calculating combined profit margin

Market share
Letzte Aktivität am 3. Juni 2022
1 Antwort
646 Views
Anonym A fragte am 3. Juni 2022

if company A has 12% market share by rev and B has 8% market share by rev how do I calculate their combined profit margin? additional info is A has 4% profit margin before economies of scale and B has 3% profit margin before economies of scale. due to economies of scale the addition profit margin for A is 1.2% and for B is 0.8%. its assumed that by adding 0.1% to profit margin for every 1% market share

(editiert)

Übersicht der Antworten

Upvotes
  • Upvotes
  • Datum aufsteigend
  • Datum absteigend
Beste Antwort
Ian
Experte
Content Creator
antwortete am 3. Juni 2022
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Hi there,

I know exactly where this is from :) (BCG Casey Chatbot practice test)

You need to do a weighted average.

When company A and B merge, they will have 20% market share (think, 20 dollars).

That means Company A has 60% of the revenue of the combined company and Company B has 40%)…12/20 and 8/20.

To get the weighted average from this you take Company A's weight, so 4 (profit margin) times 60%, which equals 2.4.

You then add that to Company B's weight, so 3 times 40%, which equals 1.2

You add these two to get 3.6 et voila!

War diese Antwort hilfreich?

Ian

Content Creator
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate
1.088
Meetings
76.127
Q&A Upvotes
227
Awards
5,0
150 Bewertungen
Wie wahrscheinlich ist es, dass du uns einem Freund oder Kommilitonen empfiehlst?
0
1
2
3
4
5
6
7
8
9
10
0 = Nicht wahrscheinlich
10 = Sehr wahrscheinlich