Consider this fact: Just 500 companies–the ones on this year’s -Fortune 500 list, to be precise–produced enough revenue last year to equal two-thirds of the entire economic output of the United States. Think about that a minute: just 500 companies.
These same American businesses sold an astounding $13.7 trillion worth of goods and services, a record sum whether you measure it in nominal dollars or adjusted for inflation. But focus in on the numbers and you’ll discover something yet more remarkable: that just a tenth of these companies account for nearly half (48%) of that total revenue. Sharpen your microscope a bit more, and you’ll see that profits among the group are more concentrated still–with a mere 40 companies responsible for 52% of the combined earnings. Twenty-seven of these household names earned at least $10 billion in their most recent fiscal year. Six, moreover, are as rich as mighty nations, with at least $1 trillion in assets on their balance sheets.
Each year, it seems, America’s biggest companies look more and more like a set of matryoshka dolls; companies that a generation ago would have been seen as corporate titans now appear as if they could be swallowed up as midday snacks by the real behemoths. That’s one of the takeaways from this year’s Fortune 500 ranking–the 65th running of the list: The big are getting bigger, and the rich are getting richer. And, as Erika Fry explores in an opening essay, there are a host of reasons why–from the rise of corporate ecosystems, to the increasing competitive need for scale, to the power-concentrating effect of data and information technology.
This same broad narrative of American business winds through the thousands of data points we’ve curated–with some abandon, it would seem–in 45 pages of tables and charts. But perhaps more telling are the implications of that story line–which emerge in each of the features in this issue. Both AT&T (publishing online May 21) and CVS (publishing online May 17) have remade themselves into information-age colossi. The reinvented Ma Bell, writes Fortune’s Geoff Colvin, is counting on massive scale and reach to overcome the effects of old-economy gravity. (It isn’t exactly working.) CVS, for its part, has combined with Aetna to become the health industry’s biggest platypus: a drugstore-insurer-pharmacy benefit manager-walk-in clinic. As Shawn Tully reports, investors aren’t buying this one either.
The prize of size is driving Occidental Petroleum (No. 167 on the list) to buy Anadarko (No. 237), so it can outcompete Chevron (No. 11) in the oil-rich Permian Basin (read Jen Wieczner’s timely story). And it’s driving Wayfair into a wild, loss-leading gambit for e-commerce domination … in the very old-world realm of couches and cabinets. What’s Wayfair spending so ferociously on? Well, says Jeffrey O’Brien, the company’s 2,300 in-house data geeks should give you a hint.
Data, of course, may help a company get to the top. But it may not be enough to keep it there. That’s …read more