Synergy exists when:
A) cost savings are realized through improved allocations of financial resources based on investments inside or outside the firm.
B) two units create value by utilizing market power in their respective industries.
C) firms utilize constrained related diversification to build an attractive portfolio of businesses.
D) the value created by business units working together exceeds the value the units create when working independently.

Question

Quizplus · Accepted Answer

Synergy exists when the combined value created by business units working together is greater than the value those units create when working independently. Therefore, option D is the correct answer. While options A, B, and C may also be strategies that lead to improved performance, they don't necessarily indicate the existence of synergy.

Synergy Exists When