What the characteristics of a good business looks like? The basic element of a good business is derived from a good management. It is true since business is run by individuals known as managers that perform specific business functions, such as manufacturing and production, finance and accounting, sales and marketing, and human resource departments. Identifying a good business is not an easy job; an understanding of Managerial Economics is needed because it provides some tools, techniques of analysis and Economic concepts to make good managerial decisions. The purpose of this paper is to identify some characteristics of a good business and list names of the companies having these certain characteristics.
Most of good businesses have characteristics such as promising prospect, high rates of return on equity, steady growth of sales, and also strong brands equity. When we talk about a good business, we are not only talking about past and present condition of a firm, but a good business should also have a good prospect. It is true that past successes do not ensure future successes; however the most common way to predict the future is based on the companiesí historical data because those all data are available for us. Those data must depict consistent sales growth and high rates of return on equity. Moreover, since many changes can happened, it is also important for a business to anticipate and adapt continuously to the changing conditions. Since the common objective of the firms is to maximize shareholderís value;
A good firm has to have a steady growth of sales because a firm earns its revenue from the sales of its products or services, so it is clear why firm tend to maintain its cash flow not to fluctuate. When a firmís sales reach its peak, it works as a signal that new firms start to enter the markets and the firmís sales and profit will start to decline. In this case, the role of management is very essential. The firm has to man...
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