Today’s Top 10 Biggest Companies

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All of the world’s 10 biggest companies as measured by market capitalization are American. While these companies have their roots in the U.S. and are the embodiment of “all-American” qualities such as innovation and industry, their reach is worldwide and their marketplace global.

The disproportionate number of American companies in the ranks of global titans now can be attributed to a confluence of favorable factors in recent years.

Here are the world’s top 10 companies (the markets caps are as of Nov. 17 and are based on Google Finance):

  1. Apple (AAPL) – Market cap $634 billion. The world’s most valuable company continues to reap billions by selling millions of iPhones, iPads and other coveted gadgets.
  2. Alphabet (GOOGL) – Market cap $505 billion. New holding company Alphabet was created in August to separate Google’s main businesses such as search and advertising from a plethora of new projects that are riskier long shots. Those include such ventures as Life Sciences (whose projects include a glucose-sensing contact lens), Calico (focused on longevity), driverless cars and secretive lab Google X, plus investing units Google Capital and Google Ventures.
  3. Microsoft (MSFT) – Market cap $428 billion. Microsoft was the world’s biggest company at the turn of the millennium and continues to be a steady presence in the ranks of the giants.
  4. Exxon Mobil (XOM) – Market cap $334 billion. Exxon Mobil was the world’s largest company in October 2007, with a market cap of $510 billion, but a 30% decline since then has pushed it down to the No. 4 spot among the mega-caps.
  5. Berkshire Hathaway (BRK.A) – Market cap $328 billion. Warren Buffett’s holding company reported record net income of $9.43 billion in the third quarter, driven by a one-time investment gain in Kraft Heinz (HNC). Berkshire Hathaway became the largest shareholder in Kraft Heinz after Buffett helped finance the merger that created it.
  6. Amazon (AMZN) – Market cap $301 billion. Amazon’s shares reached a record high this month as the stock surged 112.5% for the year, the best performance of the top 10 mega-caps. The stock has had a meteoric rise in the current bull market, having surged more than six-fold since 2009.
  7. General Electric (GE) – Market cap $308 billion. GE reached a seven-year high in November after reporting third-quarter results that beat expectations. The company is returning to its manufacturing roots and moving away from its financing activities, by selling $200 billion in assets from its GE Capital division and completing the split-off of its consumer-finance business Synchrony Financial. Although GE was among the world’s biggest companies during previous bull cycles that peaked in the years 2000 and 2007, the stock now trades at less than half of its all-time high reached in August 2000.
  8. Facebook (FB) – Market cap $293 billion. Facebook has the distinction of becoming the fastest company to reach $250 billion in market cap, having done so in about three and a half years since its initial public offering in May 2012.
  9. Wells Fargo (WFC) – Market cap $281 billion. San Francisco-based Wells Fargo became the largest U.S. mortgage lender with its 2008 acquisition of Wachovia Corp in a $15 billion stock transaction. Wells Fargo traded at a record high in July, but has since retreated 5%.
  10. Johnson & Johnson (JNJ) – Market cap $280 billion. J&J, the only health-care company in the top 10, reached a record high in November 2014, but has since pulled back about 7%.  J&J is one of only three U.S. industrial issuers that have a AAA rating from credit-rating firms Standard & Poor’s and Moody’s.

Why the Top 10 Are All American

The U.S. accounts for a disproportionate percentage of the world’s largest companies for possibly three reasons:

(a) the relative out-performance of U.S. equities in this bull market: Since March 2009, U.S. equity indexes have outperformed their global peers by a wide margin. The S&P 500 has gained 210% (from March 9, 2009 to Nov. 6, 2015), while the Dow Jones industrial average has advanced 173%. But even these impressive performances pale in comparison to the Nasdaq Composite’s 305% surge over this period, which is the biggest reason technology titans comprise half of the top 10 list.

(b) the strength of the U.S. dollar: Since the beginning of 2014, the dollar has gained against all 16 major currencies, and has advanced almost 22% versus the euro and 14% against the Japanese yen.

(c) the premium valuations accorded to U.S. mega-caps:  That means that a dollar of net income will probably fetch a higher market value for a U.S. mega-cap, compared with a European or Asian company.

The Bottom Line

The five biggest technology companies in the world are American. So are the world’s biggest bank, diversified conglomerate, energy company, health care product manufacturer and industrial firm. History shows that such dominance in the ranks of global titans does not last forever.

References: 

Read more: Why All of the World’s Top 10 Companies Are American http://www.investopedia.com/articles/active-trading/111115/why-all-worlds-top-10-companies-are-american.asp#ixzz3tH3tOhE1

Image: http://www.internations.org/usa-expats/guide/working-in-the-usa-15497/taxation-and-business-culture-in-the-usa-3

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Leading in the Digital Age

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In today’s digital economy, organizations are decentralized – that is, power to make decisions is spread out among different people. What’s more, the pace of change is so blindingly fast that leaders rarely have the luxury of making decisions with careful deliberation. Finally unlike traditional workers, many of today’s employees demand independence and autonomy. In short, they are reluctant to be led in the traditional sense of having someone tell them precisely what to do.

As you might imagine, these considerations have important implications for the way today’s dot-com leaders are required to operate. Some of the most important implications of the internet economy for leadership are as follows (Greenberg, 2005; Labarre, 1999):

1.) Growth occurs so quickly that strategies have to be change constantly. For example, Meg Whitman, now CEO of Hewlett-Packard, says that while she was at eBay the company grew so rapidly (often 40 to 50 percent each quarter) that it became an entirely different company every few months (Lashinky, 2003). Leaders cannot take anything for granted, except the fact that whatever they decided to do yesterday may need to be changed tomorrow.

2.) Leaders of technology companies are not expected to have all the answers. The highly technical nature of the business and the rapid pace of change make it impossible for just one or two people to make all the right decisions. According to Jonathan Buckley, retired CEO of Barnesandnoble.com, today’s leaders “must be evangelists for changing the system, not preserving it.”

3.) Showing restraint is critical. There are so many opportunities available to technology companies today that executives can too easily enter into a bad deal. For example Andrew Jarecki, cofounder and CEO of Moviefone, Inc., ignored the many suggestions he received  to go into business with a big portal before agreeing to what proved to be the right deal – acquisition by AOL for $386 million in stock (Greenberg, 2005).

4.) Hiring and retaining the right people is more important than ever. In the world of the internet and technology, the average tenure of a senior executive is only 18 months. Constant change means that the people who are hired for today’s jobs must meet demands of tomorrow’s jobs as well. As Jay Walker, founder of Priceline.com puts it, “You’ve got to hire ahead of the curve,” adding, “If you wait until you’re actually doing [as much business as you expect] to hire the necessary talent, then you’ll be too late” (Labarre, 1999).

5.) Today’s leaders must not take anything for granted. When Mark Cuban and his partner founded Broadcast.com (before selling it to Yahoo! four years later for $5.7 billion), they made lots of incorrect decisions. Instead of sticking to them, they quickly adjusted their game plan to fit the realities they faced (Greenberg, 2005).

6.) Leaders in technology must focus on real-time decision making. Traditional leader were trained to gather lots of data before making carefully researched decisions. According to Ruthann Quidlen, partner in Institutional Venture Partners, leaders can no longer afford to do so: “If your instinct is to wait, ponder, and perfect, then you’re dead…leaders have to hit the undo key without flinching” (Labarre, 1999).

References:

Greenberg, J. (2005). Managing behavior in organizations. Pearson Prentice Hall.

Labarre, P (1999). Unit of one: Leaders.com. Fast company, pp 95-98, 100, 102, 104, 108, 110, 112.

Lashinsky, A. (2003). Meg and the machine. Fortune, pp 68-72, 76, 78.