CFA Level I · CFA Level I Exam · Industry and Competitive Analysis
A firm's sales rose from €400 million to €460 million while its industry grew 5% over the same period. The analyst computes the firm's market share using total industry sales of €2,000 million in the first year. Assuming the industry grew exactly 5%, the firm's market share in the second year is closest to:
The second-year market share is about 21.9%. Industry sales grew 5% from €2,000 million to €2,100 million, and dividing the firm's €460 million by €2,100 million gives 21.9%. Using the old industry total would give 23.0%, which is wrong.
- A20.0%
- B21.9%Correct
- C23.0%
Explanation
Second-year industry sales = 2,000 × 1.05 = 2,100. Share = 460/2,100 = 21.9%. The first-year share was 20.0% (400/2,000), and 23.0% wrongly divides by the old industry size (460/2,000).
Did you get it right without looking?
One question tells you little. A timed set on Industry and Competitive Analysis shows your real accuracy, how long you take and where you lose marks.
More Industry and Competitive Analysis questions
- A regional cement industry has high fixed costs, slow demand growth, and products that buyers view as undifferentiated commodities. Which fo…
- A small software firm serves only dental clinics with specialized scheduling tools and charges higher prices than general software vendors. …
- A rapidly aging population in a country is most likely to benefit which industry's long-term demand?
- An analyst is refining a peer group for a company whose revenue is 70% from consumer software subscriptions and 30% from hardware. Which can…
- A company sells a product with few substitutes to customers that face high switching costs. Rival firms, however, are expected to enter afte…
- A company sells a basic product that is nearly identical to its rivals' products. It focuses on driving down its cost per unit through scale…