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65. The following appeared in a memo from the president of a chain of cheese stores located throughout the United States.
"For many years all the stores in our chain have stocked a wide variety of both domestic and imported cheeses. Last year, however, the five best-selling cheeses at our newest store were all domestic cheddar cheeses from Wisconsin. Furthermore, a recent survey by Cheeses of the World magazine indicates an increasing preference for domestic cheeses among its subscribers. Since our company can reduce expenses by limiting inventory, the best way to improve profits in all of our stores is to discontinue stocking many of our varieties of imported cheese and concentrate primarily on domestic cheeses."
To be a president of a chain of cheese stores located throughout the United States, the author’s analysis and conclusion in his memo seems logically at first glance. However, it contains several facets after a careful examination. I will discuss each of these facets in turn.
Based merely on unwarranted assumptions, the president draws the conclusion that their company can reduce expenses by limiting inventory, improve profits by discontinuing stocking imported cheeses and concentrating on domestic cheeses. Ignoring how ungrounded the conclusion is temporarily. The president takes the situation of “last year” into consideration first. But the situation may be unusual last year. All of us know things will change as time goes by. The condition of last year does not indicate that domestic cheddar cheeses will also be popular in the future.
Second, albeit the five best-selling cheeses at the newest store were all domestic cheddar cheeses, yet the situation at the newest store might not be representative of all stores in the United States. Likely the location of the newest store is special. The residents around the store are only fond of domestic cheddar cheeses.
Third, a recent survey by Cheeses of the World magazine was mentioned in the memo. But it does not provide any information about the subscribers of Cheese of the World. How broad the survey was? Whether the survey was limited in certain ways? Hence, the result of the survey may not be accepted. What’s more, the memo neglects to indicate how recently the survey was actually conducted. A survey should be close enough in time to conduct, so that the result can be reliable and indicate current circumstance.
Finally, in evaluating the president’s conclusion, to reduce expenses by limiting inventory is not a wise method. On the other hand, limiting inventory may reduce the profit because those customers who prefer imported cheeses may not come to the stores any more. In addition, many other better ways might be available to improve profits. For instance, stores have sales promotion every month, delivering coupons in a certain time, advertizing their products, etc. The last and the most important factor is the president does not provide any information about the actual profit of domestic and imported cheese respectively. Once the profit of domestic cheese is lower than the imported one, to discontinue stocking many of our varieties of imported cheese and concentrate primarily on domestic cheeses will be a fatal decision.
To sum up, the memo, while it seems logical at first, has several flaws as discussed above. The president’s unilateral perspective could lead the chain of cheese stores into a wrong sales way. To make the memo more convincing, the president would have to seek more information, such as the given areas above. It would then have been more logically acceptable. |
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