Here is the question --
The following appeared in a memorandum from the assistant manager of Pageturner Books:
"Over the past two years, Pageturner's profits have decreased by 5 percent, even though we have added a popular café as well as a music section selling CDs and tapes. At the same time, we have experienced an increase in the theft of merchandise. We should therefore follow the example of Thoreau Books, which increased its profits after putting copies of its most frequently stolen books on a high shelf behind the payment counter. By doing likewise with copies of the titles that our staff reported stolen last year, we too can increase profitability."
Here is my attempt --
The Pageturner book store has seen decrease in its profits over the past two years and attributes the thefts of merchandize as the reason for this trend. The assistant manager of the store argues that the books which were stolen over the past year need to be kept behind the payment counter in the high self to tackle the theft issue and thereby, increase the profitability. The argument has some serious flaws which need to be looked at first, before implementing the solution.
First, the author takes example of another book store, Thoreau Books, which increased profitability by keeping the most stolen books in the high self behind the counter. Author thinks that applying the same tactic would help the Pageturner book store also ; However, he/she may be missing the real reason behind the profitability of the other store. Although this tactic to prevent the theft ensures revenue and profit to some degree, there could be a number of other ways Thoreau Book store could have increased the profitability- reducing its cost, increasing the price margin, introducing new items so on and so forth. So, just tackling the theft may not ensure profitability.
Second, the author does not try to find out what caused the profits to decrease in last two years. That will give good insight to what measures to be taken to overcome the issue. Recently, the book store invested in a new café and started selling music CDs and tapes. The investment would be a cost to a company and hence would result in less profit. Moreover, if this investment does not generate as much profit as the other parts of the business or it incurs loss, then also, the overall profits will decrease. So, before finding a solution of the problem, first try to understand the root causes.
Finally, preventing the theft by keeping copies of last year's stolen books on a high shelf also has loopholes. The books stolen last year, may not be in demand for this year. So, keeping them in secured place would be unnecessary. At the same time, other books which are in demand this year will be exposed to thefts. Thus, this may be an ineffective solution.
Overall, the argument fails to understand the issue at stake - decrease in profits - and, it hastily proposes a solution, which is not convincing. The above open questions/ issues first need to be addressed before devising ways to increase profitability.
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Thank you for your time.
The following appeared in a memorandum from the assistant manager of Pageturner Books:
"Over the past two years, Pageturner's profits have decreased by 5 percent, even though we have added a popular café as well as a music section selling CDs and tapes. At the same time, we have experienced an increase in the theft of merchandise. We should therefore follow the example of Thoreau Books, which increased its profits after putting copies of its most frequently stolen books on a high shelf behind the payment counter. By doing likewise with copies of the titles that our staff reported stolen last year, we too can increase profitability."
Here is my attempt --
The Pageturner book store has seen decrease in its profits over the past two years and attributes the thefts of merchandize as the reason for this trend. The assistant manager of the store argues that the books which were stolen over the past year need to be kept behind the payment counter in the high self to tackle the theft issue and thereby, increase the profitability. The argument has some serious flaws which need to be looked at first, before implementing the solution.
First, the author takes example of another book store, Thoreau Books, which increased profitability by keeping the most stolen books in the high self behind the counter. Author thinks that applying the same tactic would help the Pageturner book store also ; However, he/she may be missing the real reason behind the profitability of the other store. Although this tactic to prevent the theft ensures revenue and profit to some degree, there could be a number of other ways Thoreau Book store could have increased the profitability- reducing its cost, increasing the price margin, introducing new items so on and so forth. So, just tackling the theft may not ensure profitability.
Second, the author does not try to find out what caused the profits to decrease in last two years. That will give good insight to what measures to be taken to overcome the issue. Recently, the book store invested in a new café and started selling music CDs and tapes. The investment would be a cost to a company and hence would result in less profit. Moreover, if this investment does not generate as much profit as the other parts of the business or it incurs loss, then also, the overall profits will decrease. So, before finding a solution of the problem, first try to understand the root causes.
Finally, preventing the theft by keeping copies of last year's stolen books on a high shelf also has loopholes. The books stolen last year, may not be in demand for this year. So, keeping them in secured place would be unnecessary. At the same time, other books which are in demand this year will be exposed to thefts. Thus, this may be an ineffective solution.
Overall, the argument fails to understand the issue at stake - decrease in profits - and, it hastily proposes a solution, which is not convincing. The above open questions/ issues first need to be addressed before devising ways to increase profitability.
--------------------
If you have any feedback, please share.
Thank you for your time.
