Respuesta :
As an economist for a US Manufacturer, using the market potential research data, I will propose to the company to expand the market into Italy market since it has expected profit around $980,000.
Market Potential represents the size of the market for a specific product at the specific time. Market potential of a product is measured by its sales volume.
From the case, we got some informations regarding the market potential for our products in 3 countries with 3 scenarios, such:
Success Level
Big Mediocre Failure
France Probability 0.3 0.3 0.4
Unit 1,000,000 600,000 0
Probability Unit sold 300,000 180,000 0
Italy Probability 0.4 0.4 0.2
Unit 900,000 700,000 0
Probability Unit sold 360,000 280,000 0
Spain Probability 0.4 0.3 0.3
Unit 700,000 300,000 0
Probability Unit sold 280,000 90,000 0
The probability unit sold represents the potential units of products in each scenarios by multiplying the scenario's probability and unit data.
Price = $12 per unit
Production cost = $10 per unit
Entry cost = $300,000 (equal for all markets)
We could find the revenue and production cost of each country by using revenue and production cost formula:
Revenue = Price x Unit sold
Production Cost = Unit cost x Unit sold
Based on the data we got, we could find the total probability units sold for each country:
Total Prob. Unit Sold Revenue Prod. Cost Entry Cost Profits
France 480,000 5,760,000 4,800,000 300,000 660,000
Italy 640,000 7,680,000 6,400,000 300,000 980,000
Spain 370,000 4,440,000 370,000 300,000 440,000
From the calculation above, we know that Italy is the most promising market to be the next market of our product expansion plan.
Learn more about Market Potential here: https://brainly.com/question/18958933
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