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 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. By implementing similar changes in our other stores, Movies Galore can increase profits without jeopardizing our reputation for offering great movies at low prices."

Write a response in which you examine the stated and/or unstated assumptions of the argument. Be sure to explain how the argument depends on these assumptions and what the implications are for the argument if the assumptions prove unwarranted.

In the given memorandum, the Movies Galore owner asserts that there should be a reduction in operating expenses at his or her stores in order to make up for the loss of recent profits. However, the author fails to provide a logical explanation regarding his or her reasoning for this proposal and provides several instances of jumping to conclusions and providing weak & dubious evidence.

To begin with, the owner claims that because Movies Galore is famous for special bargains that they should not increase their rental prices. However, simply being popular is not a good enough reason to keep rental prices low, as there are several other factors regarding profit. For example, despite being a popular company, movie goers may not want to go to Movies Galore if they do not find the specific films that they are looking for and will therefore go to other competitor companies, meaning that changing rental prices will not help attract those people. Additionally, potential customers may still consider Movies Galore if it is cheaper than its competitors even if the price does go up. Therefore, the owner should consider more than just fame before determining the best course of action for increasing overall profits for the company.

Furthermore, the owner asserts that the store in downtown Marston decreased its operating expenses by closing at 6 PM instead of 9 PM and reducing its stock of movies from more than 5 years ago. However, this piece of information reveals nothing about the resulting net gain or loss in profit, leaving a possibility that this decrease in operating expenses could have actually led to a decrease in profit, not increase. For instance, movie enthusiasts may be interested in watching movies later at night after 6 PM, making Movies Galore not a valid option for them as it closes before they get to rent and watch a movie. On top of this, many customers may actually wish to rent older movies and will be put off by the lack of anything but recent movies, once again resulting in a loss of potential profit and good reputation. Additionally, both of these situations could lead to the customers going to competitor companies, increasing their reputation and decrease Movies Galore’s, which in turn could create a cycle of decrease in reputation and net gain until the store is forced to close down. As a result, the author needs to meticulously scrutinize the effects of the decisions of this specific store on the company’s profit.

Finally, the owner propounds that implementing similar changes to the ones discussed in the last paragraph at different stores in different locations will result in higher profit without loss of reputation for cheap movies. But wary perusing of this statement shows, once again, a lapse in judgement and raises several possible bad situations. To illustrate, while movie goers in downtown Marston may prefer watching movies earlier in the day, those in other regions may prefer to watch it later in the day after 6 PM. Furthermore, customers in those other areas may prefer older movies to newer ones. These different scenarios could result in a loss of Movies Galore’s reputation that the owner did not foresee, and could result in an unexpected loss of profit. Additionally, the date of the movies and the time of their release may not even be what is causing this predicament, but something else, such as a lack of a specific genre, or the failure to quickly have a new movie available before other competitors do. Because of the various scenarios plausible, the author needs to closely evaluate the factors that are affecting profit in each store in each region and create a plan that will work for each individual store location.

In conclusion, the owner of Movies Galore’s argument presented in his or her memorandum is unpersuasive and illogical in its arguments and subsequent proof. To bolster it further, the owner should provide more concrete and less refutable evidence that clearly highlights which solutions will help increase profits without risking loss of profit or reputation in other areas. In order to come up with such a plan, the author should come up with various strategies to gather data regarding this invidence, such as a create regional surveys to see what people’s preferences are and use that information to better adjust how the different stores in these regions operate and what movies they provide for customers, or a report of profit gain and loss over time. However, without a definitive answer to why the store is losing money, the owner will not be able to come up with a strategy to save his or her business.