Michael Porter Believes That Managing Linkages Among Businesses Through Transferring

question 20

Multiple Choice

Michael Porter believes that managing linkages among businesses through transferring skills and sharing resources offer greater potential for creating value than portfolio management because:

• A)Economies of scope have a greater impact on profitability than industry attractiveness
• B)The size of acquisition premiums means that acquisitions can no longer deliver satisfactory shareholder value
• C)Increasingly efficient capital markets limit the potential for firms to create value through allocating capital among their businesses
• D)The propensity for stock markets to apply a conglomerate discount to highly diversified companies

---

Definitions:

Marginal Utility

The change in satisfaction or utility received by consuming one additional unit of a good or service.

Limited Usefulness

Refers to the notion that a tool, resource, or piece of information is only beneficial or applicable in certain situations or to a certain extent.

Optimal Quantity

The amount of a good or service that maximizes the net benefit to an individual or society, often considering factors like cost and utility.

Utility-maximizing Consumer

An economic concept where consumers aim to get the greatest utility or satisfaction from their purchases given their budget constraints.