“PolarPro” Flies Ahead of the Competition
Season 7, Episode 8: Your students will find this pitch by a fellow millennial especially motivating. Jeff Overall’s business, PolarPro, is in a very competitive space. After he delivers his intro speech, stop the video (time 1:49) and ask students what type of market structure he is operating in and why. What profit maximizing strategies can he employ in this type of market? Constant innovation and/or economies of scale are critical for success. Why? Innovations in this market are easily copied and accompanying profits quickly competed away. Economies of scale provide a variable cost advantage that will price smaller competitors out of the market. Jeff chose constant innovation as his strategy since he currently lacks the capital investment to lower production costs. An interesting comment by Jeff at 4:25 is sure to spark students’ attention. In Jeff’s case, what would have been the opportunity cost of using his student loan toward books? Immediately following that, a discussion of opportunity costs continues with Jeff’s decision to make higher profits or invest in R & D.
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