by Benson Agoha | Organisational Goodwill
“Goodwill is the one and only asset that competition cannot undersell or destroy.” ~ Carl Ludwig Börne.
Goodwill represents the sum total of attraction built into a name through sustained marketing effort, consistent delivery of quality products and services, high quality and reliable manpower and profitability. It is often said to be unquantifiable quality image. Perhaps so, but once built, accountants are usually able to assign values to it and treat it as an asset to the firm or individual. A firm’s goodwill can be so strong and highly valued that its fortunes are tied to that image, sometimes making profit oscillate along with the image.
Private names, like Elvis Presley, Michael Jackson, Andy Murray, Tiger Woods, JK Rowling etc., also enhance their respective fortunes. For example, JKR’s latest book, was not doing so well, but once her pseudonym was unmasked, it shot to best seller and its pre-orders rose. Rihanna’s legs were insured for $1m, just because she is a performer. Cristiano Ronaldo was bought from Manchester United for £80m. Last season alone, he scored 55 goals in 55 games. He is now said to be valued at 10 times the original price by Real Madrid. Whereas Lionel Messi of Barcelona, highest goal scorer in the Spanish League and winner of the Player of the Year Award, he is valued at about £360m. This proves that goodwill has a lot to do with people’s perception of the `name’ or brand.
PS4 CONSOLE.
In some respects, goodwill is like wine, it matures with age. But whereas it can rise and even remain at its saturation point for a long time, unlike wine, its lifespan oscillates along its marketing curve and maybe shorter.
How To Look After Goodwill: The continual relevance of a name, the potential for a higher value and the length of its relevance depends on its management, the ability to identify deficient spots and take timely corrective action before major damage is done to the name.
Here, the leader must ensure that the right mix is in place to manage the brand. The public relations experts will decide when to contract inserts in the mass media, what the message should say, how long it will need to be carried, whether it should be print or electronic as well as determining if the PR is doing the intended job. Also, the team will know how to respond when scandals hit – even if they are facing their own scandals.
Benefits of Goodwill: There is a wrong notion that a company does not need to fight for good except it is a player in the mass market. Nothing can be farther from the truth. The public will always appreciate to know about the existence of a firm and how it impacts on them even if indirectly. Benefits of goodwill to a firm include the following:
a) Attracting the right suitors, goodwill ensures that interests come from the right buyers or merger proposals. This can only happen if it is has created consistent goodwill overtime.
b) Ability to attract Loans and grants, as and whenever, the organisation or individual required it. Michael Jackson was a successful musician whose name attracted instant positive response from lenders.
c) Goodwill also helps an organisation or name to create the right influence, by leaving the right impressions on stakeholders, quicker. It’s adverts position faster also.
d) Goodwill enhances the chances of future profitability of the firm or individual. Apple, Samsung, Facebook are some of the organisations whose new products are trusted and embraced timely. Facebook’s share took a hit and plunged shortly after its Initial Public Offering. The shareholders became downcast and analysts whipped up the sentiment. But their mobile advertising app has been hugely successful, increasing its revenue and returning its share price to its current value of $39.90 on the NASDAQ.
e) Volunteers also embrace organisations with a strong goodwill when considering where to give their free time. Some volunteers give time, not just because they have it, but also because of what they hope to benefit from doing so – such as boosting their CV or benefiting from Referrals. The British Heart Foundation, Coca Cola, Apple and Facebook are some of the names whose strong goodwill can be of attraction to generous but selective volunteers.
SONY'S PS4.
Measuring Goodwill: There are several indices which can be used to measure an organisation’s goodwill. These include:
a) Share Turnover can be used as a determinant of goodwill because this shows the attitude of consumers to its name. For example, if a company is a quoted firm, its shares tend to be active at the stock exchange. Nestle is a quoted organisation at the London Stock Exchange with a strong goodwill and, as the time of writing this piece, its share are quoted at £65.30 and the trend is positive, Coca cola was at 38.20 and also active.
b) Shareholders value represents what the firm is worth to its owners after its liabilities and commitments are deducted for the accounting year. A company with high shareholders value will almost always have a strong goodwill. Shareholders value provides evidence of managerial proficiency – and what else can add to an organisations image than skilled and reliable manpower, that communicate confidence in what they do?
c) Acceptability of new products. As already stated, image sells and in fact retains the potential to sell more. So an organisation with a strong goodwill stands a very good chance of successfully and quickly introducing new products into existing or even new markets. Sony makes PlayStations and new versions are almost always anticipated and quickly embraced. It’s PlayStation 4 is due for release soon this summer and, it is already being anticipated.
d) Attraction to skilled workforce. Even if it does not pay the highest industry rate, a company can retain the capacity to attract skilled manpower, simply because of its name.
e) Positions faster. Organisations with a strong goodwill are almost always quickly remembered because of what the media would have done for them. Positioning is a marketing term for public relations efforts that achieve the aim of registering the `image’ in the mind of advert targets.
Downsides of Goodwill: With so much going for goodwill, it will appear that an organisation with a good name has nothing to worry about. Well, uneasy lies the head that wear’s the crown. So organisations find that, contrary to being on a bed of roses, they have issues to worry about as a result of the image they have built, including:
a) Being continuously on the media radar. Because of the work already done to achieve the good name, organisations are also of interest to journalists for any form of news concerning them – and this may not always be good. So the pressure to avoid embarrassments builds. Look at the embarrassing image of Charles Saatchi throttling his wife, Celebrity Chef Nigella Lawson. The couple had finished their dinner and gone for a whole week, during which they have patched up their differences, only for the photos to be published. Subsequently, she moved out and they have now divorced.
b) Industry watchdog will also be doing their regular assessments and monitoring and sometimes, they contribute to the pressure as organisations work to avoid penalties or sensor.
c) Competition is also another pressure builder. When an organisation has built up a good name, the tendency to attract other new-comers is huge and expectedly, they have to work to increase their investment into strengthening or further embellishing their name.
d) Potential for derivative loss of profitability resulting from a dent on that image. Sometimes, one bad news results in a huge loss to an organisation. If the wrong person dies after drinking a bottle of soft drink in whose bottle a dead cockroach is later discovered, it can create a big problem for the firm. Aside from the monitoring and legal implications, this can also cause negative consumer reaction which, if not properly managed, can lead to loss of sales. So the pressure is also always on to track and settle cases early.
In conclusion, goodwill puts unquantifiable value to a firm’s name or image and this can potentially have astronomical positive multiplier effects on it’s fortunes. The 2012 London Olympics is an example. Positive news have been pouring in from all sides. Even factors that would have probably been considered unimportant – like the perception of the British as a people of high taste by Germans. The latest news say the Germans, now believe that Brits are people of high quality. Auto sales are on the rise and consumer confidence is increasing from all sides. The highest number of Ferrari Sport Cars, a preserve of the rich, was said to have been sold in Britain in the past year, second only to the US.
No doubt, the London Olympics was a perfect example of organisational masterpiece, but if so much good news is pouring in as a result, imagine what the reverses and damage would have been, if the event was, organisationally a massive failure.
Leadership has the responsibility to build goodwill, and must put the right mix in place to achieve this, as well as strive to get the quality right, consistently. The cost of failure can be astronomically higher than foreseen.
>=========================================<
Twitter: @bensonagoha.
Goodwill represents the sum total of attraction built into a name through sustained marketing effort, consistent delivery of quality products and services, high quality and reliable manpower and profitability. It is often said to be unquantifiable quality image. Perhaps so, but once built, accountants are usually able to assign values to it and treat it as an asset to the firm or individual. A firm’s goodwill can be so strong and highly valued that its fortunes are tied to that image, sometimes making profit oscillate along with the image.
Private names, like Elvis Presley, Michael Jackson, Andy Murray, Tiger Woods, JK Rowling etc., also enhance their respective fortunes. For example, JKR’s latest book, was not doing so well, but once her pseudonym was unmasked, it shot to best seller and its pre-orders rose. Rihanna’s legs were insured for $1m, just because she is a performer. Cristiano Ronaldo was bought from Manchester United for £80m. Last season alone, he scored 55 goals in 55 games. He is now said to be valued at 10 times the original price by Real Madrid. Whereas Lionel Messi of Barcelona, highest goal scorer in the Spanish League and winner of the Player of the Year Award, he is valued at about £360m. This proves that goodwill has a lot to do with people’s perception of the `name’ or brand.
In some respects, goodwill is like wine, it matures with age. But whereas it can rise and even remain at its saturation point for a long time, unlike wine, its lifespan oscillates along its marketing curve and maybe shorter.
How To Look After Goodwill: The continual relevance of a name, the potential for a higher value and the length of its relevance depends on its management, the ability to identify deficient spots and take timely corrective action before major damage is done to the name.
Here, the leader must ensure that the right mix is in place to manage the brand. The public relations experts will decide when to contract inserts in the mass media, what the message should say, how long it will need to be carried, whether it should be print or electronic as well as determining if the PR is doing the intended job. Also, the team will know how to respond when scandals hit – even if they are facing their own scandals.
Benefits of Goodwill: There is a wrong notion that a company does not need to fight for good except it is a player in the mass market. Nothing can be farther from the truth. The public will always appreciate to know about the existence of a firm and how it impacts on them even if indirectly. Benefits of goodwill to a firm include the following:
a) Attracting the right suitors, goodwill ensures that interests come from the right buyers or merger proposals. This can only happen if it is has created consistent goodwill overtime.
b) Ability to attract Loans and grants, as and whenever, the organisation or individual required it. Michael Jackson was a successful musician whose name attracted instant positive response from lenders.
c) Goodwill also helps an organisation or name to create the right influence, by leaving the right impressions on stakeholders, quicker. It’s adverts position faster also.
d) Goodwill enhances the chances of future profitability of the firm or individual. Apple, Samsung, Facebook are some of the organisations whose new products are trusted and embraced timely. Facebook’s share took a hit and plunged shortly after its Initial Public Offering. The shareholders became downcast and analysts whipped up the sentiment. But their mobile advertising app has been hugely successful, increasing its revenue and returning its share price to its current value of $39.90 on the NASDAQ.
e) Volunteers also embrace organisations with a strong goodwill when considering where to give their free time. Some volunteers give time, not just because they have it, but also because of what they hope to benefit from doing so – such as boosting their CV or benefiting from Referrals. The British Heart Foundation, Coca Cola, Apple and Facebook are some of the names whose strong goodwill can be of attraction to generous but selective volunteers.
Measuring Goodwill: There are several indices which can be used to measure an organisation’s goodwill. These include:
a) Share Turnover can be used as a determinant of goodwill because this shows the attitude of consumers to its name. For example, if a company is a quoted firm, its shares tend to be active at the stock exchange. Nestle is a quoted organisation at the London Stock Exchange with a strong goodwill and, as the time of writing this piece, its share are quoted at £65.30 and the trend is positive, Coca cola was at 38.20 and also active.
b) Shareholders value represents what the firm is worth to its owners after its liabilities and commitments are deducted for the accounting year. A company with high shareholders value will almost always have a strong goodwill. Shareholders value provides evidence of managerial proficiency – and what else can add to an organisations image than skilled and reliable manpower, that communicate confidence in what they do?
c) Acceptability of new products. As already stated, image sells and in fact retains the potential to sell more. So an organisation with a strong goodwill stands a very good chance of successfully and quickly introducing new products into existing or even new markets. Sony makes PlayStations and new versions are almost always anticipated and quickly embraced. It’s PlayStation 4 is due for release soon this summer and, it is already being anticipated.
d) Attraction to skilled workforce. Even if it does not pay the highest industry rate, a company can retain the capacity to attract skilled manpower, simply because of its name.
e) Positions faster. Organisations with a strong goodwill are almost always quickly remembered because of what the media would have done for them. Positioning is a marketing term for public relations efforts that achieve the aim of registering the `image’ in the mind of advert targets.
Downsides of Goodwill: With so much going for goodwill, it will appear that an organisation with a good name has nothing to worry about. Well, uneasy lies the head that wear’s the crown. So organisations find that, contrary to being on a bed of roses, they have issues to worry about as a result of the image they have built, including:
a) Being continuously on the media radar. Because of the work already done to achieve the good name, organisations are also of interest to journalists for any form of news concerning them – and this may not always be good. So the pressure to avoid embarrassments builds. Look at the embarrassing image of Charles Saatchi throttling his wife, Celebrity Chef Nigella Lawson. The couple had finished their dinner and gone for a whole week, during which they have patched up their differences, only for the photos to be published. Subsequently, she moved out and they have now divorced.
b) Industry watchdog will also be doing their regular assessments and monitoring and sometimes, they contribute to the pressure as organisations work to avoid penalties or sensor.
c) Competition is also another pressure builder. When an organisation has built up a good name, the tendency to attract other new-comers is huge and expectedly, they have to work to increase their investment into strengthening or further embellishing their name.
d) Potential for derivative loss of profitability resulting from a dent on that image. Sometimes, one bad news results in a huge loss to an organisation. If the wrong person dies after drinking a bottle of soft drink in whose bottle a dead cockroach is later discovered, it can create a big problem for the firm. Aside from the monitoring and legal implications, this can also cause negative consumer reaction which, if not properly managed, can lead to loss of sales. So the pressure is also always on to track and settle cases early.
In conclusion, goodwill puts unquantifiable value to a firm’s name or image and this can potentially have astronomical positive multiplier effects on it’s fortunes. The 2012 London Olympics is an example. Positive news have been pouring in from all sides. Even factors that would have probably been considered unimportant – like the perception of the British as a people of high taste by Germans. The latest news say the Germans, now believe that Brits are people of high quality. Auto sales are on the rise and consumer confidence is increasing from all sides. The highest number of Ferrari Sport Cars, a preserve of the rich, was said to have been sold in Britain in the past year, second only to the US.
No doubt, the London Olympics was a perfect example of organisational masterpiece, but if so much good news is pouring in as a result, imagine what the reverses and damage would have been, if the event was, organisationally a massive failure.
Leadership has the responsibility to build goodwill, and must put the right mix in place to achieve this, as well as strive to get the quality right, consistently. The cost of failure can be astronomically higher than foreseen.
>=========================================<
Twitter: @bensonagoha.
