coffee drinker’s consumption of coffee increases with age,
[#permalink]
15 Jun 2020, 12:44
Looking for any insight and feedback! Thank you!
The following appeared as part of the business plan of an investment and financial consulting firm:
“Studies suggest that an average coffee drinker’s consumption of coffee increases with age, from age 10 through age 60. Even after age 60, coffee consumption remains high. The average cola drinker’s consumption of cola, however, declines with increasing age. Both of these trends have remained stable for the past 40 years. Given that the number of older adults will significantly increase as the population ages over the next 20 years, it follows that the demand for coffee will increase and the demand for cola will decrease during this period. We should, therefore, consider transferring our investments from Cola Loca to Early Bird Coffee.”
Discuss how well reasoned you find this argument. In your discussion be sure to analyze the line of reasoning and the use of evidence in the argument. For example, you may need to consider what questionable assumptions underlie the thinking and what alternative explanations or counter examples might weaken the conclusion. You can also discuss what sort of evidence would strengthen or refute the argument, what changes in the argument would make it more logically sound, and what, if anything, would help you better evaluate its conclusion.
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While this argument uses relevant facts and information in an attempt to draw a conclusion, the conclusion is quite far-fetched in reality. The argument's conclusion to transfer investments from Cola Loca to Early Bird Coffee is much too extreme to be considered logical and worthwhile for an investor, requiring further information to be considered reasonable.
First, the argument does not consider how much coffee demand will increase and how much cola demand will decrease. If these changes are relatively large, the conclusion may make sense. However, if the demand for coffee only increases a small amount and demand for cola only decrease a small amount, transferring all investments would be far too extreme and can potentially cause a negative impact to the investor. This leads to another lacking aspect of the argument - it doesn't take into consideration transferring only some investments. From the argument, it can be inferred that the vague language of the firm intends to transfer all investments. But, if they had information on the significance of the demand changes, they would be able to draw a better conclusion regarding how much of their investments might be beneficial to transfer.
Second, the argument lacks information regarding these two specific businesses, Cola Loca and Early Bird Coffee, themselves. Without knowing how these businesses are doing economically and how the changes in demand affect them specifically, it is possible to know which to invest in. For example, it would be helpful to know the locations and the customer demographic of these businesses in order to know how the demand changes are affecting them. Maybe these businesses are located on a college campus where their primary target market is young students between the ages of 18 and 22. In this case, the demand changes as a result of increased number of adults will likely not affect these businesses. Thus, transferring investments might not be beneficial.
All in all, this conclusion needs more information to be supported. As it is now, it would be way too far-fetched to transfer investments from one business to another. There is limited information and all relevant information has not been entirely considered.