2007 Most Admired Company Survey
Competitiveness: a 360-degree Assessment
In this annual survey of Taiwan's most prestigious corporations, important shifts have taken place in the food, service and telecom sectors. What gives some Taiwanese companies that vital edge?
Competitiveness: a 360-degree AssessmentBy Isabella Wu
From CommonWealth Magazine (vol. 382 )
CommonWealth Magazine’s once-a-year Most Admired Company Survey is 360-degree assessment of competitiveness among businesses in Taiwan. While it serves as an indicator of the current business performance of companies in Taiwan, it also reflects their potential for handling future changes as well as the degree to which they have satisfied the expectations of society. One thing is certain though – it’s no easy task to stand out from the crowd.
This year’s results are out, and Taiwan Semiconductor Manufacturing Company (TSMC) and Hon Hai Precision Industry Company sit firmly at the top of the charts yet again, as the first and second most admired companies in Taiwan. Yet some changes have taken place among the other top rankings since last year. President Chain Store Corporation has stepped up one position from 2006 into third place, pushing last year’s number three, ASUStek Computer Incorporated, back to fourth, while MediaTek Incorporated has moved up one spot to fifth. Taiwan’s food industry leader, Uni-President Enterprises Corporation, has entered the top ten for the first time at sixth place, while Texas Instruments, Citibank, China Steel Corporation and High Tech Computer Corporation (HTC) round out this year’s survey top ten, in that order .
This quick glance reveals that little has changed since last year’s survey. Only one new company has entered the top ten, and seven companies have shifted just one or two positions. Still, some important information is revealed by this change, and lack thereof.
TSMC and Hon Hai Set the Bar High
TSMC has settled into the first-place spot for an impressive 11 years, while Hon Hai has held its number-two position for six years running. The reasons become clear when we view the figures.
Hon Hai is Taiwan’s largest enterprise. Its revenues in 2006 exceeded NT$1.3 trillion. The revenues of Hon Hai alone are equivalent to one-tenth of the nation’s gross domestic product.
Survey leader TSMC not only claimed the top spot on seven of the ten indicators in this year’s survey, it stands out as the most profitable company in Taiwan as well. Boasting profits in excess of NT$120 billion this year, it is the only company in Taiwan to post profits exceeding the NT$100 billion mark.
“TSMC has established an ecology of leadership that is extremely difficult to surpass,” asserts National Chung Hsing University Department of Management Administration assistant professor Chiu Yi-chia, who notes that TSMC has erected barriers obstructing others from reaching its benchmark.
As for the world outside of high technology, food giant Uni-President has captured everyone’s attention by leaping into the sixth highest position in the survey rankings. It is this year’s best-performing conventional enterprise.
Uni-President is ranked among the top ten on seven of the survey’s ten indicators. Indicative of the changes that have taken place at Uni-President, it ranks fifth on the indicators for both “forward thinking” and “quality of products/services” .
Having reached the ripe old age of 40 this year, Uni-President is nevertheless constantly promoting innovations. It carried out adjustments to its team of executives after its board of directors meeting in the middle of this year. Alex Lo, known especially for his role as an innovator, was promoted from executive vice president to company president.
As prices of raw materials continue to rise, food manufacturers are increasingly finding themselves under considerable pressure. Lo, however, intends to transport his enterprise beyond price-based thinking towards “creating brand value.” Otherwise, the company will have trouble dealing with the long-term trend of rising raw-material costs. Lo aims to “find needs of which customers have yet to become conscious.” As a case in point, Uni-President recently put on the market milk made with plant cholesterol, meeting the needs of a growing number of people who must control their high cholesterol levels. This innovation has created a new high value-added product to compete in the traditional dairy products market.
Of the ten indicators on the Most Admired Company Survey, “forward thinking,” “innovation” and “quality of products/services” have long been considered by businesses and experts to be the most important skills for enterprises to possess. Yet, when we look at the actual scores of enterprises in the overall survey results, we discover that foresight and innovation are among their weakest suits.
In the scoring of enterprises on this year’s survey, the indicator that has advanced the furthest is “transnational operations capability.” This measure has moved up from the eighth position in 2006 to the fourth this year.
Kenneth Yan’s New Auto Industry Challenge
Looking at the survey scores of different industries this year, information technology and manufacturing sectors continue to score higher than others. The average scores of the computer, semiconductor, electronics and optoelectronics sectors all place them in the top ten. The average score for the communications industry, however, plummeted from fourth place in 2006 to 17th this year, due to less than ideal mobile phone sales.
The strength of Taiwan’s electronics industry has created greater growth opportunities for other sectors and distributions connected to this powerful industry.
With new 3C (computers, communications and consumer electronics) products hitting the market all the time, the semiconductor distributor WT Microelectronics Company has enjoyed continued growth while riding on the coattails of Hon Hai, ASUStek, Compal Electronics and HTC. Its survey ranking among information technology distributors jumped from 13th place in 2006 to fourth place this year.
For the first time this year, our survey has scored the auto manufacturing sector separately from the auto sales and service sector. Automaker China Motor Corporation received the highest score in its category, and is followed in second place by Giant Manufacturing Company, the company that established the Giant bicycle brand. Taiwan’s Toyota sales representative, Hotai Motor Company, scored at the top of its sector.
With Taiwan’s auto market having suffered a steep decline in sales over the last two years, Yulon Group CEO Kenneth Yan recently took over as president of China Motor Corp. He is expected to introduce even more innovations in order to allow his company to hold on to its leading position.
The service sector has been performing relatively weakly, and this is especially the case in the financial industry, where international banks occupy all top five slots in their sector. Larger domestic banks, including Taipei Fubon Bank, Cathay United Bank, Taishin International Bank and Chinatrust Bank, took a pounding from last year’s credit card and cash card debt crisis. They failed to enter the survey’s rankings this year due to the resulting losses.
President: the New Service Star
The brightest star in the service sector is none other than this year’s Most Admired Company Survey bronze medallist, President Chain Store Corporation. Among the survey’s ten indicators, the convenience store operator earned a second-place ranking for “forward thinking,” behind only Hon Hai. It also came in second for “quality of products/services,” behind TSMC, and took third place for both “operational achievements and organizational soundness,” outperforming even MediaTek .
“President is absolutely amazing,” declares an admiring Jih Sun Securities vice president Emily Chiang. Of late, it has been busy opening new locations and improving its distribution operations. “The way to go is to emulate how President runs its distribution business,” says Chiang.
President Chain Store Corporation is not only moving swiftly in opening new stores, for the last two years it has been active at integrating online sales channels into its operations. Recently, it has gone a step further, installing its iBon virtual kiosks in its convenience stores, offering such services as on-line bill payment and ticket purchasing, along with functions for downloading employment information, and even example questions from old school tests. Having integrated the virtual and the brick-and-mortar, President is now learning from others and crossing the boundaries between business sectors, and it is set to becoming a formidable player that renders those boundaries obsolete.
“Taiwan needs more benchmark enterprises in the service sector,” observes National Taiwan University Executive MBA director Lee Ji-ren, who looks forward to Taiwan producing even more “high-value, exportable service businesses” in the future. Just as the high-tech industry has taken the world by storm, Taiwan’s entire business community will then raise its level of development up a notch, and even more new shining stars will appear among Taiwan’s most admired enterprises.
How were the 2007 Most Admired Companies chosen?
This year’s Most Admired Company Survey investigated the 24 industries influencing Taiwan’s future development, based on the criteria for categorizing CommonWealth Magazine’s list of 1,000 top Taiwanese enterprises.
The companies surveyed were derived mainly from the top 1,000 list, and other reliable surveys were referenced, as well as expert recommendations. Controversial companies and enterprises operating at a loss were disqualified, and only those companies showing a market lead in profits in 2006 were selected.
Appraisal and comparison were conducted according to the same standards as those of international media. A total of 286 companies were chosen for adjudication. Each was appraised by industry peers and experts, and scored according to ten key indicators.
Industry peers were selected from CommonWealth Magazine’s research database of the 1,000 top Taiwanese enterprises, and expert analysts in Taiwan from the fields of banking, securities, investment consulting, investment trusts, and accounting were invited to make assessments.
A total of 4,830 surveys were distributed from August 27 to September 28, 2007. Of those, 1,709 (35%) were completed and returned – 958 from companies and 751 from expert analysts.
(Surveys conducted by the CommonWealth Magazine Survey Research Center )
Translated from the Chinese by Stan Blewett
Chinese Version: 360度競爭力大檢驗