COMPETITIVE POWER OFCROSS-SUBSIDIZATION

COMPETITIVE POWER OFCROSS-SUBSIDIZATION

• Involves using profits earned in a country market to
  • Support offensive against key rivals OR
  • Gain increased penetration of a critical market
• Most powerful when global firm with multiple profit sanctuaries is intent on
  • Achieving global market dominance
• A global firm can use LOWER PRICES to siphon a domestic firm’s customers while
  • Gaining market share &
  • Covering losses with profits earned in other critical markets

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