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 for our special bargains,
raising our rental prices is not a viable way to improve profits. Last month our store in
downtown Marston significantly decreased its operating expenses by closing at 6:00 P.M.
rather than 9:00 P.M. and by reducing its stock by eliminating all movies released more than
five years ago. Therefore, in order to increase profits without jeopardizing our reputation for
offering great movies at low prices, we recommend implementing similar changes in our
other nine Movies Galore stores.”
Write a response in which you discuss what questions would need to be answered in order to
decide whether the recommendation is likely to have the predicted result. Be sure to explain
how the answers to these questions would help to evaluate the recommendation.
The owner of Movies Galore appears to make a great case for reducing operating expenses by closing earlier in all Movies Galore stores as well as eliminating movies older than five years ago. On a closer look however, his recommendation his based on a faulty premise rife with unwarranted assumptions. To accept his recommendation, it is necessary for him to answer the following questions.
Firstly, do the customers majorly rent movies from Movies Galore because of the special bargains? While he made the point that Movies Galore is famous for its special bargains, it doesn't necessarily mean this is the major reason that customers patronize the store. Some may prefer Movies Galore because of its favorable distnace from their homes. It is also possible that most customers rent from the store because it has a great range of movies and provides the latest movies. In the event that either of these is the major catch for the customers, raising the price might be a viable way of increasing profits.
Also, do the customers in all nine Movies Galore shops behave the same way? The owner generalises that the changes that worked in downtown Marston will also work in all other stores. For example, it may be that customers in downtown Marston are mostly night workers and thus rent movies during the day while they are resting, while customers in the other stores rent movies at night. If the stores close by 6pm, this would greatly reduce sales and the changes will work against the store. Similarly, it may be that customers at the other stores prefer renting old movies. Removing movies older than five years ago from the stores will also have a negative effect on profits. If the owner is able to answer this question and proves that customers in all the stores watch movies at the same time and like movies less than five years old, it would become possible to implement this recommendation in those stores.
In addition to those questions, it is important for the owner to answer the question of whether the storage costs of movies from more than five years ago is a significant cost in all stores. For example, some stores may have a large storage facility, which they must pay for whether it is filled to the capacity or not. Similarly, some stores may also have mostly movies from less than five years ago. In either of these cases, reducing the stock of movies from more than five years ago will have no effect on operating expenses and the recommendation would be redundant.
Finally, the owner must answer this question: will the loss of sales from increasing prices outweigh the gains from increasing prices? It is quite possible that the reduction in demand for movies from Movies Galore will not lead to a reduction in revenue. For example, if the current average price of movies were 100 dollars, with an average of 500 movies rented in a day across all stores, and the price were increased to an avergage of 150 dollars per movie, leading to a fall in average number of movies rented per day to 400 movies, this will lead to an increase in revenue overall. Hence, the owner of Movies Galore must answer this question to prove that increasing prices is not a viable way of improving profit.
In conclusion, this recommendation is based on a faulty argument with a lot of questions begging to be answered. If the owner of the store can provide answers to questions on the similarity of the stores' cost structures, similarity of consumers' behaviours and effect of an increase in prices on demand, it becomes possible to evaluate his argument and consider his recommendation.
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Comments
e-rater score report
Attribute Value Ideal
Final score: 4.0 out of 6
Category: Good Excellent
No. of Grammatical Errors: 13 2
No. of Spelling Errors: 8 2
No. of Sentences: 25 15
No. of Words: 622 350
No. of Characters: 2915 1500
No. of Different Words: 231 200
Fourth Root of Number of Words: 4.994 4.7
Average Word Length: 4.686 4.6
Word Length SD: 2.436 2.4
No. of Words greater than 5 chars: 216 100
No. of Words greater than 6 chars: 128 80
No. of Words greater than 7 chars: 82 40
No. of Words greater than 8 chars: 50 20
Use of Passive Voice (%): 0 0
Avg. Sentence Length: 24.88 21.0
Sentence Length SD: 11.438 7.5
Use of Discourse Markers (%): 0.84 0.12
Sentence-Text Coherence: 0.352 0.35
Sentence-Para Coherence: 0.573 0.50
Sentence-Sentence Coherence: 0.14 0.07
Number of Paragraphs: 6 5
Grammar and spelling errors:
Line 3, column 181, Rule ID: EN_CONTRACTION_SPELLING
Message: Possible spelling mistake found
Suggestion: doesn't
... is famous for its special bargains, it doesnt necessarily mean this is the major reas...
^^^^^^
Line 7, column 73, Rule ID: WHETHER[3]
Message: Wordiness: Shorten this phrase to the shortest possible suggestion.
Suggestion: whether; the question whether
...it is important for the owner to answer the question of whether the storage costs of movies from more t...
^^^^^^^^^^^^^^^^^^^^^^^
Transition Words or Phrases used:
also, finally, first, firstly, hence, however, if, look, may, similarly, so, thus, well, while, for example, in addition, in conclusion, as well as
Attributes: Values AverageValues Percentages(Values/AverageValues)% => Comments
Performance on Part of Speech:
To be verbs : 21.0 19.6327345309 107% => OK
Auxiliary verbs: 20.0 12.9520958084 154% => OK
Conjunction : 10.0 11.1786427146 89% => OK
Relative clauses : 12.0 13.6137724551 88% => OK
Pronoun: 46.0 28.8173652695 160% => Less pronouns wanted
Preposition: 86.0 55.5748502994 155% => OK
Nominalization: 16.0 16.3942115768 98% => OK
Performance on vocabulary words:
No of characters: 2987.0 2260.96107784 132% => OK
No of words: 621.0 441.139720559 141% => Less content wanted.
Chars per words: 4.80998389694 5.12650576532 94% => OK
Fourth root words length: 4.991980728 4.56307096286 109% => OK
Word Length SD: 2.52119304802 2.78398813304 91% => OK
Unique words: 241.0 204.123752495 118% => OK
Unique words percentage: 0.38808373591 0.468620217663 83% => More unique words wanted or less content wanted.
syllable_count: 946.8 705.55239521 134% => OK
avg_syllables_per_word: 1.5 1.59920159681 94% => OK
A sentence (or a clause, phrase) starts by:
Pronoun: 13.0 4.96107784431 262% => Less pronouns wanted as sentence beginning.
Article: 4.0 8.76447105788 46% => OK
Subordination: 6.0 2.70958083832 221% => Less adverbial clause wanted.
Conjunction: 1.0 1.67365269461 60% => OK
Preposition: 7.0 4.22255489022 166% => OK
Performance on sentences:
How many sentences: 25.0 19.7664670659 126% => OK
Sentence length: 24.0 22.8473053892 105% => OK
Sentence length SD: 62.2376863323 57.8364921388 108% => OK
Chars per sentence: 119.48 119.503703932 100% => OK
Words per sentence: 24.84 23.324526521 106% => OK
Discourse Markers: 5.88 5.70786347227 103% => OK
Paragraphs: 6.0 5.15768463074 116% => OK
Language errors: 2.0 5.25449101796 38% => OK
Sentences with positive sentiment : 12.0 8.20758483034 146% => OK
Sentences with negative sentiment : 7.0 6.88822355289 102% => OK
Sentences with neutral sentiment: 6.0 4.67664670659 128% => OK
What are sentences with positive/Negative/neutral sentiment?
Coherence and Cohesion:
Essay topic to essay body coherence: 0.255565405066 0.218282227539 117% => OK
Sentence topic coherence: 0.0929090251206 0.0743258471296 125% => OK
Sentence topic coherence SD: 0.0627702604676 0.0701772020484 89% => OK
Paragraph topic coherence: 0.151267507722 0.128457276422 118% => OK
Paragraph topic coherence SD: 0.049474576285 0.0628817314937 79% => OK
Essay readability:
automated_readability_index: 13.6 14.3799401198 95% => Automated_readability_index is low.
flesch_reading_ease: 55.58 48.3550499002 115% => OK
smog_index: 3.1 7.1628742515 43% => Smog_index is low.
flesch_kincaid_grade: 11.5 12.197005988 94% => OK
coleman_liau_index: 10.91 12.5979740519 87% => OK
dale_chall_readability_score: 7.73 8.32208582834 93% => OK
difficult_words: 114.0 98.500998004 116% => OK
linsear_write_formula: 11.5 12.3882235529 93% => OK
gunning_fog: 11.6 11.1389221557 104% => OK
text_standard: 12.0 11.9071856287 101% => OK
What are above readability scores?
---------------------
Write the essay in 30 minutes.
Rates: 66.67 out of 100
Scores by essay e-grader: 4.0 Out of 6
---------------------
Note: the e-grader does NOT examine the meaning of words and ideas. VIP users will receive further evaluations by advanced module of e-grader and human graders.