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V10-30

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V10-30  [#permalink]

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New post 15 Sep 2015, 13:08
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A
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  65% (hard)

Question Stats:

52% (00:42) correct 48% (01:01) wrong based on 91 sessions

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Company Executive: Ten years ago, we held an 80% market share in Japan, even though we are a U.S.-based company. At that time, Japanese consumers overwhelmingly preferred our product to those locally produced in Japan. Over the past ten years, our market share in Japan has decreased to almost 40%. However, our revenue from the Japanese market has actually increased.

Which of the following best helps to explain the above discrepancy?


A. The size of the Japanese market for the company’s product has doubled over the past ten years
B. The population of Japan has remained the same over the past ten years
C. The company has increased its selling price for the product over the past ten years
D. Over the past ten years, local Japanese manufacturers have introduced a number of low-cost products that compete with the company’s product line
E. Consumer sentiment in Japan has shifted away from imported goods and towards domestically produced goods

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Re V10-30  [#permalink]

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New post 15 Sep 2015, 13:08
Official Solution:


Company Executive: Ten years ago, we held an 80% market share in Japan, even though we are a U.S.-based company. At that time, Japanese consumers overwhelmingly preferred our product to those locally produced in Japan. Over the past ten years, our market share in Japan has decreased to almost 40%. However, our revenue from the Japanese market has actually increased.

Which of the following best helps to explain the above discrepancy?


A. The size of the Japanese market for the company’s product has doubled over the past ten years
B. The population of Japan has remained the same over the past ten years
C. The company has increased its selling price for the product over the past ten years
D. Over the past ten years, local Japanese manufacturers have introduced a number of low-cost products that compete with the company’s product line
E. Consumer sentiment in Japan has shifted away from imported goods and towards domestically produced goods


(A) Correct. If the size of the market doubled and the company is getting 40% of the sales, this results in an overall higher amount of sales today than sales ten years ago. To demonstrate, 40.01% of 200 is greater than 80% of 100.

(B) This does not explain why revenue increased while market share was lost.

(C) The company may be selling its product at a higher price, but it’s not clear that this is enough to overcome the large drop in market share.

(D) This suggests a reason for the drop in market share, but not for the increase in revenue.

(E) This simply restates the fact that the U.S. company has lost market share.


Answer: A
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Re: V10-30  [#permalink]

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New post 23 Jun 2016, 04:40
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bb,

Half the market share of double the market leads to the same revenue from created by the original market share of the original market size.

I'm not clear on the explanation..
Where did we get 40,01% market share? If you use 39.99% market share, it would create small revenue. Additionally, either of these number are not stated in the text.
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Re: V10-30  [#permalink]

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New post 30 Jun 2016, 03:47
RobertWK wrote:
bb,

Half the market share of double the market leads to the same revenue from created by the original market share of the original market size.

I'm not clear on the explanation..
Where did we get 40,01% market share? If you use 39.99% market share, it would create small revenue. Additionally, either of these number are not stated in the text.


Please refer to the small change in the passage: "just 40%" is replaced by "almost 40%". Does this make sense now ?
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New post 21 Aug 2016, 22:01
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It does not, as almost 40% could be either 40.1% or 39.9%. I do not think the GMAT would permit such ambiguity.
I did not choose that answer because of that.

sayantanc2k wrote:
RobertWK wrote:
bb,

Half the market share of double the market leads to the same revenue from created by the original market share of the original market size.

I'm not clear on the explanation..
Where did we get 40,01% market share? If you use 39.99% market share, it would create small revenue. Additionally, either of these number are not stated in the text.


Please refer to the small change in the passage: "just 40%" is replaced by "almost 40%". Does this make sense now ?
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Re: V10-30  [#permalink]

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New post 22 Aug 2016, 00:11
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Ok, let me make one more effort to explain:

Previous value was 80%.... then the value decreased to almost 40%. This implies that the new value has not touched 40%; it is slightly higher than 40%.

However if the initial value were 20% and then it increased to almost 40% then the implication is that the new value is slightly less than 40%.

Let me know, if it does not make sense even now.

Robertob91 wrote:
It does not, as almost 40% could be either 40.1% or 39.9%. I do not think the GMAT would permit such ambiguity.
I did not choose that answer because of that.

sayantanc2k wrote:
RobertWK wrote:
bb,

Half the market share of double the market leads to the same revenue from created by the original market share of the original market size.

I'm not clear on the explanation..
Where did we get 40,01% market share? If you use 39.99% market share, it would create small revenue. Additionally, either of these number are not stated in the text.


Please refer to the small change in the passage: "just 40%" is replaced by "almost 40%". Does this make sense now ?
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Re: V10-30  [#permalink]

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New post 12 Nov 2016, 12:12
Could you please help me to delineate options A and C?

I chose C because it explains as to why company has more revenue despite decrease in market shares.

e.g. 80 products sold at $1 = $80 ; now 40 products sold at $8 = $320

so despite reduced market shares, more revenue is generated from the J market.


While A states that "The size of the Japanese market for the company’s product has doubled over the past ten years"

I am confused as to -- If the size of the market has increased for the company's products, then it doesn't help to address the concern that the share of the market has decreased.
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New post 13 Nov 2016, 11:41
warriorguy wrote:
Could you please help me to delineate options A and C?

I chose C because it explains as to why company has more revenue despite decrease in market shares.

e.g. 80 products sold at $1 = $80 ; now 40 products sold at $8 = $320

so despite reduced market shares, more revenue is generated from the J market.


While A states that "The size of the Japanese market for the company’s product has doubled over the past ten years"

I am confused as to -- If the size of the market has increased for the company's products, then it doesn't help to address the concern that the share of the market has decreased.


Market share is based on revenue, not quantity. A company has 50% market share implies that its revenue is 50% of the total revenue earned by all the companies in the market, not that it sells 50% of all the products in the market.
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New post 21 Oct 2017, 04:58
I think this is a poor-quality question and I don't agree with the explanation. Almost 40% can still be 39% or 41%, irrespective of one using decreased to almost 40% or increased to almost 40%.
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New post 13 Dec 2017, 10:14
Are we trying to say that if our revenue were the same as it was 10 years ago, and the size of Japanese market had doubled over these 10 years, then the question statement would have mentioned that our market share has decreased to 40% [exact 40%].

However, since our revenue has actually increased, that is why our market share has decreased to almost (but greater than) 40%?

So basically, option A is taking care of the reduction of our market share (from 80% to almost 40%), and the word almost in the question statement is taking care of the fact that revenue has actually increased.

Is my understanding correct?
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Re: V10-30  [#permalink]

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New post 15 Jun 2018, 02:18
sayantanc2k As the MS has dropped to ~40% and Revenue has increased = The Total market has MORE than doubled (Not just doubled). Accordingly option A should be reworded
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New post 03 Sep 2018, 22:25
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I just again feel like it is better to solve official questions than any random questions. I wonder if there is something to learn after solving the question, getting it wrong and realizing that it is a poor question.
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New post 02 Oct 2018, 02:51
@sayatanc2k I would like you to acknowledge this FACT. I'm studying economics so please consider this -

Market share is the percentage of a market (defined in terms of either units or revenue) accounted for by a specific entity. In a survey of nearly 200 senior marketing managers, 67% responded that they found the revenue- "dollar market share" metric very useful, while 61% found "unit market share" very useful.[1]

"Marketers need to be able to translate and incorporate sales targets into market share because this will demonstrate whether forecasts are to be attained by growing with the market or by capturing share from competitors. The latter will almost always be more difficult to achieve. Market share is closely monitored for signs of change in the competitive landscape, and it frequently drives strategic or tactical action."[2]

https://en.wikipedia.org/wiki/Market_share

Your remark - Market share is based on revenue, not quantity. A company has 50% market share implies that its revenue is 50% of the total revenue earned by all the companies in the market, not that it sells 50% of all the products in the market.

This makes option C plausible
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Re: V10-30   [#permalink] 02 Oct 2018, 02:51
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