Market Calculations
Business Management: IB Diploma, topic 4.1.2
Market Calculations
To measure a business' success, you can calculate market growth, sales growth and market share.
Market growth
- Market growth describes when an industry grows in terms of either volume or value.
- For example, the automotive industry in the United Kingdom is worth £77.5 billion in value. A 10% increase in market growth would mean the industry was now worth £77.5 billion x 1.10 which gives £85.25 billion.
Sales growth
- Sales growth occurs when a business increases its sales in terms of volume or value.
- For example, Netflix has 130 million active subscribers and if this increases in volume by 20%, there will be 130 million x 1.20 which gives 156 million subscribers.
- If each customer pays £50 per year, then Netflix sales will rise by 26 million x £50 = £1.3bn.
Market share
- Market share refers to the proportion of a market that a business controls in order to satisfy customer needs.
- Market share can be calculated: (sales of one product divided by total market sales of that product) multiplied by 100.
- For example, if the BBC has a 29% market share of the UK television market, then it provides 29% of the TV watched in the United Kingdom.
Test yourself on Market Calculations
The beer industry in Germany is worth £175 billion in value. It grows at 8% a year. What is its value in 1 year's time?
If Sky has 400 million subscribers globally and this increases in volume by 5% a year. How many subscribers will Sky have next year?