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Marie

am 16. Sept. 2017

Global

Government subsidy: cost cuting measure or revenue enhancement?

Hello all,

Just to clarify one point: is it wrong to mention public funds as a way to cut down costs?

Technically this would be another revenue stream, but can be justified by specific cost cutting purposes (ex: subsidy for the investement costs of a company willing to enter the renewable energy market)?

Thanks you very much for your insights,

Best

Marie-Eve

2,8k

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Beste Antwort

Vlad

Coach

am 17. Sept. 2017

McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

It depends on who is your client.

For a private company, it will be just a part of revenues that otherwise would be paid by the end user.
For a government-owned company or a public-private partnership, it may be a decrease in revenues. Imagine government subsidizing the subway tickets for veterans. If the subway is not privately owned - government most probably will subsidize less than a regular ticket price.
I can't imagine a case when government subsidies will be a cost-cutting tool

Best,

Vlad