An interview in Beacon Reports with Stephen Givens, a Japan based lawyer, regarding whether Japanese firms are really global enough to compete, reminded me of a discussion in academia I recently became aware of thanks to an article in Nikkei Business Online by Akie Iriyama, who was at Mitsubishi Research Institute, now at University at Buffalo School of Management. He points out that not only (according to well regarded business academic Alan Rugman) are there only 3 Japanese companies that could truly be regarded as global in terms of a balanced regional spread of business (Sony, Canon and maybe also Mazda) but very few other firms are really global either – in fact according to Rugman’s original calculations – only 9 out of the 500 largest companies in the world are (IBM, Philips, Nokia, Intel, Coca-Cola, Flextronics and LVMH in addition to Sony and Canon)
The Beacon Reports article inadvertently reinforces this by citing Kraft, JELL-O, Miracle Whip, Velveeta, Oscar Mayer, Ritz, Oreo as being Fortune’s well known global brands. In Europe at least, people may have heard of Kraft and Ritz, but otherwise these are screamingly American brands that we only hear about via American TV imports. The best loved brand in Germany for example is Bahlsen, who make cookies – unheard of even in the rest of Europe.
And being truly global does not seem to be a guarantee of lasting success – if we see what has happened to Nokia recently.
Sometimes I think, rather than beating themselves up about not matching up to some Anglo-Saxon defined global ideal that doesn’t actually exist anyway, Japanese firms should make tough choices about which regions they want to focus on and realistically have strengths in. I wonder if, given today’s news, Suntory has chosen to focus on Europe – adding UK brands Lucozade and Ribena to its existing Orangina Schweppes business.
Much of Rugman’s research is 10 or more years’ old, and the companies cited by Givens such as Apple, AB InBev, Amazon, Google, Facebook, WPP, HSBC did not exist or have changed substantially since. Also Rugman’s “triad” does not take into account Latin America, which makes it difficult to classify the Belgian-Brazilian company AB InBev – I suppose it would be “bi-regional” (more than 20% of sales in two regions, if Latin America is added as a region). Apple and HSBC would classify as truly global as they have more than 20% of sales in North America, Europe and Asia Pacific. Amazon and AXA are home region oriented, with more than 50% of sales in their home regions. Google’s data is not broken down into these regions and WPP seems to be bi-regional, with over 20% of sales in both Europe and North America.
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