American brands taking a hit in the new world order

June 6, 2004 9:19 PM

Consumers send 'warning sign' to US brandsTom Miller, the managing director of NOP World, said worsening attitudes to the county's products could damage US business. "It's not like there's a massive boycott," said Miller. "Instead, it seems to be an erosion of support. It's not falling off the face of the earth, but it is clearly a warning sign for brands."
posted by Rastafari (27 comments total)

Welcome to the free market.
posted by Yelling At Nothing at 9:42 PM on June 6, 2004

What the hell is NOP World, but just another spin factory? I was once a director of research and my primary job function was finding facts on the opposition that could be distorted to fit our clients' own marketing schemes.

Weak FPP, all around.
posted by mischief at 9:49 PM on June 6, 2004

Interesting that they failed to mention Starbucks Coffee Company (their international expansion has caused their profits to remain far above expectations). Seems like that article already had a conclusion and decided to find some shallow research to fill in the details.
posted by BlueTrain at 9:53 PM on June 6, 2004

NOP World, according to the company's UK site, is a marketing research firm whose major clients include the Ford Motor Co. and Visa International, both of which are based in the U.S. It has offices in Detroit.
posted by raysmj at 10:15 PM on June 6, 2004

hmmm, from posts, sounds bunk. woulda been nice if this was all true. The only way the American corporate-gubment monster goliath will be stopped is when their horrid march of doom ceases to be profitable.
posted by Tryptophan-5ht at 10:20 PM on June 6, 2004

From posts? Here's the same story in a more respectable publication, the International Herald Tribune.
posted by raysmj at 10:27 PM on June 6, 2004

Tryp - Can't say anything true or nice, keep it to yourself.

If the "american corporate-gubment monster goliath" gets stopped, the european corporate-gubment monster goliath or the chinese/asian corporate-gubment monster goialth will just take it's place. Welcome to the global economy!

Try thinking. It's good for you, honest.
posted by SpecialK at 10:44 PM on June 6, 2004

From raysmj's link:

While the declines were slight - a two-point drop in familiarity, a three-point decrease in the number of users - the trend is clearly headed in the wrong direction.

Two years of data does not make a trend. It makes assumptions and quick judgments.

We believe that rising anti-American sentiment is a business problem, and that U.S. corporations need to address the issue in a sensible, nonpartisan manner.

And this, I believe, is the crux of raysmj's and Rastafari's links. The opinion that corporations should pressure the government into getting out of Iraq and succumbing to international pressure on a various set of issues (Kyoto, Geneva, etc) to further corporate profits. WOW. Every week we see links on this site condemning corporations for leaning on politicians for favors in exchange for campaign contributions. These links are basically suggesting that corporations lean on the government to appease international interests, all for money.
posted by BlueTrain at 10:49 PM on June 6, 2004

As far as the topic of the post goes --

Questionable source or not, the article seems to have correctly identified a trend. A quick google turned up a few articles with the same conclusion. The first article there is from the Harvard Business School, whose word can practically be taken as gospel on issues such as this one.

On Preview: Got beaten to the IHT link.
posted by SpecialK at 10:50 PM on June 6, 2004

Gah, sorry for the comment-spam, folks.

BlueTrain -

You've stated the premise behind Corporate Social Responsibility. Basically, corporations will make more profits if they help support good causes and "do the right thing". It's also known as "being a good corporate citizen".

It goes hand in hand with not polluting, not causing accounting scandals, donating to the community, providing good jobs with security, protesting things that they feel are wrong, and doing things that they feel are right.

CSR improves a corporation's profitability by providing a stable base for the employees to build on. Companies that embrace CSR and ethics are involved in less litigation, have better community support, and are less likely to go bankrupt or suffer thefts.

So, if they're doing the right thing for the money instead of the wrong thing for money, why is that a bad thing?
posted by SpecialK at 10:57 PM on June 6, 2004

So, if they're doing the right thing for the money instead of the wrong thing for money, why is that a bad thing?

Their huge donations force politicians to make concessions. Sometimes we like the outcome. Other times we don't (all depending upon where you find yourself on a particular issue). Your argument is allow the good with the bad, since you can't control the contributor. My argument is: Control the contributor, or find yourself (eventually) at the mercy of an MNC instead of your human constituents.

You've stated the premise behind Corporate Social Responsibility.

Corporate Social Responsibility is a myth. Here's why: the bottom line of any successful corporation is maximizing shareholder wealth. If people, the environment, governments, etc. can benefit, it's only as a tangential outcome; not an outright goal. If these same people, environment, governments etc. are injured (legally), oh well because the corporation's primary responsibility is to its shareholders and NOT to the outside world.

You open up Pandora's box when you allow MNC's to control government actions. It's hard enough creating a consensus with real citizens. Enter a corporation with deep pockets and a very superficial agenda and suddenly you see a lack of government accountability by its shareholders, the common man.
posted by BlueTrain at 11:08 PM on June 6, 2004

BlueTrain: Extrememly well-put.
posted by trharlan at 11:16 PM on June 6, 2004

the bottom line of any successful corporation is maximizing shareholder wealth

Makes me glad I'm a shareholder. ;-P
posted by mischief at 11:44 PM on June 6, 2004

Were you as happy back in 2000 when the market went kablooie, mischief?
posted by stavrosthewonderchicken at 11:48 PM on June 6, 2004

>the bottom line of any successful corporation is maximizing shareholder wealth

There are various ways to achieve that end, thus the simplistic view of short-term gains and constantly fighting off bad PR may very well NOT be part of a smart strategy to of maximizing anyone's wealth.
posted by skallas at 11:48 PM on June 6, 2004

Cases in point: Philip Morris and Gator changing their corporate names because they have such a lousy reputation with consumers. Not with stakeholders, but with consumers.

I wouldn't dismiss corporate social responsbility out of hand, as it seems many safe investments and profitable companies tend not to act like Philip Morris or Gator. "Google-esque" PR is worth its weight in platinum.
posted by skallas at 11:52 PM on June 6, 2004

Corporate Social Responsibility is a myth. Here's why: the bottom line of any successful corporation is maximizing shareholder wealth. If people, the environment, governments, etc. can benefit, it's only as a tangential outcome; not an outright goal. If these same people, environment, governments etc. are injured (legally), oh well because the corporation's primary responsibility is to its shareholders and NOT to the outside world.

I don't disagree with you, but you seem to be locked in the short view, a disease that many corporations and politicians have a terminal case of.

Is it in a business's best interest to destabilize a country? Is it in their best interest to pollute? Is it in their best interest to rob their customers or employees blind and then move on to the next victim? In the past, maybe you could get away with it. These days, you start to run into the problems that Wal-Mart is running into - it's becoming harder and harder for them to do business in areas where they aren't already the leader. People simply don't want them in their neighborhoods, but they don't have much of a problem with a Target or a similar competitor. It's not that Wal-Mart is a victim of its success; while that's part of it, they're a victim of their business practices. It's highly likely that Wal-Mart will begin to decline in the next ten years because it simply can't grow any longer, and all of it's policies and current successes are dependent on constant growth. It all comes down to sustainability. Is the way you do business a good way to do business ten, twenty years down the line?

Face it, we have about as much control over our country's actions at the moment as we do over a MNC or a megacorp like Wal-Mart. 6 of one and half-dozen of another. At least we all know what the corporation's goals are. Who the fuck knows what our country's leaders are out for? (And don't give me some bullshit like "the common good" ... But if you really believe that, email me. I've got a bridge I'd like to sell you. )

(This is a total thread-derailing side discussion, but one I've been thinking about a lot lately. It seems that governments are becoming less and less effective in the global scheme of things, and a lot of people living in a country don't really feel like they're a part of it. I would say that we're seeing the seeds of a Stephanson-esqe neotribal culture (Ref: Diamond Age) where people use the internet and other methods of communication to meet and create a social network based upon a common interest, be it the company they work for, a recreation activity, a preferred lifestyle rather than identifying with a nation or ethnicity.)

On Preview: What Skallas said.
posted by SpecialK at 12:05 AM on June 7, 2004

"Is it in a business's best interest to destabilize a country?"
Sometimes.

"Is it in their best interest to pollute?"
Sometimes.

"Is it in their best interest to rob their customers or employees blind and then move on to the next victim?"
Sometimes.

WalMart's recent expansionary failures are a touch overblown. They may be slowing in the US because they're too big, but that just means they'll focus on international markets. (Where they'll likely have a showdown with Carrefour, which I assume has more international brand recognition than WalMart.)

In any case, NOP World's numbers don't jibe with Interbrand's numbers, found in a recent issue of BusinessWeek. The nutgraf explains all:

Luckily for the stewards of America's largest brands, plenty of other consumers around the world are making the same distinctions. America's go-it-alone attitude in recent years, which has shaped its position on everything from environmental issues to Iraq, has aroused plenty of anti-U.S. sentiment. So far, however, that antipathy is not spilling over into a widespread rejection of U.S. hamburgers or packaged goods. "Yemeni students were out burning the American flag, chanting 'kill the Americans"' in early March, notes Jack Valenti, CEO of the Motion Picture Association of America. "As soon as the theaters opened at 7 p.m., bingo, they were all in there." Indeed, overseas box-office receipts for American movies have been cresting at near-record highs this year despite mounting anger against the country in which the films were produced.
posted by raaka at 12:55 AM on June 7, 2004

Raaka - Carrefour is kicking Wal-Mart's ass in any area where they're already established, which is most of them. Check the news coming out of Brazil for confirmation.
I'm also not sure that the Valenti quote is really valid; there aren't many alternatives to Hollywood movies for blockbuster-quality thoughtless screen-candy worldwide.
If the Interbrand #'s for 2004 show the same increases, I'll agree that Harvard Business Journal and NOP World (among others) are blowing smoke. If it was just NOP world, I'd agree. Since HBJ's saying the same thing, that gets me worried. The HBJ isn't that wrong that often, especially where strategic trends are concerned.

As for the other things...

"Is it in a government's best interest to destabilize a country?"
Sometimes.

"Is it in their best interest to pollute?"
Sometimes.

"Is it in their best interest to rob their citizens blind"
Sometimes.
posted by SpecialK at 2:21 AM on June 7, 2004

Boycotts as a political tool...hmm...didn't work so well in Cuba.
posted by rushmc at 5:32 AM on June 7, 2004

When people were asked about brands associated with "honesty", Coca-Cola was found to have declined from 18% to 15%, McDonald's from 19% to 14%, Nike from 14% to 11% and Microsoft from 18% to 12%

Whaaa ??? I knew Coca-Cola was a filthy dishonest whore by the way she dresses! I never buy filthy dishonest non alcoholic beverages, only honest true to god compassionate sexually attractive literate and spiffy beverages. The fact that I don't like the taste is second to brand honesty !

Duck and cover marketing is spouting funny numbers again !
posted by elpapacito at 6:33 AM on June 7, 2004

"These links are basically suggesting that corporations lean on the government to appease international interests, all for money."

Yeah, but since this is leaning on them in ways the poster and authors of those articles agrees with thats going to be called "good".
posted by soulhuntre at 6:50 AM on June 7, 2004

SpecialK, I think you're seriously missing my point. Governments are held accountable through their shareholders: citizens. Corporations, on the other hand, are owned primarily by institutional investors (about 40% is the industry average). Governments are established to maintain civil society and afford equal rights to people. Corporations are designed simply to make money. They don't care about goodness, society, or the common man (primarily). Again, if they find themselves profitable and are able to help, all the better...but because corporations are ruled by profits and governments are ruled by citizens' interests (theoretically), to expect corporations to accept less profit for the sake of the environment (without legislation) is ludicrous.

Philip Morris and Gator changing their corporate names because they have such a lousy reputation with consumers.

Which changed what, exactly? They used a marketing tactic to fool customers and you're using that as an example of consumer pressure? Gee, let's call Bush a Democrat and all will be better.

PR is worth its weight in platinum.

Which is precisely my point. Businesses only change their practices to the point that they can get away with neglecting social responsibility in favor of additional profits. Governments, on the other hand, are held much more accountable by their people (theoretically; I don't feel like getting into campaign finance reform here).
posted by BlueTrain at 9:02 AM on June 7, 2004

the bottom line of any successful corporation is maximizing shareholder wealth

This is an overly simplistic view. The goal of any corporation (or any organism organic or otherwise) is ensuring its own long-term survival and prosperity. Sometimes, as in the case of GE when Jack Welch took over, or IBM when Gerstner took over, in order to accomplish this, shareholder value can and must take a short-term hit. To do otherwise would be disastrous.

If you look at a model of a company that was motivated only by the idea that it existed to maximize shareholder value, that would be Enron.

The way I have always looked at this is taht Shareholder value is but one of the four pillars that the successful company stands on. The others are operational excellence (throughput efficiency + employee job satisfaction), market/product positioning and external/ecological factors (pr, legal compliance, environmental issues). If any of these pillars is elongated, and the others are not increased proportionately, the whole thing falls over.
posted by psmealey at 9:58 AM on June 7, 2004

psmealey, I agree. I wasn't attempting to suggest that the only motivation for corporations was/is shareholder wealth, but merely that it was their primary motivation (in regards to the context of my response to SpecialK).

A great example that was brought to my attention a couple of days ago is the status of oil refineries in the United States. In the 90s, the refineries were deregulated and privatized (like the utilities). Demand is increasing, (since it has been for decades now) but capacity has stayed the same. Why? Privatized refineries are more profitable running their plants to capacity, as opposed to building additional plants to prepare for the future. Do your shareholders want capital gains and dividends now, or are they willing to wait 5-10 years for the demand to catch up to your newly build plants? No brainer...only build when needed. Governments, on the other hand, anticipate this demand without regard for profitability; thus are more prepared for spikes in demand.

Pittsburgh Public schools have a similar situation today. The city can't afford to keep all of their schools open because the entire system is approximately 60% of their total capacity. So they shut down (I think) three schools. The schools will remain city property and, in the future, can be reopened to accommodate a population increase. On the other hand, if these schools were run by a private company, the closed schools would be sold off to appease shareholders.
posted by BlueTrain at 10:55 AM on June 7, 2004

pmeasley, the board of the corporation has a fiduciary duty to maximize shareholder wealth. This does not have to mean short term wealth, but in the end if the goal is a detriment to the shareholders (unless the shareholders have agreed to pursue this detriment) it breaches the fiduciary duty. Of course, many believe that corporations that act ethically actually outperform the rest, thus implying that acting ethically is one of the foundations of meeting one's fiduciary duty to the shareholders.
posted by caddis at 7:03 PM on June 7, 2004

caddis, I don't necessarily disagree. Depending on the legal structure of the company (what you are describing is a regular C corp with a board of directors) that is indeed true. My point was at a higher level of abstraction, the role of the corporation is to ensure for its own survival and prosperity. What you are describing has more to do with the technae of its stewardship. When Gerstner took the helm at IBM he effectively sold the board on the idea that the company would have to be dismantled and recreated for it to survive. The board agreed with this course of action, which meant diminished short term profits, increased losses, diminished stock price, etc, so that Lou could work his magic.

My point is that slavishly holding to maximizing shareholder value without regard to long term strategic planning and some consideration given to ethics and employee morale will more often than not cause the company to crater rather than continue to deliver value over the long haul.
posted by psmealey at 11:15 AM on June 8, 2004