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I’m trying to solve the TYU 7 of Chapter 8 (using Kaplan) but can’t understand how they arrived at the answer. All my answers for market growth, relative market share and division’s market share were wrong. Can anyone help?
Thanks in advance.Let’s say that market size is 100, 120 and 140 in three successive years. ou have a choice as to how to estimate growth rate:
Last two years only: 120(1 +g) = 140
140/120 = 1.167 , g = 0.167 or 16.7%
Or all three years 100 x (1+ g)(1 + g) = 140
(1 +g)(1 + g) = 140/100 = 1.4
1+g = Square root(1.40) = 1.183
g = 0.183 = 18.3%
The second method takes more years into account so might give a better estimate of market growth rate. However, the first method takes only the latest years into account so might give a more up-do date growth rate.I found this reply by GROMIT given last year to a similar question.
Thank you Gromit!Im using Kaplan and trying to figure out how they have calculated market growth, share and relative market share for the BCG matrix. Please can someone explain to me. the above query has helped me to arrive at the market growth. However, i am unable to answer the remaining two aspects. Please can you help. Thankyou.
Food For Thought (FFT) has been established for over 20 years and has a wide range of food products.
The organisation has four divisions:
(1) Premier
(2) Organic
(3) Baby
(4) Convenience
The Premier division manufactures a range of very high quality food products, which are sold to a leading supermarket, with stores in every major city in the country. Due to the specialist nature of the ingredients these products have a very short life cycle.The Organic division manufactures a narrow range of food products for a well-established Organic brand label.
The Baby division manufactures specialist foods for infants, which are sold to the largest UK Baby retail store.
The Convenience division manufactures low fat ready-made meals for the local council.
The following revenue data has been gathered:
Year ending 31st March:
$m
20X3
20X4
20X5
20X6
20X7
Premier
Market size
180
210
260
275
310
Sales revenue
10
12
18
25
30
Organic
Market size
18.9
19.3
19.6
19.8
20.4
Sales revenue
13.5
14
14.5
15
16
Baby
Market size
65
69
78
92
96
Sales revenue
2.5
2.7
2.8
2.9
3
Convenience
Market size
26
27.2
27.6
28
29
Sales revenue
0.9
0.9
0.92
0.94
0.9
The management accountant has also collected the following information for 20X7 for comparison purposes.
Market leader
% share
Premier
Organic
Baby
Convenience17%
78%
25%
31%Required:
Using the BCG matrix assess the competitive position of Food For Thought.
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