Saturday, November 1, 2008

Methodology for selecting the 2008 BCG 100

The Boston Consulting Group generated the 2008 list by using a detailed screening process based on rigorous selection principles. For the earlier, 2006 report, it had looked at 2004 financial data; this time it had the benefit of additional data from fiscal years 2005 and 2006. First, it selected a set of rapidly developing economies (RDE) in which to find the challenger companies. The BCG started with 30 countries ranked according to size of GDP, value of exports, and amount of outbound foreign direct investment. From these rankings, it chose a set of 14 RDEs: Argentina, Brazil, Chile, China, Egypt, Hungary, India, Indonesia, Malaysia, Mexico, Poland, Russia, Thailand and Turkey.

Then an initial master list of more than 3,000 candidate companies that are based in these countries was compiled. This list drew on a variety of local company rankings, such as the top 500 companies in India selected by Business Worldmagazine and the top 500 companies in Brazil selected byExame, a Brazilian business magazine. Having amassed this large candidate pool, an international BCG research team from Brazil, China, Eastern Europe, India, Mexico and Russia, together with a panel of senior BCG experts in Asia, Europe, Latin America, Russia, and the US, conducted a rigorous three-step triage process.

In step one, it ensured that the selection included only companies that are truly RDE-based, omitting foreign joint ventures and the RDE-based subsidiaries of multinational corporations. In step two, the BCG homed in on those players with 2006 revenues of at least $1 billion, a threshold believed to be generally necessary to drive a serious globalisation campaign. “We allowed ourselves some flexibility on this criterion; four companies on our final list fell short of the $1 billion threshold. We included them because their revenues are fast approaching this level and because we felt that they merit inclusion on the basis of other criteria,” says the BCG report.

In step three, it scored the major globalisation credentials of the remaining companies using five criteria: the international presence of the company as indicated by its owned and operated subsidiaries, sales networks, manufacturing facilities, and R&D centres; the major international investments pursued in the past five years, including mergers and acquisitions; the company’s access to capital for financing international expansion, whether through free cash flows, stock markets, or other sources; the breadth and depth of its technologies and its intellectual-property portfolio; and the international appeal of its existing offerings and value propositions

( Source: the hindu business line )


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