Founded in 1937, Westland Milk Products in New Zealand is a leading independent

Question

Founded in 1937, Westland Milk Products in New Zealand is a leading independent co-operative dairy company, owned by over 425 farmer shareholders that supply milk for processing. In the video we watched, it was evident that Westland had started as a small independent dairy farm and has grown into a significant competitor within that industry. Most significantly, Westland has expanded their product offerings from simple dairy products to include nutritional supplements made from dairy processing.

1. Discuss the sources of comparative advantage that would have led to the original success of the Westland Milk Products company. How did sources of comparative change over time and how did that likely influence the plans for Westland’s production?

Explanation / Answer

ANSWER:-

We observe from the following discussion is that there has been an evolution of a competitive firm within the industry. Now the other firms that are a part of Westland Cooperative farming observe that the tax incentives given to the exporter of Infant and toddler nutritional Dairy product, which is the newly evolved firm, will increase the supply from this exporter.

This will in turn increases its Monopoly power and its ability to dictate prices for the whole industry. This is step would be an acceptable to other firms in the industry because it might lower the price for the industry as a whole. Due to increase Monopoly power this firm may also increase the prices of certain products which only this firm produces. It is thus necessary for the industry to look for the possible consequences

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