The following appeared in a memorandum from the owner of Movies Galore, a chain of movie-rental stores."In order to stop the recent decline in our profits, we must reduce operating expenses at Movies Galore's ten movie-rental stores. Since we are famous f

An owner of a movie selling company is sending a memorandum at his stores indicating that they should limit their opening hours and stop selling movies older than 5 years in order to reduce the expenses and thus increasing profits for the company. The owner makes a series of assumptions in order to support his opinion which if proved unbased may lead to serious problems for the company. In the following paragraphs I found and prioritized from most significant to less the main assumptions the owner is making.

The owner of Movies Galore is falling to a fallacy involving a weak connection among two facts. More especially he states that if certain actions are made in one store, such as closing the shop earlier or seize selling movies older than 5 years old the same actions should be made to other stores too. This assumption he makes is not based on any evidence. Consider for example the following case, in another store in Upper EastWood which made the same actions as the store in the memorandum the clients who entered the store were signifcantly lower in numbers than before because in Upper Eastwood clients like to shop after 6 pm or they like mostly old time classic movies.As a result the profits fell significantly. This example case if true could seriously undermine the conclusion of the owner that similar changes should be made to other stores too.

The owner is also assuming in his memorandum that his company is famous for the bargains it has on selling movies. However, since the profits of the company are significantly lower than before and the bargains continue to be the same then this assumption is probably unwarranted. For instance, instead of lowering the standards and the expenses by limiting the hours of open time of the shops, if the company decided to make a slight increase in the price and still manage to sell the movies lower than their competitors then the profits would increase even though the company would not be famous for their extrem bargains. The example above indicates that the assumption the owner makes that the company is famous for her bargains can be proved that is is without a solid basis and thus undermining the conclusion and the opinion of the owner.

Finally, the owner assumes that by limiting the expenses of the stores by closing earlier and stop selling movies older than 5 years, the profits will go up but he does not mention the percent the profits will go up. Thus, he assumes that the combined percent of the profits from all the stores would be large enough to protect the company from bankruptcy. However if in reality, the combined profits prove to be just a slight more than the previous the company would be in a worse case than before due to the expenses needed for the changes. For example, if the company already owes 20% percent of her profits to providers and taxes and the combined profit increase is at 5% and another 10% are the expenses needed for the change then the company would most probably file for bankruptcy. The above example indicates that assuming the profits will be high enough to save the company from its current debts has to be based on solid evidence such as consumer surveys otherwise the effects for the future of the company will be detrimental.

To sum up, in this essay the assumptions made by the owner of the company in his memorandum and the implications that may occur if these assumptions prove unbased were mostly depicted through examples. Assuming that changes made to one store can be applied to every store, that lowering the expenses will increase profits and that even if there is a profit increase this increase will be high enough to sustain the company can lead to serious effects if they prove unwarranted or they could lead to a risky movement that will boost the company's profits to high levels again.