Reputation

Not PC makes a great point in this post:

There’s been a lot of talk about Cadbury’s slide down the rankings of NZ’s most-trusted brands, from being judged the most trusted company in the country lat year down to a meagre 36th out of 133rd this year …

But you might be wondering, why on earth would companies care what people say about them?  Especially when so many of the left’s luminaries insist that companies, especially multinational companies in headlong pursuit of profits, are essentially an irresponsible law unto themselves?The answer is as simple as the nose on your face, really.  It’s because a seller’s reputation is the key to their long-term profits.

If companies have their own long-term interests at heart then, as all good companies should, then maintaining their reputation with their customers is essential. This is why good companies spend so much time and energy protecting their brand, and lesser companies do not. It’s because in the final analysis it’s not multinational corporations who decide the long-term direction of production, it’s consumers. …

The consumer is king, and she is a hard task-master—and it is the very profit system that those leftist luminaries denounce that is the key to ensuring a company’s responsibility. Because if long-term profits are important to a company, then keeping their customers happy must be paramount.

Some people see profits as providing bad incentives to corporations. Like PC, I believe they provide good incentives.