Halcyon Bank: This Market Size Looks Too Big
Consulting
medium35 min0 submissionsGoldman Sachs
Scenario
A junior consultant has sized the annual replacement market for a household appliance in UK. The number is being used to justify a £127 M capacity investment.
Their working, verbatim
Population is 158m. Average household size is 4, so there are about 40m households.
Penetration of this appliance is 18%.
Appliances are replaced every 7 years.
So annual replacement demand = 158m × 18% ÷ 7 = 4.1m units per year.
At £1221 per unit, that is a market of roughly £4,961 M a year.
The partner has asked you to check it before it goes in the deck.
Supporting data
derived hints
- corrected units m
- 1
- overstatement multiple
- 4
stated working
- households m
- 40
- population m
- 158
- household size
- 4
- price per unit
- 1221
- stated units m
- 4.1
- penetration pct
- 18
- replacement years
- 7
Your task
Check the estimate. Your answer should provide:
- Analysis — find the error and quantify how much it distorts the answer.
- Risks — what depends on this number being right.
- Recommendation — the corrected size, computed, and how you would sanity-check it.
State any assumptions you make.
Ready to move forward? Up next: Marlow Chemicals: Pressure-Test This RecommendationNext question
How you'll be graded
100 points, 60% to pass.
- explanation20
- residual review15
- error identification35
- quantitative correction30
Hint
Reveal suggested structure
Unit consistency; households vs individuals; recompute; sanity-check against a known anchor