Page 11 - Portfolio Analysis
P. 11
MEASUREMENT AND INTERPRETATION PROBLEMS
WHAT IS MARKET DOMINANCE?
Market share is the ratio of sales by a company, in a given time
period, to total sales by all competitors in the same market. The
“market” includes all of the products or services, customer types,
and geographic areas that are directly related to the activities of the
company. For example, it includes all products and services that are
competitive with those sold by the company.
However, a measure of market share, per se, is not a good indicator of the
extent to which a firm dominates its market. The value of a 30% share is
very different in a market where the next largest competitor has 40% than
in one where the next largest has only 20% (See figure 5).
FIGURE 5
MARKET SHARE
100
70
50 40%
30%
30
20
10 20% 30%
0
Two alternative measures which incorporate information on the
market structure:
