Question

Rapida Inc. and Click Inc. are two companies that have been manufacturing typewriters for almost 30 years. Due to the reduced demand for typewriters today, both companies' average return on invested capital is approximately –5 percent. The current industry average is 2 percent. In this scenario, Rapida Inc. and Click Inc. most likely have
a. competitive advantage over other firms in their industry.
b. competitive parity with each other.
c. strategic alliance with each other.
d. economies of scope instead of economies of scale.

Answer 1

Answer:

The answer is: B) Competitive parity with each other.

Explanation:

Rapida Inc. and Click Inc. have competitive parity with each because they are both losing money and both have the same negative rate of return.  

Competitive parity happens when one company achieves standard or average results as compared to other similar company (or companies) in their industry.