.
Reputation Institute NetworkAustralia • Belgium • Bolivia • Brazil • Chile • China • Colombia • Denmark • Finland • France • Germany Greece • India • Ireland • Italy • Japan • Malaysia • Netherlands • Norway • Peru • Portugal • Russia • South AfricaSpain • Sweden • Switzerland • Turkey • Ukraine • United Arab Emirates • United Kingdom • United States
www.ReputationInstitute.com
REPUTATION INSTITUTE
For more information on how to unlock the power of your reputation, please email:[email protected]
RepTrak™ is a registered trademark of Reputation Institute. ©2011 Reputation InstituteThe format, content, and arrangenment of this report constitutes a trademark of Reputation Insitute. No reproduction, in part or entirety, without expressed written permission.