The aim of the case is get $300m in revenue however the calculation was done based off of margins i.e. profits. Don't understand how this makes sense?
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Ah thanks for explaining, that makes sense!
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Top answer
Deleted user
on Oct 17, 2020
The margin is used to calculate the wholesale price. A wholesaler is upstream to the retailer. the exhibit only shows retailer price. To get the wholesale price : retailer price * (1- retailer margin)
1 comment
Akshay
on Oct 17, 2020
Ian
edited on Oct 17, 2020
Coach
Top US BCG / MBB Coach - 5,000 sessions |Tech, Platinion, Big 4 | 9/9 personal interviews passed | 95% candidate success
Hi Akshay,
This case perfectly underscores the important of doing industry deep-dives to better understand how different markets work!
Wholesalers sell to retailers who sell to customers.
Customers pay price 100. Retailers pay price $50 (to wholesales). Wholesalers pay price $10 (to produce).
In the above example, the wholesaler makes $40 profit and the retailer makes $50 profit. With this same logic, you can backtrack from profit to revenues.
They gave you the retailer's profits from which you can deduce how much the wholesaler sold for!
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