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25 Jul 2020, 14:43
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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.
The author of the investment thesis contends that the firm should consider transfering their investment in Cola Loca to early Bird Coffee. Ultimatley, the author cites that an individual's demand for coffee increases as they age, whereas the deamand for soda decreases as an individual ages. This trend has been recognized to be consistent over a 40 year window. Additionally, more individuals are going to be aging over the next 20 years, so the author belives that the demand for coffee is going to grow. However, in making this argument the author fails to consider the need for per capital population growth rates, geographical focus, and finally, how revenue is derived. These missed points could have strengthed the author's argument and provided needed color.
Whenever the author is describing population growth rates, it is important to include per capita data. This infomration would have helped the author's audience discern if the demand is going to change as the potential market size grows. For example, the author mentioned that the number of older people is going to be increasing over the next 20 yeaers and that an individual's consumption of coffee increases as they age. However, without per capita infomration, we do not know if the increase in demand for coffee is going to track with the increase in older people. Had the author included per capita information, the argument would be significantly improved and likely more meaningful to the author's audience, financial professionals.
Secondly, the argument does not consider geographical components. We are not told if the statistics represent trends at the international, national, or local levels. This information is very important. It could be the case that the demand for coffee is increasing in regions that have lower average temeperatures, and this growth rate is outweighing the lower growth rates in warmer climates. This would mean that the data are skewed and are not a good picture of the market, as a whole. The author could have narrowed down on a geographic region. This would have provided need color to their analysis, and supported a bottom-up market research approach.
Finally, the author only cosniders one compoent of how revenue is calculated: quantity. Hypotethetically, even if the author's analysis is 100% about demand increasing for coffee, there still is the possibility that the price for coffee could be significantly less than the price for soda. This delta could result in the infestment firm earning less money, as a result. The author should include the cost info for consumers and producers; this infomration would be incredibly valuable to the report. Ultimatlely, the author would be able to demonstrate how the trends that they are seeing on the demand are supported by the changes in prices.
In conclusion, the author could have greatly strenghted their argument by including information on per capita growth rates, geographical information, and infomration on the costs for coffee and soda. In failing to include this infomration, the author paints a picture that lacks context: the audience does not know if the growth rates will be consident, if there will be geographical differences, or if the pricies will align with the growing demand.
“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.
The author of the investment thesis contends that the firm should consider transfering their investment in Cola Loca to early Bird Coffee. Ultimatley, the author cites that an individual's demand for coffee increases as they age, whereas the deamand for soda decreases as an individual ages. This trend has been recognized to be consistent over a 40 year window. Additionally, more individuals are going to be aging over the next 20 years, so the author belives that the demand for coffee is going to grow. However, in making this argument the author fails to consider the need for per capital population growth rates, geographical focus, and finally, how revenue is derived. These missed points could have strengthed the author's argument and provided needed color.
Whenever the author is describing population growth rates, it is important to include per capita data. This infomration would have helped the author's audience discern if the demand is going to change as the potential market size grows. For example, the author mentioned that the number of older people is going to be increasing over the next 20 yeaers and that an individual's consumption of coffee increases as they age. However, without per capita infomration, we do not know if the increase in demand for coffee is going to track with the increase in older people. Had the author included per capita information, the argument would be significantly improved and likely more meaningful to the author's audience, financial professionals.
Secondly, the argument does not consider geographical components. We are not told if the statistics represent trends at the international, national, or local levels. This information is very important. It could be the case that the demand for coffee is increasing in regions that have lower average temeperatures, and this growth rate is outweighing the lower growth rates in warmer climates. This would mean that the data are skewed and are not a good picture of the market, as a whole. The author could have narrowed down on a geographic region. This would have provided need color to their analysis, and supported a bottom-up market research approach.
Finally, the author only cosniders one compoent of how revenue is calculated: quantity. Hypotethetically, even if the author's analysis is 100% about demand increasing for coffee, there still is the possibility that the price for coffee could be significantly less than the price for soda. This delta could result in the infestment firm earning less money, as a result. The author should include the cost info for consumers and producers; this infomration would be incredibly valuable to the report. Ultimatlely, the author would be able to demonstrate how the trends that they are seeing on the demand are supported by the changes in prices.
In conclusion, the author could have greatly strenghted their argument by including information on per capita growth rates, geographical information, and infomration on the costs for coffee and soda. In failing to include this infomration, the author paints a picture that lacks context: the audience does not know if the growth rates will be consident, if there will be geographical differences, or if the pricies will align with the growing demand.
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