100 Reasons To Celebrate

Dec. 21, 2004
Twenty-four new names have been added to IndustryWeek's fourth annual list of the world's 100 Best-Managed Companies.

If there is one thing we will remember after judging candidates for this year's fourth annual list of IndustryWeek's 100 Best-Managed Companies, it is this: The world's leading manufacturers not only know how to please their shareholders; they also have big hearts. Given the caliber of the companies we considered, we should not have been surprised. Still, after hearing some of the stories the companies told in their questionnaire responses, we were impressed. After Hurricane Mitch pulverized parts of Honduras and Nicaragua last October, several of our Best-Managed Companies made contributions of money, time, and materials. In one example, employees at Tyco International Ltd. facilities in the U.S. donated tons of food and supplies, as well as cash, to help the victims. When Serbian troops drove thousands of people from Kosovo this year, several of our best-managed firms also responded. One company, Schering-Plough Corp., contributed medications valued at more than $1 million to assist the refugees. Yet another example: For the 18th consecutive year, Warner-Lambert Co. has committed to raise funds to support Operation Smile, an organization that helps children around the world with facial deformities smile for the first time. Its goal this year: $1 million. While financial performance, innovation, leadership, globalization, the ability to lead and partner, treating employees fairly, and being ever attentive to change were critical parts of our judging process again this year, philanthropic efforts were just as vital. More than any other year, selecting this year's elite group of 100 companies was extremely difficult. Mergers eliminated some contenders -- winners from last year including Aeroquip-Vickers Inc., AMP Inc., and Amoco Corp. were acquired by Eaton Corp., Tyco International, and British Petroleum PLC, respectively. Food-contamination problems felled one of our past winners, while two others' CEOs were ousted after poor returns. Setbacks in safety performance hurt several companies' chances, an ongoing antitrust trial sidelined a favorite, and an inability to respond to adverse market conditions impacted others. Nineteen firms that had been on our list for each of the project's first three years do not appear this year. Twenty-four companies appear for the first time, including: Honda Motor Co. Ltd., which in December will introduce Insight, the world's most fuel-efficient, gasoline-powered, mass-production vehicle; Hindustan Lever Ltd., one of two India-based firms to be named a best-managed company; and the chewing-gum maker Wm. Wrigley Jr. Co. Only 45 companies make their fourth appearance. Twelve firms appear for the third time, and 19 for the second time. Fourteen countries are represented. Here, then, is how we determined our list of IW's 100 Best-Managed Companies. The candidate companies were drawn from the IndustryWeek 1000, a list of the world's largest publicly held manufacturing companies based on revenues. The IW 1000 was published in our June 7 issue. Waltham, Mass.-based Primark supplied the data for the IW 1000. First, the 100 companies chosen as winners in 1998 were considered finalists. Second, using a proprietary financial formula, we selected 100 additional finalists from the IndustryWeek 1000. We looked at each company's performance in the following areas: profit-margin growth, sales-turnover growth, revenue growth, inventory-turnover growth, profit growth, profit margin, leverage, sales turnover, return on assets, and return on equity. In our judging, we also considered measures such as total revenues, earnings per share, and net income. Four years of data supplied by Primark were analyzed. IW also asked 113 international expert panelists, including business leaders, analysts, and academicians, to vote for those companies among the 200 finalists that they believe to be among the best-managed in the world. All IW editors also were asked to complete the ballot. Because panelists and editors had the opportunity to nominate companies in the IW 1000 that did not appear on the ballot, the total number of finalists surpassed 200. Each IndustryWeek 1000 company was asked to complete a questionnaire detailing its strongest performance and best practices in the following five areas: people, market development, technology, social responsibility, and processes. IW reviewed the finalists' questionnaires and also consulted its own research on each finalist's management practices. Those companies that chose not to submit a questionnaire this year still were considered but failed to garner additional consideration during the final stages of the selection process. Using all of the collected data -- financial-formula results, questionnaires, company information, and expert panelist and editor votes and comments -- IW editors carefully selected the 100 winning companies.

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