The following appeared as part of the business plan of an investment and financial consulting firm:
“Studies suggest that an average coffee drinker’s consumption of coffee increases with age, from age 10 through age 60. Even after age 60, coffee consumption remains high. The average cola drinker’s consumption of cola, however, declines with increasing age. Both of these trends have remained stable for the past 40 years. Given that the number of older adults will significantly increase as the population ages over the next 20 years, it follows that the demand for coffee will increase and the demand for cola will decrease during this period. We should, therefore, consider transferring our investments from Cola Loca to Early Bird Coffee.”
The investment and financial consulting firm points out that the demand for coffee will increase while the demand for cola will decrease, and in turn suggests a plan to transfer its investment from Cola Loca to Early Bird Coffee. However, the firm’s claim is based on several unsubstantiated assumptions which make it unconvincing as it appears.
The firm first cites studies on average coffee drinker’s consumption of coffee and average cola drinker’s consumption of cola: the formal increases with age, whereas the latter declines with increase age. It also mentions that these trends have remained stable for the past 40 years. However, the firm does not provide any evidence to support that these treads will continue over the next two decades. Many factors may change drinker’s habit. For example, if a scientific research shows that coffee has a big negative impact on body health, coffee drinkers perhaps will drink more cola instead.
Given that the trends above will continue in the future, the firm unfairly assumes that the demand for coffee will increase while the demand for cola will drop off. It might be true that the number of older people will significantly increase over the next 20 years; however, the firm ignores the possible rise in the population of younger people. If the younger people’s increase outweighs the older adults increase, then the demand for cola will actually increase rather than decline.
Even if the two assumptions above are warranted, the firm’s choice for Early Bird Coffee is still questionable. A higher demand for coffee does not necessarily ensure a higher sale of Early Bird Coffee. In fact, the firm provides no information about this particular brand, such as market share, consumer acceptance and other competitive brands. Without a detail market analysis, it is too hasty to claim that Early Bird Coffee will take advantages during the fierce completion.
To sum up, the firm’s plan relies on several unproven assumptions mentioned above. To strength this argument, the firm should provide more evidence about whether people’s drink preference will remain the same as current treads. The firm also needs to provide detail information on population in the next two decades. Finally, the firm has to make a full analysis on coffee market to support its choice on Early Bird.
“Studies suggest that an average coffee drinker’s consumption of coffee increases with age, from age 10 through age 60. Even after age 60, coffee consumption remains high. The average cola drinker’s consumption of cola, however, declines with increasing age. Both of these trends have remained stable for the past 40 years. Given that the number of older adults will significantly increase as the population ages over the next 20 years, it follows that the demand for coffee will increase and the demand for cola will decrease during this period. We should, therefore, consider transferring our investments from Cola Loca to Early Bird Coffee.”
The investment and financial consulting firm points out that the demand for coffee will increase while the demand for cola will decrease, and in turn suggests a plan to transfer its investment from Cola Loca to Early Bird Coffee. However, the firm’s claim is based on several unsubstantiated assumptions which make it unconvincing as it appears.
The firm first cites studies on average coffee drinker’s consumption of coffee and average cola drinker’s consumption of cola: the formal increases with age, whereas the latter declines with increase age. It also mentions that these trends have remained stable for the past 40 years. However, the firm does not provide any evidence to support that these treads will continue over the next two decades. Many factors may change drinker’s habit. For example, if a scientific research shows that coffee has a big negative impact on body health, coffee drinkers perhaps will drink more cola instead.
Given that the trends above will continue in the future, the firm unfairly assumes that the demand for coffee will increase while the demand for cola will drop off. It might be true that the number of older people will significantly increase over the next 20 years; however, the firm ignores the possible rise in the population of younger people. If the younger people’s increase outweighs the older adults increase, then the demand for cola will actually increase rather than decline.
Even if the two assumptions above are warranted, the firm’s choice for Early Bird Coffee is still questionable. A higher demand for coffee does not necessarily ensure a higher sale of Early Bird Coffee. In fact, the firm provides no information about this particular brand, such as market share, consumer acceptance and other competitive brands. Without a detail market analysis, it is too hasty to claim that Early Bird Coffee will take advantages during the fierce completion.
To sum up, the firm’s plan relies on several unproven assumptions mentioned above. To strength this argument, the firm should provide more evidence about whether people’s drink preference will remain the same as current treads. The firm also needs to provide detail information on population in the next two decades. Finally, the firm has to make a full analysis on coffee market to support its choice on Early Bird.
