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CS Professional · Strategic Management and Corporate Finance · Analyzing the External and Internal Environment

Three rivals in an industry have market shares of 40%, 30% and 20%, and the remaining 10% is held by small firms. Bharat Tools holds 20%. Its relative market share against the largest rival is computed as:

Relative market share is the firm's market share divided by that of its largest competitor. Bharat Tools has 20% and the leader has 40%, so the ratio is 20/40 = 0.50. This shows it sells half as much as the market leader.

  1. A0.50Correct
  2. B2.00
  3. C0.67
  4. D0.20

Explanation

Relative market share is the firm's share divided by the share of its largest competitor: 20 / 40 = 0.50. Dividing 40 by 20 inverts the ratio and gives 2.00. Dividing by the second-largest rival, 30, gives 0.67, which is the wrong base. Using 0.20 simply restates the absolute share.

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