The top lists this year have an interesting outcome. The top 10 largest companies, in revenue, are those old names, with Walmart sitting on the top with US$ 378,799 millions.
1. Wal-Mart Stores (~$ 379B) ....... 6. Chevron (~$ 211B)
2. Exxon Mobil (~$ 373B) ............ 7. ING Group (~$ 201B)
3. Royal Dutch Shell (~$ 356B)....... 8. Total (~$ 187B)
4. BP (~$ 291B) ....................... 9. General Motors (~$ 182B)
5. Toyota Motor (~$ 230B).......... 10. ConocoPhillips (~$ 179B)
By profits, Exxon grabs the top list with US$ 40.61 billion or nearly $ 78,000 per minute! Stacked on the US$ 18 billion club are Chevron (no. 6, $ 18.7B), Petronas (no. 7, $ 18.1B), Total (no. 8, $ 18B). Thease are all oil companies, benefititng from high oil prices. Amazingly, Petronas is the no.
95 by revenue, yet its profit is at par with two of the super major oil companies, Chevron (no. 7) and Total (no. 9). With revenue about one third of these two big guys, Petronas posted profit against revenue (27%) about three times of Total and Chevron. How can it be ?Fortune 500 described that Chevron "faces several challenges from falling oil production to difficulties in finding new resources". Beyond this, I presume that for Petronas being operated out of Malaysia contribute to lowering the cost of doing business -- although not quite sure enough about the significance.
It's about globalization, and those big corporations of "multi-nationals". Automation technology, creative efficiency, and professional disciplines have been contributing to a big leap in productivity in light of growing business operations globally. It's been the "priviledge" of much developed economy to have those productivity enabling characteristics. With the advance of Internet digital technology, growing competency of people in less developed countries, and easier flow of people around the globe, the opportunity is now widely open to developing countries. As company operations are becoming global, the needs for more standard products and services are more apparent to breed overall efficiency. Several global companies are still relying on products and services that are "manufactured" by and in developed countiries with more "advance" technology, yet with labor-related cost relatively much higher. The aim is to get an overall good cost-performance: higher labor cost is offset by higher productivity. This product-service package is then deployed to all their business units across the globe.
The above is no longer true for mass products. As economic disparity still in a wide gap, re-locating manufacturing plants to low-cost countries have been quite successful to lower down cost of business. Products made in China has been flooding the world. Services and eventually products made with more advanced technology, and specialized services would be on the next pendulum shift. Offshoring jobs to India have become a business phenomena. Among other things, I suppose that Petronas is taking benefits by having Malaysia as a base of operations as compared to Total (France) and Chevron (USA).
The challenge for global companies is to agressively move around their "factories" around the globe to benefit from low-cost economy whrever appropriate. Management overhead would be higher as it would face a complexity of managing research centers, pool of expertise, products design and the like across various locations in the world with different timezone and cultural barrier. Once it could be properly managed, the overall cost of products or business would be more efficient, lower that at the end would book more dollars to the bottom line.
Although there might be some concerns of "national interest" (employment in the base countries / HQ), the global reach would benefit the world as whole providing a net positive opportunity to all. It is going toward a new equilibrium of the world while shrinking the economic disparity. It shall be done on mutual benefits, business-like undertaking, not on the basis of (pure) charity. It is, I would suppose, within the spirit of capitalism. Or as Bill Gates once stated, a creative capitalism.
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