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."
Discuss how well reasoned . . . etc
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My Response:
The above argmument of the investment and financial consulting firm that it should consider transferring funds from Cola Loca to Early Coffee since the number of adults in future will siginificantly increase as the population ages over the next 20 years seems good at first glance.However, when analysed deeply shows a number of assumptions it fails to consider and flaws that might arise if the argument taken as is.
Firstly, the argument presents a study thats suggests, an average coffee drinker's consumption of coffee increases with age,from age 10 through age 60, without providing any numeric data or which geographical area or any statistic which will support the argument.Without any concreate data it becomes difficult to come to any conclusion that the consumption will actually decrease.Further, the other side of the argument, it does not mention anything about the probabilty of the future population.What if the popoulation in future increases significantly due to any reason(for eg:people may migrate to that country) of which many are in their twenties and thus Cola Loca consumption may increase dramtically thus failing the investors plans.Further, consider what happens if the Cola Loca invests abroad & reaps big profits from other countries which can be manyfold in todays global environment.Also, the assumption about past data and applying it to the future can never be appropraiate.It has a number other dependent factors to be considered.
Secondly, the argument mentions, people above 60 will continue to drink Early Coffee & hence the profits will continue to rise which is completed flawed since it fails to consider how many years will people in the 60s continue to drink coffee & how much profit actually each of the two compared company make with their sale.Another important point is that it does not comapre or mention the manufactring cost of coffee Vs cola.For eg the final price of coffee depends essentially on its ingredient which are milk & coffee beans (which may fluctate drastically) to that compared to cola which are water, sugar & some artifical cola taste maker.
Thus, the above arument seems flawed & does not consider very basic points & the argument may be better considered if above points are considered.
"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."
Discuss how well reasoned . . . etc
---------------------------------------------------------------------------------------------------
My Response:
The above argmument of the investment and financial consulting firm that it should consider transferring funds from Cola Loca to Early Coffee since the number of adults in future will siginificantly increase as the population ages over the next 20 years seems good at first glance.However, when analysed deeply shows a number of assumptions it fails to consider and flaws that might arise if the argument taken as is.
Firstly, the argument presents a study thats suggests, an average coffee drinker's consumption of coffee increases with age,from age 10 through age 60, without providing any numeric data or which geographical area or any statistic which will support the argument.Without any concreate data it becomes difficult to come to any conclusion that the consumption will actually decrease.Further, the other side of the argument, it does not mention anything about the probabilty of the future population.What if the popoulation in future increases significantly due to any reason(for eg:people may migrate to that country) of which many are in their twenties and thus Cola Loca consumption may increase dramtically thus failing the investors plans.Further, consider what happens if the Cola Loca invests abroad & reaps big profits from other countries which can be manyfold in todays global environment.Also, the assumption about past data and applying it to the future can never be appropraiate.It has a number other dependent factors to be considered.
Secondly, the argument mentions, people above 60 will continue to drink Early Coffee & hence the profits will continue to rise which is completed flawed since it fails to consider how many years will people in the 60s continue to drink coffee & how much profit actually each of the two compared company make with their sale.Another important point is that it does not comapre or mention the manufactring cost of coffee Vs cola.For eg the final price of coffee depends essentially on its ingredient which are milk & coffee beans (which may fluctate drastically) to that compared to cola which are water, sugar & some artifical cola taste maker.
Thus, the above arument seems flawed & does not consider very basic points & the argument may be better considered if above points are considered.
