FTSE 100 – How companies make the cut

FTSE 100 image

Known as a symbol of success and respect, earning a place on the Financial Times Stock Exchange 100 list (FTSE 100) is the outcome of an organisations dedication and accomplishment. 

The list is calculated by tracking the shares of the 100 biggest companies stated within the London Stock Exchange, and the index is traditionally recognised and respected as an indication of the performance of all major companies listed in the UK. Securing a position on this list for any company is nothing short of an accolade brimming with prestige, which will undoubtedly lead to a firm being held in the highest regard.

The FTSE 100 list provides a barometer for the UK’s economy and lays the foundation for businesses across the entirety of the United Kingdom. It’s also an accurate reflection of economic and international events – often it will tumble in response to markets falling around the world. The largest one-day percentage fall was on 20th October 1987 at 12.22%; this was the day following ‘Black Monday’.

The advantages of becoming a part of this illustrious list include an affluent ‘blue chip’ reputation that will stretch beyond the scope of employees, offices and clients – it will show the world that a business is gaining strength and success through excellence within its field.

How can FTSE 100 Status be achieved?

A remarkable aspect of the FTSE 100 is that it ranks companies in real time, meaning that the list alters and changes on a daily basis. So to remain at the forefront of it, there needs to be consistency in size and share price of a company, which is the very essence of a great business.

More than half the companies that made up the FTSE 100 last time it peaked in 1999 have now left the index, only 49 companies have survived since 30th December 1999, the other 51 companies were either acquired, broken up, went bust or deteriorated during the turbulent period since the prior record was set. Household brands including Abbey National, ICI and Norwich Union disappeared entirely due to mergers or takeovers. Other well-known brands such as Cadbury’s Schweppes and NatWest live on as subsidiaries within bigger firms.

An effective method of learning within the corporate world is through example – a company that has been widely recognised by the media and have left a lasting impression of prosperity and a contagious desire to progress, is none other than budget airline company easyJet.

easyJet and the FTSE 100

Budget airlines generally have a reputation that goes beyond anything they have actually accomplished or achieved as a business, but in many instances undesirable views and impressions can be based merely upon unfounded belief. Cheap flights don’t necessarily mean cheap business.

easyJet are currently listed in the FTSE 100, and have managed monumental expansion since their inaugural flights from Luton airport in 1995. The company now operate more than 200 aircrafts and fly to 44 airports throughout Europe.

In total, they cover 600 routes, which is a statistic that has grown exponentially beyond the two routes originally offered within the borders of Great Britain.

On top of this, through the purchasing of rival companies, easyJet managed to expand into new airports and inherited fleets of aircrafts, undoubtedly squashing the competition that lay in their path to success.

During the year of 2013, just 18 years after the company’s birth, easyJet managed to obtain a place in the FTSE 100, as they turned over a net profit of £398 million. This is a figure that was beaten once more during 2014 when the airline reached £450 million.

With the figures achieved, it’s simple to understand how easyJet made the cut. They knew their market, they planned and executed their expansion, and they not only fought, but bought their competition and managed to solidify their airline as worthy to serve Europe, and perhaps the rest of the world in years to come.

Further considerations for ranking on the FTSE 100

In order to rank on the FTSE 100 the size of a company is a significant mediating factor, and the scope of all companies is judged by market capitalisation on an individual basis. In short, this means that the larger the value of distinct company shares, the higher the rank on the list.

In addition to this, the weighting and influence each company has on the index varies largely, and due to this, the fluctuating share prices for each company can affect the entire FTSE 100 list in completely different ways.

To be a part of the FTSE 100 list, it’s imperative to hire great employees, people who share the ambition and visions of a firm are at the core of its success. To find out more about our executive search services, please contact IRG Executive Search info@irgexecutivesearch.com.