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Goodwill factor Market share

Factor “Market share” is 1 out of 8 factors that GMC simulator uses to calculate the company's goodwill value. Below are presented parameters from decision and management report that are most correlated with goodwill factor “Market share” when calculating the company's goodwill value.

Parameters include direct and inverse correlation:

  1. Sales office: 0.83

  2. Number of products sold: 0.51 - 0.63

 

To calculate the factor, we will use information from the sales office only, as the most significant and already taking into account the number of products sold.

Diagram below shows the dependence of the goodwill factor “Market share” on sales office for scenarios 12C1, 12C3, 14C1 and 14C3 in 1 period. Values close to the maximum and minimum are filtered.

 

The minimum value is 0.866, on average when value of sales office is 25,000 - 30,000. 

The maximum value is 1.162 on average, while value of sales office is 40,000 - 60,000.

Value of goodwill factor “Market share” is calculated relative to the share that company occupies in the market in its group. Company receives the highest value of goodwill factor with the maximum sales revenue and company receives the lowest value of goodwill factor with the minimum sales revenue. All other companies are located in proportion to their sales along a common trend line for this group. Each period this distribution is updated. Diagram below shows the dependence of the goodwill factor "Market share" on sales office only for 8 teams in the same group.

 

Hints:

  1. Goodwill factor “Market Share” can vary between 0.866 - 1.162.

  2. Value of goodwill factor “Market share” depends on market share of competitors in the group (according to ranking of companies in the group). With an equal share of market among all teams, value of goodwill factor is 1.000.

  3. Optimal strategy is to maximize company's revenue, in the ideal case - to have the highest revenue in the group.