The Assumption That Maximization of Shareholder Value Equates to Long-Term

question 19

Multiple Choice

The assumption that maximization of shareholder value equates to long-term maximization of profit, is justified partly by "competition" which means that:

• A)Strong competition erodes profit, so it is always best to operate from a position of strength (high profits) in order to survive the battle
• B)Stronger competition emphasizes the need to create more value and more customer loyalty
• C)Competition plays at the same level across rivals and geographies, and therefore requires profit maximization
• D)Stronger competition increases pressures to expand into other markets thus leading to higher profits

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