— Kishore V, SME and ACW at Edumarz
The intangible asset that symbolises the firm’s worth and reputation, as well as the brand name it bears in the market, is referred to as goodwill.
A company’s goodwill is acquired by the job it produces, which contributes to people’s trust by satisfying all client requests in terms of quality and quantity. Positive goodwill is extremely beneficial to a company’s ability to produce outstanding profits compared to its competitors.
It also secures future earnings and aids in the retention of existing clients.
The following factors have an impact on a company’s goodwill:
- Product Quality:
- A company with a high level of goodwill will consistently deliver the best product to its customers.
- Position:
- A central location is easier to find and attracts more customers, resulting in increased sales and goodwill.
- Management:
- Having an effective management system in place may result in cost savings and increased production, as well as ensuring excellent products at a lower cost, which generates goodwill.
4. Market Structure:
- If the market is monopolistic in character and there are no substitutes, the business will gain greater goodwill.
- Other Benefits:
- A company that receives regular supplies of gasoline, power, and raw materials and uses them to make high-quality items has greater goodwill.