- A study revealed that the U.S. technology giant is the best managed company this year
- The annual ‘Management Top 250’ list of the 250 ‘best managed’ companies in the United States is compiled by the Drucker Institute.
Although technology companies no longer completely dominate the annual Management Top 250 ranking of U.S. companies, Microsoft Corp. has managed to stay in first place for the third consecutive year and overcome the bad streak that has accompanied the so-called FAANGs this year.
The preponderance of the technology sector in the stock indexes has fallen considerably. Analysts are starting to manage the thesis that this could be the end of the reign of technology companies in the stock market. In fact, the total dominance of the technology sector in the ranking has been displaced by other sectors.
Displacement of technology companies
Last year, large technology companies occupied the top five places in the ranking published by the Drucker Institute at Claremont Graduate University. But this year the top five included companies such as General Motors Co. and Whirlpool Corp. which ranked fourth and fifth, respectively.
The other two best-managed companies of 2022 are Apple Inc. which ranked second and International Business Machines Corp. in third place. But in contrast the other ‘Big Tech’ did not have a good year. Revenues at Meta Platforms Inc, the parent company of Facebook and Amazon.com Inc. have declined.
Both companies have seen slower growth compared to 2020 and 2021, which were extraordinary. Also Google’s parent company Alphabet Inc. along with Uber Technologies Inc. and Salesforce Inc. slipped this year in the ranking of best-managed U.S. companies.
Amazon slipped back to eighth place after ranking second. It also fell sharply in the overall score given to companies in this year’s Top 250 ranking. While Meta, which ranked No. 31 in the 2021 ranking, fell to 130th place this year. It was the fourth largest decrease in relation to the group’s overall score.
According to Rick Wartzman, director of the KH Moon Center for a Functioning Society belonging to the Drucker Institute, “what you’re seeing is some weakness in the financials relative to where they’ve been in recent years and also some deterioration in customer satisfaction” in the technology industry.
However, “technology companies are still pretty high up overall, and they still largely dominate the top of the list,” adds Wartzman.
Automotive companies advance
For automakers this year was a very good one. Despite setbacks with microchip supplies and deliveries, the auto companies did very well. The large gains recorded are attributed by researchers at the Drucker Institute to an increased focus on electric vehicle manufacturing.
This contributed to improved scores related to the social responsibility of automakers. General Motors, which was ranked 16th last year, moved into the top five of the ranking. Tesla Inc. and Ford Motor Co. improved their positions as well.
It is clear to analysts that the auto industry’s rise in the rankings this year was due to largely overcoming the supply problems the sector suffered in 2021. This circumstance boosted the customer satisfaction levels of several of these companies by increasing their scores.
The Management Top 250 ranking is a scale that evaluates and highlights the efforts of companies to improve and optimize their administrative management. The philosophy behind the ranking, which measures the administrative management of companies, is inspired by the principles of Peter Druker, considered the father of modern management.
This year, the ranking analyzed and rated more than 900 companies in five different categories. These included customer satisfaction, innovation, employee engagement and development, financial strength and social responsibility.
Companies that rank in the top 15% to 20% in each of the ranking categories are labeled as stars. On the other hand, companies that do not perform well in management and score low in the ranking categories receive “red flags”.
The seven companies that achieved such a level of excellence this year were Apple, Mastercard Inc, Procter & Gamble Inc, HP Inc, Pfizer Inc, Accenture PLC and Visa Inc.
Microsoft placed in the top 10 in each of the five categories in the ranking. With the exception of the customer satisfaction category, where it ranked 519th on the list. In terms of innovation, the company scored the highest, displacing Amazon from the top spot it had held since 2020.
Since 2014 when Satya Nadella took the reins of the company, Microsoft has made great gains with its cloud business bet. The company has focused on its Azure platform, which it has managed to market very successfully.
During the pandemic Microsoft’s cloud business grew enormously and is still expanding. Despite inflation, high interest rates and a negative outlook for 2023 for the economy, the company has achieved excellent rates of return for its shareholders.
The cloud business continues to bring Microsoft a large profit, albeit smaller compared to the two years of pandemic. However, in the company’s third quarter earnings report, the company shows that while other sectors of the company recorded declines in revenue, cloud computing revenue grew by 35%.
“We continue to have a strong focus on our people, and while we are not immune to macro impacts, we feel good about the businesses we are investing in, our position in those markets and our ability to help customers optimize their IT budgets. and cloud spending,” said Chris Capossela, Microsoft’s chief marketing officer.
Amazon and the other tech companies pulled back
Another company that has shored up its cloud business with good results has been Amazon. However, this has not been enough to prevent its first-ever exit from the top five of the 2022 Best Managed Companies ranking. Its weighting in other categories of the ranking was lower, not so in social responsibility.
In November the company was considering focusing its business on expanding new capabilities for the Alexa virtual assistant. Notwithstanding that the Alexa management unit has had operating losses in excess of $5 billion in previous years, according to The Wall Street Journal.
Another unfavorable point for Amazon is that the number of satisfied customers has declined lately. Analysts and former employees of the company associate these results with problems such as shipping delays and frustration with search results due to the saturation of advertised products.
“There’s been a lot of talk about the excessive power and market concentration” of large U.S. technology companies, Wartzman says. “But I do think that also starts to erode consumer confidence. People just feel less good about shopping at these places or using these platforms.”
The other tech companies that slipped back in the Management Top 250 were Intel Corp, Cisco Systems Inc,HP Inc and Adobe Inc. Twitter, the other big tech that remained in the eye of the hurricane throughout the year, also failed to hold on to the top spots.
This ranking was made with data analyzed until June 2022. So it did not take into account the bitter and controversial dispute between Elon Musk and the board of the social network during the whole process of buying the company.