CS Professional · Strategic Management and Corporate Finance · Strategic Analysis and Planning
Aarav Foods Ltd has a business unit with annual sales of Rs 60 crore. The largest competitor in the same market has annual sales of Rs 240 crore. What is the unit's relative market share as used in the BCG matrix?
Relative market share is the unit's sales divided by the largest competitor's sales, so 60 divided by 240 equals 0.25. A value below 1 means the unit trails the market leader, which places it on the low-share side of the BCG matrix.
- A0.25Correct
- B4.00
- C0.20
- D0.75
Explanation
Relative market share = unit's sales / largest competitor's sales = 60/240 = 0.25. Check: 0.25 x 240 = 60. The figure 4.00 results from inverting the ratio, and 0.20 results from dividing by the combined sales of 300 crore.
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