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News stories please, not trivia quizzes – company rankings not a horse race

Logo for Phillip Blanchard blog posts“Time Warner Cable Inc., the nation’s second-largest cable company, reports its second-quarter earnings before the market opens Thursday.” (AP)

“BP, Europe’s second-biggest oil company, and UBS, Switzerland’s largest bank, slid more than 2.5 percent.” (Bloomberg)

It’s nice to know that Time Warner is the second-largest U.S. cable company, but the mention inevitably raises the question:  What’s the biggest?

You might guess that it’s Comcast, but that’s because you’re a business writer or reporter. A good number of your readers won’t have a clue. They also might not realize that two TV-programming distributors – DirecTV and Dish – also outrank Time Warner.

Even if you are a business writer, you might not be able to come up with the name of Europe’s No. 1 oil company. The obligatory Google search yields Royal Dutch Shell, but you have to be careful. In early 2010, BP overtook Shell as No. 1.  Then, later in the year, Shell retook the top spot, partially because of the big BP oil spill in the Gulf of Mexico. Then, there was renewed talk that Shell might want to acquire BP, a possibility that had been floated several times in the past several years.   More recently, Shell scoffed at the notion, which at least for now saves us from having to identify a new No. 2.

Stop thinking of companies and competition like a horse race, says Testy Business Copy Editor Phillip Blanchard. Photo by Flickr user Paolo Camera.

Mentioning a company’s rank in its industry is pretty much automatic in news stories. But you cannot name the No. 2 or No. 3 company without saying which is No. 1. Failing to do so will get people guessing – especially if there’s ambiguity. How are you measuring the size of a company? Annual sales? That might not mean so much for a company like BP, which has all sorts of unusual obligations to soak up that revenue. Market capitalization? It’s not like companies are overvalued by investors.  Perhaps it’s time to reconsider how we rank these companies

Or, perhaps it’s time to stop ranking altogether. Business is competition, but it’s not always a race to No. 1. Is it a competitive advantage for Apple to be the biggest company in the world by market capitalization? Apple and Exxon traded places at the top of the list of America’s most valuable companies last week. Apple is not in competition with Exxon, unless the contest is to be the world’s biggest company, which it’s not. If Apple gets into the oil-exploration business, it would be a different matter. But that seems as unlikely as it would be for Exxon to start making  smartphones. It can’t even be said with certainty which companies are Apple’s competitors. Samsung? Obviously the iPad is significantly more popular than the Galaxy. Or Microsoft? Apple’s OS is unlikely to challenge Microsoft Windows as the world’s most widely used computer operating system.

The point here is to stop thinking of companies and competition like a horse race. In many cases, a more apt analogy might be a race in which a horse takes on a Porsche.

In Basics, Featured.

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