Bigger Pie or Bigger Piece of Pie
In a recent piece on Medium the author asked if 80% of $2billion pie was better than 2% of an $80 pie
There are two constants not variables in that question. Using these constants the arithmetic answer is of course the same.
The author’s analysis switches these constants to higly dependnet vaiables. Both the size of the pie and the percentage of it can, like most things, apparently change dependent on exogenous circumstances.
Even worse there is no definition of what the pie consists of: dollars, some other type of asset, gross sales, net income, potential market size, potential market share……..
Thus there is no possible answer other than that 1.6 billion equals 1.6 billion and that the question is trivial if we are in fact dealing with the two initially stated constants..
The real question is which of the two stated constants has which probability of change when considered as a variable dependent on external conditions.
For example, an increase in the potential market means nothing to a manufacturer that is unable to economically manufacture more.
An increase in marekt share means everything in an environment of expanding gross marekt and/or expanding profitability.
II marekt size and share are static, only the proft margin matters.