Technology has enabled companies to go global at high speed. But some time-tested approaches are a formula for success. One of the most important is having a wide distribution network, which allows companies to have a longer-lasting and durable presence in markets.
Consumer companies like Coca-Cola were pioneers, and they have retained a grip on markets globally. Coke, for instance, has an unparalleled delivery fleet and priceless relationships with retailers and bottlers worldwide.
Now companies in other areas are following suit. Beverage and spirits companies saw a wave of mergers earlier in the decade. The latest significant merger involves Anheuser-Busch InBev and SABMiller, which together sell more than 30% of the world’s beer, including brands such as Budweiser and Stella Artois.
“Once you have the distribution networks, there are huge economies of scale to branding and marketing. It is the capability to create global brands and put the massive marketing budgets behind them that is the competitive advantage of global companies.”
Georgios Damtsas, Capital Group investment analyst
Large pharmaceutical companies are also focusing on creating iron-clad distribution networks. Over the last couple of years, these drug companies have forged mergers to create some global companies with massive scale. And they have increasingly established distribution networks in select areas of specialized medicine, such as cancer therapies.
These companies are “specializing in certain diseases so they can build a distribution network of doctors from around the world who know that disease,” says portfolio manager Rob Lovelace. “That is what these big drugmakers own. They all know that to be a strong, durable company over time, they have to control distribution and specialize in it.”
When it comes to technology companies, Amazon has become a formidable presence as the consumer experience has changed. It has built what is probably the most durable franchise, in large part thanks to its vast distribution network in the U.S., and now increasingly, in far-flung markets such as India.
To find out more about how technology has changed the business landscape, read Global Companies: Technology Makes the World Smaller.