The Aussie Big’uns

You might have noticed I’m a bit of a fan of lists and rankings. I have done work with Fortune magazine’s Global 500 (i.e. the largest firms in the world). Forbes magazine goes even deeper, ranking the 2000 largest.

The latest list is out, and it gives us a chance to look how Australia’s homegrown big boys stack up. Rather than focusing on year-on-year changes (which are strongly determined by exchange rate changes), I thought I’d compare the Aussie performance relative to 2003 (the first year Forbes produced such lists).

Back then Australia had 37 listings. This year it was 46 (including the UK-Aussie pairings of BHP Billiton and Rio Tinto). You could also make a strong case for two more – Lihir Gold and Oil Search – both of whom are effectively managed out of Australia while being officially headquartered in Papua New Guinea. An argument about ‘roots’ might also extend to News Corp which shifted to a US HQ a few years back.

If we take the 46 number, then we’re looking at a 24% increase in representation since 2003 . At the same time, traditional powerhouses such as the US (down 29% to 551 firms), Japan (down 13% to 288 ) and the UK (down 23% to 102) have stumbled.

The big movers? Can you spell BRIC?

Brazil: 13 → 31 (up 138%)
Russia: 6 → 28 (up 367%)
India: 20 → 47 (up 135%
China: 13 → 91 (up 857%!!) If we included Hong Kong the numbers would be 43 → 133 (209%)

So, turning back to Australia, what should we make of this state of affairs? We have the tenth most list members while being the 14th largest economy in the world by unadjusted GDP. On this simple count front we are outperforming bigger economies like Italy (41), Spain (33), Russia (28) and Mexico (18). The only nation to ‘pass us’ relative to GDP ranking is South Korea (61). A couple of northern neighbours are outperforming their GDP status also: Taiwan (45) and Hong Kong (42).

In terms of the top end, there are 12 Aussie firms in the top 500 and five between 501-1000. Back in 2003, the count was 7 and 12. We are slightly ‘underweight’ in these upper echelons.

Who are the biggest Aussie players then?

The big four banks (Commonwealth, nab, Westpac, ANZ) split the prize with our two aforementioned mining giants (BHP Billiton & Rio), and are followed by Telstra, the diversified Wesfamers and retail fave Woolworths.

The biggest winners over the six years:

BHP Billiton (up from #133 to #52)
Rio Tinto (232 → 69)
Commonwealth Bank (141 → 59)
Woolworths (666 → 284)
Wesfarmers (866 → 266)
QBE (834 → 378)
Brambles (1155 → 684)
Insurance Australia Group (1568 → 979)
Woodside Petroleum (1933 → 762)
Origin Energy (nowhere → 732)

Biggest Losers:

Amcor (731 → 1342)
Foster’s (853 → 1389)
CSR (1113 → nowhere)

Most of the big winners have pretty extensive international operations, and I dare say almost all have increased the extent of their internationalisation over the 6 year period (anyone want to check?). Two of the losers have made some pricey and questionable commitments to the US market (much of Amcor and Fosters’ falls happened over the past 12 months).

There is a whole lot more that could be discussed out of these rankings. It really is a rich data source. For now, it does offer some support for an argument that Australian multinationals aren’t doing too badly, but could perhaps learn a lot from their emerging market counterparts.

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Expectations and competitive advantage

I’ve been a bit of a slack blogger of late. My excuses lie in two domains – (i) travel for work, and (ii) real estate transacting. Both of these experiences have served to highlight an interesting set of issues around the nature of competitive advantage and its interaction with consumer expectations.

Turning to travel first, I flew to the UK and back on an unnamed Middle Eastern airline. In a fit of absence-mindedness I managed to leave my almost brand new laptop behind at a Gatwick Airport security screening point. The laptop had no clear identifying label linking it to me, and I was unable to alert the airline to my error until I got back to Melbourne. Yet they embarked on an incredibly courteous and Herculean effort to recover said item and return it to me at no cost. They bent to my increasingly idiosyncratic requests (e.g. “can I pick it up at 7pm at Tullamarine on a Wednesday night when I land from Brisbane?”) without ever resorting to “sorry, we don’t do it that way”. Their flexibility and good nature has won me over and I am now a happy champion of their business to anyone who asks. That translates to competitive advantage.

In contrast I flew with our national carrier back and forth to Brisbane. I was stunned to get a hot meal for a change on both legs (indicating I must be flying in the very narrow window in which such service is bequeathed). My colleague flying in from Sydney was equally surprised. Now, unfortunately, that is only meeting my minimum expectation. The fact the firm has wound down service levels to such an extent in recent years does not make it something I’ll be lauding to friends and family. The firm has, at best, made up an inch of lost ground.

On the real estate side, we had a fantastic set of transactions with a particular agent. He found us the perfect house (in Fitzroy), made us feel unpressed yet lucky, facilitated our purchase with ease, and then also listed and sold our apartment  (in Collingwood) with great results and also integrity. He defied the stereotype of the shonky agent. As such, we have been proselytising on his behalf to all who will listen. Of course, folks are stunned to hear such praise. Being so out of the ordinary no doubt serves to differentiate this agent (and presumably his firm) from competitors (i.e. it represents an advantage).

Alas, these transactions meant we had to go talk with a bank. We begrudgingly are sticked with our current lender, despite negigible service over the past five years. The personal banker we dealt with this time was surprisingly efficient and pleasant to deal with. But, I say this only because we were expecting the complete runaround and much frustration. Does this make me like the bank? No, I’m just not whinging quite as much as before. Again, this is merely enough to stay in the race.

Firms need to have a stronger awareness and responsiveness to consumer expectations. Maintaining them at a high level is great. But in instances were they have been lowered industry-wide, you will make the biggest gains by massively exceeding the norm is the biggest win.