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Characteristics of a Good Business

1. One of the most important skills to learn in managerial economics is the ability to identify a good business. Discuss at least four characteristics of a good business.

2. Identify and talk about at least four companies that you regard as having the characteristics listed here.

3. Suppose you bought common stock in each of the four companies identified here. Three years from now, how would you know if your analysis was correct? What would convince you that your analysis was wrong?


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There are hundreds of metrics that can be used to measure a 'good' business. However, among these four stand out on my list:

1) A good company can attract top talent. Without an influx of fresh talent all the time, companies are forced to lay off their stale, aged work force at some point and often have difficulty in recruiting young talent after having done so. This company probably relies heavily on a solid internship program, promotes from within, and offers tuition reimbursement for its employees in qualified training programs.

2) A good company invests in the future, either in a good R&D department ...

Solution Summary

Good, descriptive solution to several questions about the common characteristics of a good business, examples of each, and a discussion about buying stocks in these companies.