An investor is considering in which of two start-up companies to invest. The investor has faith in the industrial organization model of above-average returns and is using its concepts to make a decision. Both start-up companies propose to manufacture health-focused foods with such characteristics as low salt,low sugar,high fiber,and no artificial additives. RexRich Foods has a business strategy of producing a differentiated product for which consumers will pay more. Green Pastures Foods is in the health-foods industry because of its internal culture and commitment to healthful lifestyles. Which firm will the investor feel is most consistent with the model of industrial organization?

Question

Quizplus · Accepted Answer

The investor will likely choose RexRich Foods as it has a strategy of producing a differentiated product that can command a higher price, which aligns with the industrial organization model's focus on creating a competitive advantage in order to achieve above-average returns. Green Pastures Foods' commitment to healthful lifestyles is not necessarily a competitive advantage that can translate to profitability in the market.

An Investor Is Considering in Which of Two Start-Up Companies