Cross-subsidization of a strategy of diversifying

Question

Illustrates the cross-subsidization of a strategy of diversifying?

Answer 1

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.