Starling Inc. is a public stock company that provides natural gas for businesses. Although this company generates a large profit, management's focus on reducing costs caused the maintenance budget to be trimmed. Its pipelines have at times leaked, which created significant environmental problems. As a result, the company's value creation has suffered. This scenario supports Michael Porter's warning that public companies

A) often do not keep economic needs and societal needs separate from each other, thereby contributing to low value creation.

B) have defined value creation too narrowly in terms of financial performance, thereby contributing to black swan events.

C) do not focus enough on increasing firm profits, thereby contributing to low value creation.

D) have defined value creation too narrowly and as a result have ignored political lobbying, thereby contributing to black swan events

Question

Niko Murphy

Business

3 November, 19:43

Starling Inc. is a public stock company that provides natural gas for businesses. Although this company generates a large profit, management's focus on reducing costs caused the maintenance budget to be trimmed. Its pipelines have at times leaked, which created significant environmental problems. As a result, the company's value creation has suffered. This scenario supports Michael Porter's warning that public companies

A) often do not keep economic needs and societal needs separate from each other, thereby contributing to low value creation.

B) have defined value creation too narrowly in terms of financial performance, thereby contributing to black swan events.

C) do not focus enough on increasing firm profits, thereby contributing to low value creation.

D) have defined value creation too narrowly and as a result have ignored political lobbying, thereby contributing to black swan events

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Answers (1)

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Timmy · Answer 1

Have defined value creation too narrowly in terms of financial performance thereby contributing to black swan events (B)

Explanation:

Black swan events are events that come as a surprise to a company or individual with great / devastating effects and these events are usually due to inappropriate foresight to the problem.

A company that generates huge profits is not supposed to reduce the maintenance budget because ill maintained equipment will not result to efficient production and huge profits. the leaking of their pipelines and the significant environmental problem is an example of the Black swan event due to the trimming of maintenance budget by the Management.