Cross-subsidization of a strategy of diversifying
Illustrates the cross-subsidization of a strategy of diversifying?
Expert
It is significant to know that cross-subsidization can only be used sparingly. As a universal rule, cross-subsidization plans are justified only when there is a fine vision that the short-term destruction to business profitability will be offset by stronger competitiveness and superior overall profitability over the long term.
KEY CONCEPT:
Although cross-subsidization is a strong competitive weapon, it can only be used rarely because of its adverse impact on complete business profitability.
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