Berry Index

The Berry Index (BI) indicates the degree of diversification of a group . The Berry Index is based on the Herfindahl Index . It is calculated as the complement of the sum of the squared sales shares (in%) of all independent areas of a company.

${\displaystyle BI=1-\sum _{i=1}^{n}{p_{i}^{2}}}$

Example: let the sales shares in percent:: 10% : 20% : 30% : 40% ${\displaystyle p_{i}}$
${\displaystyle p_{1}}$
${\displaystyle p_{2}}$
${\displaystyle p_{3}}$
${\displaystyle p_{4}}$

Calculation:

${\displaystyle {\text{Berry-Index}}=1-(0{,}1^{2}+0{,}2^{2}+0{,}3^{2}+0{,}4^{2})=0{,}7}$

The value of the Berry Index is between 0 and 1. 0 means not diversified (single business or complete specialization in one product), the more the value tends towards 1, the more diversified the company as a whole.

literature

• Harald Hungenberg: Strategic Management in Companies: Goals - Processes - Procedures , Springer, 2012, ISBN 9783834938411 , p. 494 ff [1]
• Katherina Gehrmann: Diversification Management in Service Networks , Springer, 2014, ISBN 978-3-658-02488-8 , p. 170 f

Web links

• Determinants of diversification in the agricultural sector p. 8