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10.04.2013The World's Most Reputable Companies

Chances are, your decision to choose one brand is influenced more by the company's reputation than by any particular product or service it offers.


Jacquelyn Smith, Forbes.com

When you browse the aisles of a grocery store, purchase a new car, ship a package, or book a flight, you have an abundance of options. Chances are, your decision to choose one brand over another is influenced more by the company’s reputation than by any particular product or service it offers.

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Reputation Institute, a global private consulting firm based in New York, found that there’s a strong correlation between a company’s reputation and consumers’ willingness to recommend or buy from it. For companies with strong reputations, 55% of consumers say they would definitely buy their products and 50% would be willing to recommend their products to others. For companies with weak reputations, these percentages fall to only 31% willing to buy and just 28% willing to recommend.

“We live in a time when word of mouth is the number one driver of sales and competitive advantage,” says Kasper Ulf Nielsen, Reputation Institute’s executive partner. “Investing in reputation will pay off on the bottom line.”

Given that international companies boast up to 95% of their revenue from foreign markets–companies need to strive to earn the trust and esteem of consumers all over the world. “Winning the support of customers in foreign markets is critical to future success,” Nielsen says.

Building a top-notch reputation that spans the world isn’t easy. However, at least 100 well-regarded companies have successfully expanded their brands into the international marketplace by integrating reputation management into the way they do business.

Reputation Institute recently ranked 100 businesses that have successfully established strong international names for themselves. The firm invited about 55,000 consumers across 15 markets to participate in a study of those 100 most reputable companies, all multinational businesses with a global presence.

Each company earned a “Global RepTrak Pulse” score of zero to 100, representing an average measure of people’s feelings for it. The scores were statistically derived from calculations of four emotional indicators: trust, esteem, admiration and good feeling.

Reputation Institute also analyzed what it calls the seven dimensions of corporate reputation. That’s where it found that perceptions of the enterprise (workplace, governance, citizenship, financial performance and leadership) trumped product perceptions (products and services plus innovation) in driving behaviors.

“Reputation is the emotional bond that companies have with stakeholders,” Nielsen says.“It’s defined by the level of trust, admiration, respect and good feeling stakeholders have towards a company. If a company has a strong reputation people trust the company. If the reputation is weak, trust admiration and respect are low.”

As it turns out, reputation is emerging as the number one driver of value, because for companies to succeed, they need stakeholders to support them. “They need customers to buy their products and services, investors to invest in their company, regulators to give them a license to operate, journalists to give them fair coverage, and employees to deliver on the strategy,” Nielsen says. “And for them to do this, they want to know that they can trust the company to deliver on its promises. That is what reputation is all about.”

Building a strong reputation takes time. To win the trust and support of consumers and other stakeholder around the globe you need to consistently show that you will live up to your promises, Nielsen says. You also need to be relevant in the local context. “It’s not enough to have a strong and appealing product brand. You need to be seen as a company who cares about the people in the country.”

The best companies are the ones who invest in local activities; doing more than just selling their product. “The winners, in many cases, also produce locally, employ local people, and engage themselves in solving local issues. But, you are unable to build a strong reputation through philanthropy or CSR actions alone.”

People are looking for companies to be an active partner in solving their issues–and this requires local investments and the willingness to think long term, and to build the relationships needed to win trust and support, he says.

One company that has been able to do all of this exceptionally well: BMW. For a second consecutive year, the German automaker is in the top 10 for all seven dimensions on a global level, earning the title of world’s most reputable company for 2013.

It earned a global RepTrak score of 78.39 out of a possible 100, and in its home country BMW did slightly better, which isn’t uncommon. Nielsen says companies tend to have a stronger reputation at home. On average, the home country reputation is 3 points higher than the global reputation across all 15 markets.

“Once again, BMW is the most reputable company in the world,” Nielsen says. “The German automaker has continued to earn the trust and respect of consumers around the globe though its consistent focus on delivering high quality in all its actions. What BMW has done so well is to be relevant across all seven dimensions of reputation. BMW is the only company to place in the top 5 in every reputation dimension, with the best perception of all 100 companies within governance.”

Another impressive result for BMW: It reached the top 10 in nine of the 15 countries in the study. “BMW has the best overall reputation in Russia, South Korea, and Australia, and it pays off,” Nielsen says. “Compared to Volvo and Ford who both have strong reputations with scores of around 70, BMW has 9% to 11% more willingness from consumers to buy products, and 12% to 14% more recommendation from consumers. These are powerful elements when you want to win customers in the fight for market share and growth.”

A BMW spokesperson told Reputation Institute that the company has a long heritage of creating trust through a simple approach: Deliver on promises. “At the BMW Group, trust is the bedrock upon which we operate and it provides the foundation for our brands to grow,” he said. “For years, we have been cultivating relationships with all of our stakeholders based on consistency and reliability. The result is a culture of ongoing communication based on trust.”

The company’s spokesperson said every associate of the BMW Group is an ambassador for the company and its brands. “Because of this, ensuring all of our associates understand our brands and our customers is central to managing the BMW Group’s corporate reputation. In turn, each brand’s promise—BMW, MINI, and Rolls-Royce Motor Cars—unites and motivates all of us at the company.”

In the No. 2 spot, The Walt Disney Company earned a 77.76 global score. It ranks highest (No. 1) in the citizenship category—but lands in the top 10 in all seven dimensions. The Walt Disney Company also has the broadest reputation profile with a top 10 rank in ten of the 15 markets.

“The Walt Disney Company is most successful at exporting trust and admiration for the company in foreign markets,” Nielsen says. “Another reason why it has such as strong reputation is that consumers admire its performance within all seven dimensions. Disney is not just liked for its magical products; consumers perceive the company to have strong ethics, act as a good corporate citizen, treat its employees well, have a clear vision, and be a financially sound company that develops new and innovative products: A well balanced platform which is the key to a strong overall reputation.”

The strong reputation pays off. Across the 15 largest markets in the world 59% of consumers say they would definitely buy Disney products, and 57% would definitely recommend the company to others.

Rounding out the top three is Swiss watchmaker Rolex.

Rolex enters the list with a strong reputation score of 77.23—and led all companies in terms of high quality products and services. “But Rolex is more than just its products in the mind of consumers,” Nielsen says. “The timeless luxury company is also seen to deliver on our other reputation dimensions like leadership, financial performance, as well as workplace and governance. The only two dimensions where Rolex is not in the top 10 are innovation and citizenship.”

Rolex has a very strong global reputation with top 10 performances in eight out of the 15 national markets.

Nestlé is the only other newcomer to the top 10 this year. “The Swiss food giant has consistently moved up in the ranking over the past years with a steady reputation,” Nielsen says. It debuts in the No. 9 spot with a global score of 75.21.

Nestlé has a strong perception within products and services, innovation, financial performance, and leadership. “Within the softer dimensions of citizenship, governance, and workplace Nestlé is seen as average,” Nielsen explains. “With 43% of reputation being driven by these three dimensions, Nestlé will need to improve performance in these if it wishes to climb to the highest levels on the reputation ladder.”

Nestlé also has a very strong reputation with consumers in North America and Latin America, where it ranks second overall among all 100 companies.

The world’s fourth most reputable company: Google. Last year the search behemoth dropped to No. 6 after holding the top spot for two years. This year it earned a 77.15 global score and has the best reputation in the workplace category.

Elsewhere in tech, Apple fell from the top 10 to No. 12 (though it won the innovation category), and Microsoft maintained its No. 7 position.

“This is the third year in a row that we have seen Apple’s reputation fall,” Nielsen says. “Apple has experienced several major challenges over the past few years: the loss of its visionary leader; legal battles; chatter about its products becoming uncool; and the stock wavering. One of the best ways to combat crises is by building a reputation cushion. Apple may need to come out from behind its ivory tower and show consumers who they really are.”

With a global score of 76.23, Microsoft ranked in the top 10 in all seven dimensions of reputation. In was the winner in two of those categories; performance and leadership.

Boeing lost the most reputation capital from 2012 to 2013 of all companies on the list. With a score of 65.45, Boeing landed the No. 87 spot this year.

“Based on feedback from more than 300 reputation leaders, the number one priority in 2013 for them is to manage and mitigate reputation risks,” Nielsen says. “Boeing saw this need when it went through a major crisis with the grounding of the Dreamliner. The public noticed the issue and reacted by losing trust and willingness to support the company. At the global level, Boeing’s reputation dropped five points, taking its reputation rating from strong to average. At the dimension level, people lost most faith in Boeing’s ability to deliver high quality product and service area but overall the issues did not ruin the reputation of the company globally with consumers.”

Others to land toward the bottom of the list with scores under 65 include Zara, Pfizer and Hertz–but they aren’t losers by many means.

To qualify for the ranking at all, each company had to have an above-average reputation score (defined as over 70) in its home market, based on Reputation Institute’s global database of RepTrak scores spanning 2006 to 2012. The criteria for qualification also included company size, based on annual revenue, multinational presence and high familiarity among consumers in the measured 15 markets (Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Mexico, Russia, Spain, South Korea, the U.K. and the U.S.).

Something all the winners across the globe have in common: They have recognized that the days where a strong product alone would win the love and support of consumers are over.

Click here to view the full report.


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