June 01, 2017 @ 12:59 PM

Goodwill is the only asset that competition cannot undersell or destroy

Published : Thursday, 1 June, 2017 12:45 PM

Goodwill is the only asset that competition cannot undersell or destroy

Read and develop points from following Essay Topic:
 
Goodwill is that invisible force which is difficult to earn and takes years to build but once earned, its benefits can be reaped for several years and generations. The significance of goodwill transcends the limited scope of a business and indeed pervades an individual's life.
 
In business terminology, goodwill is the amount of value that a company's good reputation adds to its overall value. The sum total of what a business has done in the past, the actions it takes in the present and plans for the future together help in building goodwill. A company's reputation hinges primarily on its conduct with clients, society and environment, development of trust in its brand, transparency in its processes and the ethical conduct of the company. If a business manages to have all this, it will automatically earn goodwill for the company or the brand.
 
The goodwill or the reputation that the company or the brand earns for itself would, in turn, help build a devoted clientele and attract more customers willing to put their trust in it. This will immune the company or the brand from competition as the goodwill that it has earned will give it an edge over its rivals.
 
The effect of goodwill cannot be seen so much in immediate tangible terms, such as buildings, profits and so on but in intangible gains such as trust, employee and customer loyalty, brand image, expanding networks and so on. The intangible benefits are crucial as they ensure long-term sustenance of the business.  Particularly, when the company is losing ground to its competitors and falls on hard times, the goodwill it has earned over the years plays a major role in keeping the company afloat.
 
That goodwill is important is evident from the fact that it is shown as a separate head in the accounts books of any company. It is an asset that never depreciates and, in fact, is always valued at a premium. Every business today is conscious of the image that it portrays of itself to the outside world and makes an extra effort to earn goodwill in the society. For instance, corporate houses have begun to allocate separate funds as part of their Corporate Social Responsibility (CSR).
 
These funds are employed to benefit the society in various ways-constructing hospitals, schools, old age homes, welfare programmes and so on. They realize that by doing so they will build goodwill for the company in the society which will add great value to their businesses and differentiate them from their competitors. The high investments made by the business houses in such programmes are offset by the high rate of return, both tangible and intangible, that the business is likely to earn over several years in the future and thus, makes for a good business decision.

At an individual level, goodwill is created over a period of time by being a trustworthy, reliable and kind person. Such a person will be respected wherever he/she goes and is more likely to be offered help if needed than a person with no goodwill or a bad reputation. The peculiar feature of goodwill is that it spreads rapidly through word-of-mouth. The reputation or the goodwill that the person has in the society will influence the society’s perspective and behaviour towards the individual.

Therefore, Marshall Field has rightly said that, “Goodwill is the one and only asset that competition cannot undersell or destroy”. It affects the prospects of both the business and the individual and should, therefore, be an important consideration.
 
 
Stay informed, Stay ahead and stay inspired with MBA Rendezvous

Crucial Dates, You Should not Miss

TAPMI, Manipal
Admission Application closes on January 16, 2018 for 2018-20
BIMTECH, Greater Noida
Admissions open for PGDM Programmes at BIMTECH. Apply Now !
Lal Bahadur Shastri Institute of Management
Admissions are Open at LBSIM, Delhi. Apply Now !
FORE School of Management
Apply for PGDM & PGDM-IB Programmes. Application Deadline is December 22, 2017.
Goa Institute of Management
PGDM Admissions Open at GIM. Apply Before January 5, 2018
NIRMA
Last Date to Apply for MBA (Full Time) Programme at NIRMA is January 09, 2018
XAT 2018
Application Last Date 30th November 2017
IMI New Delhi
Application closes 4th December 2017
XIM Bhubaneshwar
Last Date 8th December 2017
SIBM Bengaluru
Apply for SNAP 2017 to be held on Dec 17 and apply for SIBM-Bengaluru through the SNAP Form
Institute of Rural Management Anand
IRMASAT will be conducted on February 4,2018, Apply Before December 31,2017
IBSAT 2017
Last date for IBSAT registration is December 12 , 2017
SSBF
Last date to register for SNAP is 24th November, 2017. Last date for SSBF is 2nd January 2018
SIBM Hyderabad
Apply for SNAP 2017 to be held on Dec 17 and apply for SIBM-Hyderabad through the SNAP Form
K J Somaiya Institute of Management Studies & Research, Mumbai
Last date for Application is 31st Jan, 2018
SDMIMD Mysore
Application for PGDM 2018-20 at SDMIMD is open till February 28, 2018
Institute of Management Technology
Application closes on November 24, 2017
MDI Murshidabad
Application for PGPM 2018-20 at MDI Murshidabad is open till November 24, 2017

Admission Open Now

Following Colleges are accepting applications.

INTERNATIONAL MANAGEMENT INSTITUTE

Admissions open for 2018-20

PGDM, PGDM (HRM), PGDM(B & FS), Executive PGDM

Apply Online