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

Multiple Choice

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 that as a guideline to make a decision. Both start-up companies propose to manufacture health-focused foods with 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 healthy lifestyles, but it does not have any executives with experience in food production. Which firm will the investor feel is most consistent with the model of industrial organization?

A) Green Pastures Foods
B) RexRich Foods
C) Both firms are consistent with the I/O approach.
D) At the entrepreneurial stage, the model that companies follow is not important.