Intangible Assets and Goodwill: Q6

Q6: What is Goodwill? Is Goodwill simply good customer relations, that is lots of happy customers saying lots of positive things to each other and to others about their experience of dealing with a firm? Why or why not?

A:

Goodwill in a business is not limited to good customer relations. It includes customer confidence (for example, that Ryman Healthcare will look after residents as they need help; and relatives can have the ‘peace of mind’ that this is the case); quality management; favourable locations (Ryman Healthcare has lots of large retirement villages in well-developed suburban areas where retirees want to live; and where, typically, large development sites are difficult to obtain); manufacturing efficiency (able to build high-quality retirement villages efficiently; as well as deliver quality care services efficiently); good employee relations; and strong market share.

Study Guide Chap 5 page 5-20

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