Question

Four companieslong dash—​A, ​B, C, and Dlong dash—have revenues of​ 1, 2,​ 3, and​ 4, respectively. Company C develops a BCG Matrix. What would the RMSP be for company C if all four firms have the same net​ income? A. 0.25 B. 0.50 C. 0.75 D. 0.40 E. 0.20

Answer 1

To calculate the Relative Market Share Position (RMSP) for Company C on the BCG Matrix, you divide Company C's revenue (3) by the revenue of its largest competitor, Company D (4), resulting in an RMSP of 0.75.

Step-by-step explanation:

The student is asking about calculating the Relative Market Share Position (RMSP) in the context of the Boston Consulting Group (BCG) Matrix. The RMSP is essentially a ratio that compares a company's market share to that of its largest competitor. In this case, Company C has revenues of 3. To find the RMSP for Company C, we need to compare its revenues to that of its largest competitor, which is Company D with revenues of 4. The RMSP for Company C is calculated by dividing Company C's revenues by Company D's revenues, which is 3/4 = 0.75.

If we apply this to the BCG Matrix, it would imply that Company C has a Relative Market Share Position of 0.75 when comparing its market share with the largest competitor in the set of data provided.

Answer 2

If all the four firms have same net income then RMSP for company C will be 0.30.

Step-by-step explanation:

The BCG matrix (Boston Consulting group's product portfolio matrix) is used for doing strategic planning for long-term. It looks into how business growth will be possible by looking at portfolio of products and then decides where to invest, or which product to discontinue. It says that if the market share of the product is higher, it would be more beneficial for the company.

In the given problem, all the four companies A,B,C,D have revenues 1,2,3,4 respectively. We calculate Relative market share or RMSP by subtracting a company's market share from 100 to find the percentage it does not control. So, RMSP for Company C would be 0.30.