Additional revenue through market share increase

Question

Could someone please explain the math behind the calculation for the additional revenue through market share increase? Why wouldn't be enough just doing 33% * 4,3 which is the market size? Thanks in advance!

Answer 1

Hi there,

I would be happy to provide the solution:

Given that BabyformulaCo will be provided more shelf space, their market share increases from 30% to 33%. However, out of those 5.16m additional cans of baby formula, they sell 3.00m cans via the WIC.
As such, in order to avoid double counting, you need to subtract the WIC cans from the total additional cans sold to arrive at the additional cans through market share increase (see also here).

Best,

Hagen

Answer 2

Hi there,

that's because you'd be double-counting the WIC sales. Need to subtract those 3m that from the total additional cans sold.

Regards, Andi

Answer 3

Hi there!

With your current approach you'd be double counting the WIC sales.

You need to remove those and you'll get the same answer as in the interviewer notes.

Sharing with you a few more cases based on recent real MBB interviews. They contain detailed interviewer notes so they should come in handy:

https://www.preplounge.com/en/management-consulting-cases/interviewer-led-mckinsey-style/intermediate/element-mobile-expands-into-refurbished-phones-mbb-2nd-round-302

https://www.preplounge.com/en/management-consulting-cases/candidate-led-usual-style/advanced/mbb-first-round-soy-technologies-303

https://www.preplounge.com/en/management-consulting-cases/candidate-led-usual-style/advanced/mbb-second-round-codewave-employee-turnover-challenge-304

Best,
Cristian