a) The combined two-firm concentration ratio of Motorola (approximately 17.5%) and Nokia (35%) is around 52.5% of the market.
b) Up to 2 marks for correct definition: Market share is a measure of a firm's sales returns expressed as a percentage of the market's total sales revenue. Otherwise, market share can be measured in terms of sales volume. Formula is essential for maximum marks. Note: students may select to explain market share via concentration ratios and this should be awarded accordingly.
c) Award up to 2 marks for each applicable benefit that is explained.
• High market power (price setter) by being the dominant firm in the market
• The benefits of economies of scale from large scale of operations, e.g. technological economies
• There is a positive correlation between sales revenue and profit levels, i.e. Nokia's profits tend to increase as a firm gains more market share
• Having a larger market attendance means that Nokia's key stakeholders such as shareholders, suppliers, employees and managers are more confident (and motivated) by the existence of the company
• Brand acknowledgment can bring benefits such as a potentially higher customer base and improved corporate image
• Larger firms are likely to have the finances to invest in Research & Development (essential in Nokia's case)