Charles Schwab,a trading company,will face the risk of cannibalization from its e-tail channel e.Schwab if:
A) it attempts to lure customers with the Schwab database.
B) it branches out into mutual funds and tax-deferred investments.
C) it makes price cuts and creates competition with the parent company.
D) it allots all its best personnel to work at the online firm.

Question

Quizplus · Accepted Answer

If e.Schwab were to make price cuts and create competition with the parent company, there is a risk of cannibalization as customers may be tempted to switch to the cheaper option. The other options (attempting to lure customers with the Schwab database, branching out into mutual funds and tax-deferred investments, allotting all its best personnel to work at the online firm) do not necessarily cause cannibalization.

Charles Schwab,a Trading Company,will Face the Risk of Cannibalization from Its