The following appeared in a memorandum from the owner of Movies Galore a chain of video rental stores In order to reverse the recent decline in our profits we must reduce operating expenses at Movies Galore s ten video rental stores Since we are famous fo

According to the prompt, owner of Movies Galore states that in order to reverse the decline in profits operating expenses at 10 of its store must be reduced. He bases it upon the fact that since their stores are famous for providing movies at cheap rate therefore the only viable option is to decrease the operation cost, as was done by one of their stores by closing it earlier and reducing the stock of movies. However, in order to properly assess the argument’s validity three pieces o f evidence are requires.

Firstly, it is not clear whether all of the stores of Movie Galore comparable. Maybe the some store are located in cosmopolitan area whereas other are located in rustic setting. The location in such case could become a significant factor in deciding a viable plan of action to reverse the declining profit – as closing a store earlier – at 6 P.M. - might work on rural setting where people do not wonder outside after the dark, but the same doesn’t hold good for the urban areas where people look for a fun activity after there work – which usually ends at around 6 P.M. Similarly, type of consumers can be an important factor, and schemes to take into account various types can again play a crucial role in discerning a viable policy. For instance – store that is in the community where number of youngsters is more might like new collection of movies rather than old one, while the store that is in the community where older population is in raft might like the old movies. Thus decline in profit in such locality might be helpful only when the 10 stores that have been selected fit according to age criteria as described above. If any of the above assumption comes true then the author’s argument doesn’t hold water.

Secondly, more information is required about the effects a downtown store had on its profit after reduction of operation cost. It is unclear whether such measure actually contributed in declining profit. For instance – a downtown store could have continually seen the decline in profit even after the reducing the operation cost , maybe the quality of movies that store had weren’t good and reduction in operation cost occur at the time when customers were already fed up with the poor quality of movies. In such cases even though the company reduced its spending, it wont be of help to boost profit. If even after reducing production cost doesn’t reverse the profit then the owner’s position is weakened.

In conclusion, the argument as it stands now, is considerably flawed due to its reliance on several unstated assumptions. If the evidence for above assertions are provided, and perhaps systematic research is conducted, then it will properly help in assessment of validity of the argument.