Best Global Brands 2011


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Top Ten Brands in 2011

1 Coca-Cola71,861 ($m)
2 IBM69,905 ($m)
3 Microsoft59,087 ($m)
4 Google55,317 ($m)
5 GE42,808 ($m)
6 McDonald's35,593 ($m)
7 Intel35,217 ($m)
8 Apple33,492 ($m)
9 Disney29,018 ($m)
10 HP28,479 ($m)
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Lindsay Beltzer
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Global Marketing & Communications
+1 212 798-7786

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Which brands lead when it comes to the environment. Find out in our Best Global Green Brands report.



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Building Brand Value Through Mergers and Acquisitions

By Ron Zhiss


With companies recovering from the financial crisis and available cash on the balance sheet growing strongly, 2011 was foreseen as a year of growth for mergers and acquisitions. Thomson Reuters and Freeman Consulting predicted that mergers and acquisitions would surge 36 percent in 2011 to over US $3 trillion globally. Indeed we have seen many high profile mergers and acquisitions over the past few years.

Mergers and acquisitions have consistently played a prominent role across global businesses, but are they a solid strategy for increasing brand value? Among the top 20 brands with the strongest growth in brand value over the past five years, there are brands that make extensive use of acquisitions including Google, IBM, Oracle, HP and Philips. Yet, there are even more brands who have focused on their existing business like Apple, Nintendo, ADIDAS, and Audi.

Like most strategic initiatives, mergers and acquisitions can be effectively leveraged to drive business value. They can also be poorly conceived leading to significant losses. Reviewing some current mergers and acquisitions should prove instructive to our pursuit of increasing brand value.

Looking at the overall market for mergers and acquisitions, the key factors that drive transactions are still active. Industry consolidation, seeking scale, product line expansions, and technology acquisitions all continue to drive the market.

In contrast to the acquisition, the spinoff or split up seems to be a growing trend. Most notably, Kraft Foods recent announcement that it will split into two separate companies was a major surprise. After a voracious history of acquisitions over the past three decades, including last year’s Cadbury addition, Kraft reversed course.

The alleged logic of the “pure play”, a company with a focused, easy to understand business model, is being increasingly invoked these days. This announcement follows similar moves by Motorola and Sara Lee. But is this just the latest craze for appeasing the stock market or does it present a better way to focus and build brands?

As we salute the most valuable global brands of 2011, our experience at Interbrand strongly demonstrates that companies benefit greatly from a disciplined focus on building their brands. The question isn’t whether mergers and acquisitions build brand value better than other alternatives. The key is to look at mergers and acquisitions through the lens of building brand value to ensure that the combinations or spinoffs make sense. Before highlighting some best practices for ensuring brand building through M&A, let’s consider some key reasons why M&A can fail to build brand value.

What Can Go Wrong with Mergers and Acquisitions?

When using the lens of building brand value, there are three common issues with many mergers and acquisition. Let’s consider each of these to highlight the risk factors that should be addressed.

Prioritizing Shareholders over Customers

After the hard fought battle to acquire Cadbury, Kraft Chairman and CEO Irene Rosenfeld stated: "Together we have impressive global reach and an unrivalled portfolio of iconic brands, with tremendous growth potential. This combined company has a phenomenal future, and I firmly believe it will deliver outstanding returns to our shareholders." A year and a half later, the company announced that it was splitting into two distinct businesses so that each could focus on its different business model and financial goals—high growth versus high margin. Why the reversal?

Will focusing on each of two different businesses help the brands within the Kraft portfolio? It’s unclear. What is clear is that the rationale is focused on appeasing investors. In press coverage and in the company’s communications, there is no mention of a benefit to consumers. As brands are about building relationships with consumers, there isn’t anything about this high profile move that inherently builds brand value.

Until the benefits of this financial engineering for consumers are made explicit, it’s unclear how brand value can be increased. For now, it seems to help the investment bankers who are pitching the idea of the “pure play” company. Perhaps investors can more accurately value each company, but the key to long-term value is to drive growth. The consumer focused mindset and investment approach required to drive brands can exist independent of company structure. Kraft has many shining examples of doing just that notably with its recently spun-off pizza business.

Balancing Scale and Focus

Mergers and acquisitions are often initiated to gain scale advantages. When Wendy’s and Arby’s joined up, Roland C. Smith, President and Chief Executive Officer said: "I am delighted to announce the completion of this merger, which creates a world-class company with the strength, scale and expertise necessary to thrive in a competitive restaurant environment.” After three years of non-blissful matrimony and a sizable loss of market cap, Wendy’s announced it was selling Arby’s. As often occurs, the risks from a merger overtake the illusive scale advantages.

Even more damaging was the distraction to both brands as they fell further behind McDonald’s (#6), KFC (#62), Starbucks (#96) and Subway, all of which stayed on an unwavering path of brand building. While scale certainly has value, it’s not the essential strategy. Retaining a focus on what the brand stands for and how it wins in the market is the strategic imperative.

Using Acquisitions as a Substitute for Organic Growth

Acquisitions can also be used to drive growth but at what cost? Many companies have piled on acquisitions to drive an impressive topline story. Yet, these schemes usually fail to generate sustained increases in value. Companies on the Best Global Brands ranking that exemplify successful organic growth include Zara, IKEA, Canon, Nivea, Danone, Nintendo, and Louis Vuitton. Their stories provide a compelling case for the merits of focusing on brand value, rather than trying to buy growth.

How Mergers and Acquistions Can Enhance Brand Value

Financial transactions can assuredly have a significant impact on brand value. But how can a brand ensure that their value increases? Considering the key factors that drive brand value as measured in the Best Global Brands rankings can provide guidance.

Brand strength is one of the three key components of the valuation approach. Brand strength is comprised of factors that drive brand strength from an internal perspective and factors that drive it from an external perspective. If we review the six key measures used for the external perspective, we can create a checklist for merger and acquisition success. These factors include authenticity, relevance, differentiation, consistency, presence, and understanding. The accompanying chart highlights key questions that brand leaders can ask to determine whether a potential merger, acquisition, or spinoff can increase components of brand strength and hence brand value. To illustrate, let’s look at three examples.


Surely most brands strive to become more relevant to their prospects and customers. Understanding and meeting customer needs is central to being relevant, and continuing to evolve with customers as they change is necessary to stay relevant. Yet, once a new need is identified and understood it can take a long time to develop the right product or solution. Thus, an acquisition can be a good way to gain a new capability or product line that supports relevance.

A powerful example occurred when Disney, a best-case example for building brand value, joined up with Pixar. The recent announcement by Google (#4) that it is buying Motorola Mobility appears to be a smart way to gain access to a wide range of patents that represent the potential to develop relevant offerings.


Strong brands are differentiated. Yet differentiation, while difficult to establish can be even harder to sustain. Here again, a strategic acquisition or merger can enhance and sustain differentiation. is among the elite few in increasing brand value the most over the past five years. The acquisition of Zappos provides a boost to Amazon’s differentiated customer service. If leverages Zappos’ outstanding customer service capability, it should extend its well established advantage.


Sheer ubiquity is often a key characteristic that drives brand value. IBM has been prolific in making strategic acquisitions that expand its presence geographically, across industries and across capabilities. Similarly, Google has also continually increased its digital footprint.

Building Lasting Brand Value

However high profile a merger, acquisition or spinoff may be, the fundamental focus should be whether it increases the long term value of the business. While creating a flashy story for the media or riding the latest fad among investment bankers may work short term, real sustaining value comes from building brand relationships with customers. The discipline of doing just this is what separates the Best Global Brands from the rest. Regardless of whether acquisitions are pursued, applying the lens of brand value is the key to driving business value.

Brand Strength Components Description Guiding Questions for an Acquisition, Merger or Spinoff
Authenticity The degree to which the brand is based on an internal truth. It has a well defined heritage and clear values. It can deliver against customer expectations. Does it enhance the brand truth?
Is it consistent with the brand values?
Can it improve delivery of the brand promise?
Relevance The fit with customer needs, desires, and decision criteria across all relevant targets. Does it help to better address customer needs?
Can it enhance the drivers of brand choice?
Will it signal to customers that the brand values and understands them?
Differentiation The degree to which customers perceive the brand to have a differentiated positioning versus competitors. Can it heighten a current point of differentiation?
Does it elevate a key benefit provided?
Can it help the brand connect emotionally?
Consistency The degree to which a brand is experienced without fail across all touchpoints or formats. Does it improve a weak touchpoint or gap?
Does it enhance current strengths in the customer experience?
Does it help improve the experience across channels?
Presence The degree to which a brand feels omnipresent and is talked about positively by customers and influencers in social and traditional media. Does it expand access to channels?
Can it increase media exposure?
Can it help the customer engage in brand dialog?
Understanding The brand is not only recognized by customers, but there is also an in-depth knowledge and appreciation of its distinctive qualities. Can it help customers gain awareness of key attributes and offerings?
Can it heighten brand engagement?
Can it help create brand advocacy?