A well-known name in one country, particularly the United States, often becomes a top seller in all countries. A good brand is a good investment, say many investment advisers. Occasionally, Warren Buffett is cited as authority for that proposition because he is a prominent investor in Coke and Gillette. But business is not that simple. Whether brand names are good or bad investments depends on how well-managed is the company behind them.
Name recognition can be the last vestige of a faded star.
Buffett, for example, continues to own stock in Coke and Gillette because their managements have renewed the franchise time and again. But he is reported to have sold McDonald's stock because management went to sleep at the counter. BMW has remained a leading car company because several times it changed in response to competition. The first change in 1970, when Eberhard von Kuhnheim, the chairman, saw before most car makers that Japanese manufacturers would come to dominate the midsized car markets of the world. So he set out to have BMW develop a highly engineered automobile for sophisticated drivers, which he began to market in competition with luxury brands such as Mercedes Benz and Cadillac.