Creation of the Measure
Market share denotes the percentage of total sales in an industry that a specified company generates. It is calculated by dividing a company's total sales over a stated trading period by the total industry sales during the same period. Total industry sales are determined by adding the sales values made by all contributing companies in the industry. According to Palmer et al. (2018), market share shows a company's allotment out of the total industry demand. The company with the largest market share is referred to as the market leader.
The Implication of Ending Market Share
Market share measures the competitiveness of a company's products in the market. Wang et al. (2017) explain that increases in market share only happen as a company's sales increase. However, market share depends on the nature of an industry. In fixed industries where the population of buyers remains relatively constant, increases in market share are significant because a rise in one company's share may cause a decrease in another's market share. Such market share increases may be attained through lowering prices, aggressive marketing strategies, or introducing new and improved products (Sukoco et al., 2020) . In industries where the population of buyers grows continually, market share may remain relatively constant while the business' profit heighten. A company whose market share increases consistently enjoys increasing revenue.
Delegate your assignment to our experts and they will do the rest.
Comparison with CAPSIM
The financial measures template reveals minor changes in the market share for Andrews Team. Through the four competition rounds, the end market share changed from 18.1% to 24.6%. The small changes in market share were directly accompanied by increases in cumulative profits from a loss of $3,616,230 to a profit of $35,926,235. Alongside the increases in profitability, return on assets rose from -2.8% to 7.8%. Return on equity also increased from -8.2% to 20.9%.
The statistics in the financial measures template reveal that the company's business strategies successfully attract customers. Also, it is deducible that the company's products are highly competitive in the market. Thus, the observed increase in market share for Andrew's team is a correct indicator of the company's ability to outcompete rivals and attract more customers. The fact that increases in market share are reflected in other financial measures confirms that the business' sales increase in each subsequent period.
References
Palmer, K., Tate, J., Wadud, Z., & Nellthorp, J. (2018). Total cost of ownership and market share for hybrid and electric vehicles in the UK, US and Japan. Applied Energy , 209 , 108-119. https://doi.org/10.1016/j.apenergy.2017.10.089
Sukoco, A., Anshori, Y., & Yudha, A. (2020). Strategies to increase market share for histopathological equipment products (Brand Sakura): Case study in a sole agent company. Sinergi : Jurnal Ilmiah Ilmu Manajemen , 10 (2). https://doi.org/10.25139/sng.v10i2.2864
Wang, Z., Zheng, H., Pei, L., & Jin, T. (2017). Decomposition of the factors influencing export fluctuation in China's new energy industry based on a constant market share model. Energy Policy , 109 , 22-35. https://doi.org/10.1016/j.enpol.2017.06.050
