Bush Is Bad for Business

The irony does not escape me.

Bush's foreign policy is gearing up to have a long-term effect on our biggest corporate brands among international consumers:

Source: CNN Money

Diminishing respect for American culture and values is putting U.S. brands at greater risk overseas, according to a worldwide annual study of consumer sentiment.

"Our study has found that there's declining awareness, popularity and usage of U.S. brands," said Tom Miller, global managing director of market research consultant NOP World.

"In a nutshell, there's growing resentment and envy among global consumers toward the U.S., and that sentiment is manifest in an erosion of support for American products," said Miller. "The danger here is that even a 1 or 2 percentage point decline is not good news for companies that want to grow."

And it's apparently not a temporary reaction to the prison abuse scandal:

According to the study -- conducted before news of the prison abuse scandal broke late last month -- the total percentage of consumers worldwide who use U.S. brands has fallen to 27 percent from 30 percent a year ago across 15 brands surveyed, including McDonald's, Coca-Cola, Microsoft, Yahoo!, Disney and Nike.

In case the respective CEO's can't sort this one out for themselves: Bush is costing you business! You should support Kerry!

Merci Ondine. B d'A

Comments

[Bender]

"In case the respective CEO's can't sort this one out for themselves: Bush is costing you business! You should support Kerry!"

I understand the sentiment, but would rather use measurable action as opposed to measured opinion to make decisions about what is going on with my business.

For instance - McD's is seen as less trust worthy internationally. Great. Is this at all reflected in number of sales per store in Paris (for instance) or income per sale (even more important in many cases...)

We dont know the answer to that, and this "poll" gives us zero insite. There is much more involved in the decision of where to spend ones money than these measurements - otherwise no corporations would be using windows (as a for instance...)

[wilfred]

it seems really bizarre but these are companies i've stopped patronizing because i don't like their products/ or the way they do business. guess i'm not alone here.

[kenB]

Great. Is this at all reflected in number of sales per store in Paris (for instance) or income per sale (even more important in many cases...)

IIRC, there was an article in the times recently that said that there's been no measurable dropoff in overseas sales for high-profile American companies to date. So I guess the question is whether these "trust" measurements are reliable leading indicators or not.

[asdf]

I dunno about this one. Margin of error, difficulty of assigning causality, and whatnot.

[Edward]

Trust is a long-term indicator, hence my assertion that Bush's policy is having a "long-term effect." It takes ages to build trust and brand association with honesty. It's totally unfair to these corporations that Bush's actions are affecting these indicators. They should express their unhappiness with their checkbooks and votes.

[Phil]

Yes, I'm sure it has nothing to do with the EU's huge judgement against Microsoft for its business practices. Or with the anti-globo shenanigans of Jose Bove. Or anything like that. Nope. It's All. Bush's. Fault.

Here is a Bloomberg story from a month ago that appears to contradict what your link says, Edward. And if, as you say,the change isn't attributable to the Abu Ghraib scandal, then what we've got here is competing data.

FWIW, here are are snapshots from some of those companies' most recent earnings.

Coke: Europe, Eurasia and Middle East
-------------------------------

* Continued strong profit growth in Europe was driven by sound business
fundamentals, innovation, strong marketing strategies, rigorous cost
management, and positive currency trends. The group continues to profitably
expand in all the key beverage categories resulting in solid double digit
profit growth and unit case volume growth of 4 percent.

* The key contributors to the group's performance during the quarter included
consistent profit growth in carbonated beverages throughout Western Europe
and solid volume and profit growth in Central and Eastern European
operations. The group continues to drive immediate consumption packages,
supported by integrated marketing campaigns, in key markets such as Spain,
France and Great Britain.

* Noncarbonated beverages contributed to profit growth with the acceleration of
growth in the group's existing business and expansion into new categories.
Noncarbonated beverages grew 31 percent in the quarter led by Powerade and
Nestea.

Nike: Europe
______
Revenues for the European region (which includes the Middle East and
Africa) grew 36 percent to $880.0 million, up from $645.8 million for the
same period last year. Twenty-one points of this growth were the result
of changes in currency exchange rates. Footwear revenues increased 48
percent to $537.7 million, apparel revenues increased 19 percent to
$284.1 million and equipment revenues increased 34 percent to $58.2
million.

McDonald's showed a 19% increase in revenue in Europe in company-operated stores for the quarter ending 3/31/04 compared to 3/31/03. Some was attributable to currency exchange rates, but not all. Franchise revenue grew 21% in Europe.

Seriously, though, it's obvious the Sky is Falling and it's All. Bush's. Fault.

[Phil]

Huh. Weasels ate my post.

Anyway, Edward, here is a Bloomberg piece dated a month ago that appears to contradict much of the information your link provides. It's talking about the same time period, too.

I glanced at the most recent 10-Qs for the four companies shown in your linked graphic. All of them showed revenue growth in Europe -- some, but not all, attributable to changes in exchange rates -- for Q104 over Q103, the same period over which the survey you cite shows the decrease in trust.

But I'm sure that, whatever's really going on, it's All Bush's Fault. It certainly has nothing to do with the EU leveling record fines against Microsoft, or the anti-globo shenanigans of Jose Bove against McDonald's, or anything like that. Nope. All Bush's Fault. As soon as John Kerry is inaugurated, Europeans will flock to American brands like never before.

[wilfred]

phil, it was not 'Edward's link', it's CNN:Money. Owned by that ultra-left wing radical corporation, AOL/Time Warner Inc. so please refer as such. You act like it's his personal stash of info. And since when is anyone suggesting that it will magically change when Bush is voted out? This damage to the US is not so easily undone. I don't know of anyone who doesn't think we are in some long term predicaments. But we have to start somewhere and the last person i want to get me out of this 6 foot hole is the dude who dug it in the first place without being asked.

[Edward]

Not sure what happened to your post as it teleported in and out of the ethernet there Phil.

Of course my post is a simplification of very complicated issues, but, again, the sales reports from current annual reports are not at all indicative of the effect loss of trust or perceptions of honesty are going to play down the road.

And your "All. Bush's. Fault." meme is charming, but a bit ineffective in light of the fact that he never takes blame for anything at all.

Again, and again, and again, we're told "Don't Blame Bush" for high gas prices, for the prisoner scandal, for the economy, for 9/11, for the Plame affair, for the deficit, for the choice of Chalabi, for the lack of WMD in Iraq, for the EPA's false assurances we were safe to breath in lower Manhattan, for the insurgency in Iraq, for the ill will felt toward us around the world, for the spiteful partisanship on the Hill, and on and on and on...None of it is Bush's fault.

None of it.

Only problem is, he's the president and we, as Americans, are used to believing the Buck Stops in the Oval Office.

I'm sure the fact that it no longer does, however, is not Bush's fault.

[Dave Schuler]

Edward:

I'm becoming confused. I thought the point of your post was that GWB has created an environment overseas that is harmful to American business. Now the point appears to be that GWB doesn't accept responsibility for his actions. In re-reading the original post I see nothing about Bush accepting responsibility or refusing to accept responsibility.

[Phil]

wilfred, um, I'm going to have to penalize you ten yards for gratutious mind-reading. I referred to it as "Edward's link" because a) he posted it, and b) I wanted to make it clear that I was distinguishing between information originating from the linked article and informtion offered by Edward himself.

Edward: " . . . the sales reports from current annual reports are not at all indicative of the effect loss of trust or perceptions of honesty are going to play down the road.

Maybe, maybe not. All I'm saying is that the reported 3-6% loss in trust in those American brands over a year-long period is not reflected in any decrease in revenue in the same markets over the same period. Could it change down the road? Absolutely. But if people are reporting less trust in these brands, well, they aren't buying them any less. Not yet.

Notably, the CNN Money link buries the real lede in the ninth graf: "The study, based on anecdotal evidence rather than actual sales data . . . " Well, yeah. Anecdotes are fine, but money talks, and so far, over the period in which the anecdotal evidence shows a decrease in trust, sales are up. It's at least worth nothing, don't you think? Instead, with the sales numbers absolutely contradicting you, you shout, "Bush is costing you business!" It's just helpful to have the numbers to back youself up if you're going to make claims like that.

And your "All. Bush's. Fault." meme is charming, but a bit ineffective in light of the fact that he never takes blame for anything at all.

I'm not trying to propagate a meme, Edward. I'm saying it in regards to a specific issue. You remember it? The one your post was about?

[Edward]

Dave, you might be less confused if you re-read Phil's comment and note that the responsibility rant was in response to a tangent he introduced. I'm happy to return to the original idea.

[Phil]

"Worth noting," not "worth nothing." Cripes, I can't just leave you an opening like that. I don't have my +2 anti-snark armor on.

[Edward]

I didn't even catch that typo, Phil, extra points for the quick read and correction.

It's just helpful to have the numbers to back youself up if you're going to make claims like that.

The numbers show a drop in trust. If you interpret that as not necessarily costing these American corporations business, I'd suggest you're not thinking long term. Supposedly these companies want to grow their business.

[Dave Schuler]

Dave, you might be less confused if you re-read Phil's comment and note that the responsibility rant was in response to a tangent he introduced. I'm happy to return to the original idea.

I was trying to be gentle. You introduced a topic—valid on the face of it—that GWB was bad for the image of American business overseas. Phil responded with a pretty impressive array of facts that suggested that the actual effects of the bad P/R might not be what you were suggesting. And a bit of snark. There were any number of ways in which you might have responded to the substance of his argument for example, that the effects would be seen down the road, etc. But rather than respond to the substance of Phil's argument you responded to the snark with counter-snark.

Now I have no idea what the actual intent in your post was. Perhaps your position is that GWB should not be re-elected regardless of what he says or does or what the effects of what he says or does are. And that's an argument that could certainly be made. But, personally, I'd rather participate in that argument than in a spitting contest.

[Edward]

But, personally, I'd rather participate in that argument than in a spitting contest.

Ah, come on Dave, it's Friday...can't we do both?

Seriously, the argument is that decreases in trust are not reflected immediately (again, right up front, I wrote "gearing up to have a long-term effect on our biggest corporate brands among international consumers")...what about that doesn't scream IN THE FUTURE? Phil might as well have cited annual reports from ten years ago; they'd have been just as relevant to my point.

The other point that's being lost in here is that these corporations will be competing with growing European and Asian companies in the coming years. Trust is their best leg up in the coming onslaught of competition. It's not something we can afford to let our fiscally challenged president squander. He's really got to go for so many reasons. This one is just one of the most ironic, given how he kowtows to business on every other front.

[Ken White]

Edward mkes an interesting point; trust is down.

But then, all the referenced corporations have had a lot of adverse publicity of their own making (as Wilfred indirectly alluded)...

Almost all Brands are noted for recognition and trust volatility. Ho hum...

Sales are Up, says Phil -- as do the WSJ as well as CNN??? Yay, Team!

What to do?

Got it. Phil's wrong -- I blame John Ashcroft!

[Timmy the Wonder Dog]

Eddie, if we gave up the Jews in Israel, I bet you our poll numbers would rise. While we wouldn't be loved, we would be respected throughout Europe and the M.E. We would have a hard time living with ourselves though.

[Phil]

If you want to talk about the future and the long term, fine, Edward, but what you said is, "Bush is costing you business," which means right now, which has not been true for the quarters over which this drop in trust allegedly took place, so, draw your own conclusions.

Phil might as well have cited annual reports from ten years ago; they'd have been just as relevant to my point.

You claim that a decrease in trust and perceived honesty from '03 to '04 is "costing them business", and I show real revenue increases over the same period, and it's "irrelevant?" WTF would be "relevant," then?

I'm a firm believer in the doctrine of revealed preferences, so what the contrasting results between the linked poll data and the sales numbers say to me is there are an awful lot of people who will gladly and loudly air their anti-American creds to a pollster, but still like their Big Macs and their Air Jordans when there isn't a poll-taker asking them questions. Somebody's buying the blasted things, and buying them more than they did before.

[asdf]

Phil has me convinced. One point I would make is that a lot of these places aren't actually seen as American anymore, like McDonalds.

[william]

Edward -- all of these drops are on the order of 3%, which is only barely outside the margin of error. I don't think you can really draw any strong conclusion from these polls.

[Tobad]

William,

It seems you miss the point... Edward is primarily interested in finding fault with the Bush administration, even if one must sacrifice the facts.

[Gary Farber]

It turns out that not only is Bush good for business, but he's growing the economy. You can read the press release from his campaign that flatly says so here.

[Edward]

Edward is primarily interested in finding fault with the Bush administration, even if one must sacrifice the facts.

If only it were that simple.

Sorry if it seems like I'm beating a dead horse, but I work in an industry that focuses on the sales it will have 5 to 10 years down the road. The idea that a 3% drop in trust is something we can ignore would get us fired.

If there were an identifyable source of this drop, it would be targeted for change.

All the rest of this is wishful thinking.

[Josh]

Bush just needs a refresher MBA course.

I am offering one for him at:

http://joshonusandchina.blogspot.com/2004/09/free-mba-refresher-lesson-for-george.html