Certified Production & Operations Manager (POM) Practice Exam

Which term refers to how companies ensure their long-term viability?

1. Financial sustainability

2. Social sustainability

3. Economic sustainability

4. Ecological sustainability

The correct answer is: Economic sustainability

The term that refers to how companies ensure their long-term viability is best encapsulated by the concept of financial sustainability. Financial sustainability involves managing a company's fiscal resources in such a way that it can maintain its operations and ensure profitability over the long term. This includes generating sufficient revenue to cover costs, investing in growth opportunities, and maintaining a healthy balance sheet. A financially sustainable organization is better equipped to weather economic downturns, adapt to changing market conditions, and fulfill its commitments to stakeholders, ultimately supporting its ongoing success and longevity. The other terms, while related to sustainability, focus on different aspects. Social sustainability emphasizes the importance of meeting social equity and responsibility, ensuring that the company's actions benefit society as a whole. Economic sustainability concerns the broader economic system in which companies operate, often focusing on factors that impact economic growth and stability. Ecological sustainability is centered on environmental stewardship and preserving natural resources. Although all these aspects are important for a company’s overall sustainability, financial sustainability specifically addresses the financial health required for long-term viability.