What Makes a Good Company?

Our economy’s growth potential is declining. Corporate vitality has also weakened. Once an economy loses its dynamism, it is not easy to revive. A fundamental solution is needed.

What must be done for our economy to grow again? The key to economic growth is business. Businesses are the main drivers of the economy, and countries with many strong companies tend to prosper.

Then what makes a good company? Naturally, it is a company chosen by many consumers. This is because the essence of business is the pursuit of profit. To earn greater profits, companies must win over consumers and persuade them to open their wallets of their own accord. Therefore, a company’s fundamental duty is to make constant efforts and investments to provide goods and services that satisfy consumers.

In fact, it is no exaggeration to say that consumers determine the size of a company. When more consumers continue to choose a particular company’s products, that company increases its number of employees and expands its operations. Conversely, when consumers turn away, the company has no choice but to gradually reduce the scale of its business and employment. In this sense, large corporations are the result of evolving through consumer choice. In other words, large corporations exist because many consumers have continued to choose them.

In that context, can a company that enjoys a good reputation but fails to expand its business or create new jobs truly be called a good company?

A company’s value is measured and expressed through its brand. A brand is determined by how greatly a company has contributed to consumer satisfaction and whether it has fulfilled its responsibilities. A company with high brand value has, to that extent, made a significant contribution to consumers and to society as a whole.

Therefore, the greater a company’s brand value, the more actively it can be seen as serving consumer interests, and the less likely it is to put consumers at risk or deceive them. As a result, consumers tend to feel more secure purchasing goods from companies with high brand value.

Good companies have high brand value. As markets become globalized, companies grow larger, and the importance of branding also continues to increase. A brand can be described as the sum total of the invisible capital called trust.

The more good companies there are, the greater the social contribution made by businesses. They can not only create large numbers of quality jobs, but also reward shareholders by maximizing profits. This, in the end, leads to national economic development.

When a company’s sales rise and its profits increase, that means it has been well managed. This is precisely the requirement of a good company: generating substantial profits and providing quality jobs. In other words, a good company is one that remains faithful to the essence of business.

Moreover, the efforts of good companies lead to higher product quality and lower prices. This means consumers can enjoy more consumption with the same amount of money. And increased consumer spending forms a virtuous cycle in the economy, leading to higher corporate sales, new product development, job creation, and rising household income.

Sung-no Choi, President of the Center for Free Enterprise (CFE)

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Original title: 좋은 기업이란 무엇인가

Author: Sung-no Choi

Date: 2017-05-17

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&pn=27&idx=11090