Question
The size of the pie is the total amount customers are willing to pay (in present value terms) for Mark's product ($15 million for three
The size of the pie is the total amount customers are willing to pay (in present value terms) for Mark's product ($15 million for three years, discounted at 10%). The slices represent the cost of acquiring resources from the retailer (for distribution), the manufacturer, the sales organization, and the government (as taxes). The remaining slice belongs to Mark - that is the value of his idea. He owns 100% of the stock but keeps 16% of the value pie ($6/$37.3) because he needs external resources.
How do you explain the relative size in the shares of value?
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