RANKING



A business ranking is one in which different companies or products are listed, or ranked, in order based on specific criteria. Within a particular industry, companies are typically ranked by criteria appropriate to that industry. Banks would be ranked in terms of their dollar volume. Advertising agencies are ranked according to their annual billings. Insurance companies may be ranked according to premiums earned. General businesses could be ranked by sales volume, profits, number of employees, and other criteria.

A ranking tells at a glance who the top performers are in a given category. Business Rankings Annual contains approximately 10,000 different rankings that have been published during the year. Examples include the top ten advertisers, the top ten retailers, and the top ten mutual funds. Firms may be ranked according to one or more criteria. In the case of retailers, they may be ranked according to profits per employee, sales, return on equity, or some other measure. Each criterion is used to compile a separate ranking. In some cases, multiple criteria may be combined to create a single ranking. The ranking of mutual funds tends to be based on several criteria, resulting in a more complex indexing procedure to determine each fund's performance.

Dun & Bradstreet Business Rankings, published annually, ranks U.S. companies by size. Two separate national rankings are compiled, one on the basis of sales volume, the other on the number of employees. In addition to the national rankings, the book ranks firms within each state and within industry category.

Perhaps the most well-known business ranking is the Fortune 500. Published annually in an April issue of Fortune magazine, the Fortune 500 ranks the top 500 U.S. companies by sales for the previous year. Through 1994, the Fortune 500 included only industrial companies. Starting in 1995, the list included service and retail firms. Fortune editors said the change was made to reflect the growing importance of those sectors of the economy. Fortune also publishes the Service 500 (May), the Global Industries 500 (July), and the Global Services 500 (August).

While such rankings are based on objective criteria, such as sales figures or number of employees, other types of rankings are based on a wide range of information collected from surveys and other types of research. These types of rankings include "best places to work" and "best cities to raise a family." Fortune publishes its "100 Best Companies to Work for in America" every January. Computerworld surveys the 1,000 largest public companies and the 40 largest consultants for its annual ranking of the "Best Places to Work in Information Systems." Working Mother magazine's annual survey of the "100 Best Companies for Working Mothers" is another well-known ranking of employers.

Product rankings are also more complex, being based on multiple measures of performance. A ranking of personal computers, for example, might be based on such performance measures as the speed of its central processing unit, the speed at which it writes to and reads a file from a disk, and the time required to copy a file from one disk to another. Then, using a mathematical process called multidimensional scaling, it would be possible to obtain a single ranking of different computer models on the basis of all the relevant performance criteria.

Rankings are also used in the physical and social sciences. Rankings help interpret the results of survey research and are used in manufacturing quality control, for example. In whatever field they are used, rankings allow for the comparison of similar entities on the basis of fair and consistent criteria.

[ David P. Bianco ]

FURTHER READING:

Business Rankings Annual. Farmington Hills, MI: Gale Group, (annual).

Dun & Bradstreet Business Rankings. Bethlehem, PA: Dun & Bradstreet, (annual). "Ranking the Health Plans." Newsweek, 28 September 1998, 67-69.

Shellenbarger, Sue. "Those Lists Ranking Best Places to Work Are Rising in Influence." Wall Street Journal, 26 August 1998, Bl.

World Business Rankings Annual. 2nd ed. Farmington Hills, MI: Gale Group, 1998.



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