Why 11%

Question

I don't get the calculation for the market coverage:

The infrastructure investments of €300 m would cover 11% of the Chinese market.

Where does the 100 m in the division come from?

Answer 1

Hi Anonymous,

I had a quick look at the case you mentioned. In my understanding it comes from this part: "A new factory in Spain that produces €100 m worth of products".

So we are now talking about potential revenues of this Spanish factory of 100m, which is 11% of the market since we have sick patients (660m) pregant women (225m). So 100m worth of products covers 11% of this market.

Hope that helps - if so, please give it a thumbs-up with the green upvote button below!

Robert

Answer 2

Hello,

The text says:

A new factory in Spain that produces €100 m worth of products per year would require €500 m investment. The same factory in China would cost €300 m.

From this part you can assume that you are now evaluating to build a new factory in China, investing 300M€, that produces 100M€ worth of products per year.

The total market in China is composed by:

Pregnant women market: 225M€
Sick patients market: 660M€

The total market is then 885M€. If you want to know what would be your coverage with the new plan, you have to calculate: Production/Total Market=100M€ / 885M€= 11.3%

Hope it helps,
Luca

Answer 3

Hello!

It´s the % of the Spanish over the total:

Spanish: 100M worth
Total: 885 = 660 (sick patients) + 225 (pregnant women)

Hence, 100/885 = 0.11 = 11%

Hope it helps!

Cheers,

Clara

Answer 4

I confirm you have to divide it by 885

Best,
Antonello

Answer 5

To make things easier you could also calculate the number of births per year.