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18 Jun 2018, 18:08
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PROMPT:
The following is part of a business plan created by the management of the Megamart grocery store: “Our total sales have increased this year by 20 percent since we added a pharmacy section to our grocery store. Clearly, the customer’s main concern is the convenience afforded by one-stop shopping. The surest way to increase our profits over the next couple of years, therefore, is to add a clothing department along with an automotive supplies and repair shop. We should also plan to continue adding new departments and services, such as a restaurant and a garden shop, in subsequent years. Being the only store in the area that offers such a range of services will give us a competitive advantage over other local stores.”
RESPONSE:
The argument stated above is faulty for a number of reasons related to the store management's initial assumption that there is a cause and effect relationship between the increase in sales revenue and the horizontal departmental expansion within the store.
Firstly, the management wrongly assumes that the twenty percent sales increase is caused by the inclusion of the pharmacy section as a section within the store. Although, this might be true, the argument does not provide any evidence of the effects of the store's expansion on sales, and unjustifiably assumes a causality between the two. The argument would be much stronger if the management were to provide data that would support their conclusions.
Secondly, after making the faulty assumption of a cause-effect relationship between revenue increase and horizontal departmental expansion, the management team makes another unwarranted assumption with regard to the customer's main concern, which according to the store is the convenience afforded by one stop shopping. Nevertheless, this assumption again lacks any justifications, which severely undermines the argument's credibility. If the management team were to explain why they are making this assumption and provide the evidence that they used in the process of their analysis of the question of the consumer's main concern the argument would be much more convincing.
Lastly, the management team makes yet another mistake in assuming that if the store expands its range of services over time it will gain a competitive advantage over other local stores. This assumption is rather weak because of the management's underlying assumption that the other local stores would not change their business strategies, and expand the range of their services, in order to become more competitive.
Because the argument makes several weak assumptions, it fails to make a convincing case that expanding the store's range of services would lead to an increase in sales and local market influence over time.
The following is part of a business plan created by the management of the Megamart grocery store: “Our total sales have increased this year by 20 percent since we added a pharmacy section to our grocery store. Clearly, the customer’s main concern is the convenience afforded by one-stop shopping. The surest way to increase our profits over the next couple of years, therefore, is to add a clothing department along with an automotive supplies and repair shop. We should also plan to continue adding new departments and services, such as a restaurant and a garden shop, in subsequent years. Being the only store in the area that offers such a range of services will give us a competitive advantage over other local stores.”
RESPONSE:
The argument stated above is faulty for a number of reasons related to the store management's initial assumption that there is a cause and effect relationship between the increase in sales revenue and the horizontal departmental expansion within the store.
Firstly, the management wrongly assumes that the twenty percent sales increase is caused by the inclusion of the pharmacy section as a section within the store. Although, this might be true, the argument does not provide any evidence of the effects of the store's expansion on sales, and unjustifiably assumes a causality between the two. The argument would be much stronger if the management were to provide data that would support their conclusions.
Secondly, after making the faulty assumption of a cause-effect relationship between revenue increase and horizontal departmental expansion, the management team makes another unwarranted assumption with regard to the customer's main concern, which according to the store is the convenience afforded by one stop shopping. Nevertheless, this assumption again lacks any justifications, which severely undermines the argument's credibility. If the management team were to explain why they are making this assumption and provide the evidence that they used in the process of their analysis of the question of the consumer's main concern the argument would be much more convincing.
Lastly, the management team makes yet another mistake in assuming that if the store expands its range of services over time it will gain a competitive advantage over other local stores. This assumption is rather weak because of the management's underlying assumption that the other local stores would not change their business strategies, and expand the range of their services, in order to become more competitive.
Because the argument makes several weak assumptions, it fails to make a convincing case that expanding the store's range of services would lead to an increase in sales and local market influence over time.
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