Looking to invest? Not just financial return, find a company involved in ‘Good Business’

If you are looking for long-term investments in stocks, then apart from the current return on investment and other financial returns of a company you are planning to invest, check if the company is involved in ‘Good Business’.

This is because, apart from profitability, the future prospect of a company would depend on if it is involved in a ‘Good Business’, as the ‘Mahindra Good Business Study’ finds that more than 45 per cent of young Indians in the age group of 18-25 years give priority to ethical standards, caring for the community and inclusivity, rather than just profits.

Aimed at a better understanding of people’s perception of what actually makes for a ‘Good Business’, the study was conducted by the Mahindra Group across 10 Tier 1 and Tier 2 cities involving over 2,000 respondents. The aim was also to know how the concept of ‘Good Business’ affects decision-making as potential consumers, investors and employees.

In fact, as much as 62 per cent of respondents believe that ‘Good Business’ constitutes more than a financial return, while 14 per cent of them associate the term with qualities such as environmental consideration and community commitments like Corporate Social Responsibility (CSR).

Commissioned as part of the Mahindra Group’s 75th anniversary celebrations, the study reveals that as consumers, people are increasingly demonstrating that their idea of a ‘good business’ means that the product and price may no longer be sufficient measures to secure the sale.

For 60 per cent of respondents, it is important or fundamental for the company to be ‘good’ if they were purchasing a product or service from it, while 20 per cent of them would consider competitive pricing when purchasing a product or service.

While 27 per cent of respondents consider a brand’s reputation before making a purchase, ahead of considerations such as market leadership or product price, 14 per cent of them consider the environmental impact of the product/ service as constituting the idea of a ‘good’ deal and equal percentage of respondents give the same importance to a brand’s contribution to society at large.

Among the Tier 1 city respondents, 31 per cent consider competitive pricing and market leadership before purchasing a product, as compared to 34 per cent of Tier 2 respondents who give priority to the quality of the product at the time of purchase.

So, the prospect is that the demand for goods and services produced and offered by companies involved in ‘Good Businesses’ would be higher in the coming years, ultimately resulting in higher future financial returns.

From an investment perspective, financial returns remain essential, but it may no longer be enough for many investors as 70 per cent of the respondents expressed that they would never invest in a business, if, in their opinion, it’s not genuinely ‘Good Business’.

The study revealed interesting insights about people’s ideas of what makes a ‘Good Business’ particularly during these paradigms shifting Covid times, as features like ‘Ethical Standards’, ‘Caring for the Community’, and ‘Inclusivity’ etc are getting attention ahead of traditional business metrics such as ‘Financial Performance’, ‘Market Leadership’, ‘Profitability’ or ‘Growth’.

Not only as consumers or investors, looking beyond the pay and perks even as employees, people are giving importance to other factors such as community initiatives, flexible working hours, environmental consideration and workforce diversity when they look for a ‘good employer’.

The ‘Lack of Leadership and Vision’ is perceived as the top barrier preventing business from becoming truly ‘good’ by 20 per cent of the respondents.