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[GRE: Analyze an Argument] Reduce operating expenses to reverse decline in profits


testtaker 6 / 20 4  
Aug 23, 2013   #1
Again, I exceeded the 30-minute time limit. It took 33 minutes.

The prompt:

The following appeared in a memorandum from the owner of Movies Galore, a chain of video rental stores.

"In order to reverse the recent decline in our profits, we must reduce operating expenses at Movies Galore's ten video 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. Therefore, in order to increase profits without jeopardizing our reputation for offering great movies at low prices, we recommend implementing similar changes in our other nine Movies Galore stores."

Write a response in which you discuss what questions would need to be answered in order to decide whether the recommendation is likely to have the predicted result. Be sure to explain how the answers to these questions would help to evaluate the recommendation.

My response:

The owner of Movies Galore, in an attempt to reverse the recent decline in their profit while maintaining reputation for offering great movies at low prices, recommended a reduction in operating expenses by closing the stores earlier and eliminating old movies from the stores. The recommendation comes from an observation: one of it's stores significantly decreased its operating expenses by closing at 6:00 P.M. rather than at 9:00 P.M. and by reducing its stock by eliminating all movies released more than five years ago. However, while the observation talks about the reduced operating cost, it gives us no information about reversing the decline in profits. If the point is to increase the profits, the owner of Movies Galore should be more analytical about the observation he/she makes from the the changed operation policy of the downtown Marston store.

The Movies Galore video rental store is famous for offering great movies at low prices and it wishes to maintain this reputation. That's why, it is unwilling to raise the prices. Since there are no data regarding comparative prices of other similar stores, it is difficult to support the decision of not raising prices by Movies Galore. Does the purchase of videos from other similar stores cost slightly more than that of Movies Galore? Or, is it considerably higher? If the answer to the second question is a yes, then raising the price of videos would not harm the sales by Movies Galore. By raising the price slightly, it can compensate the operating expenses and start to make profits thereby.

The downtown store reduced its expenses by reducing it's operating time. A question can be raised here. Did this reduction reverse the decline in profit? Reducing operating time by 3 hours is significant. This is very probable that it also reduced the amount of sales while it reduced the expenses. Does these two reduction result in increased profits? If not, there is no point in reducing the operating time and closing the store earlier.

Another method that the particular store followed to reduce expenses was to eliminate older videos. This act is not much rational in the sense that the demand of old classical movies is always high. People will always like to watch the oldies such as 'The Godfather', 'The good, the bad and the ugly', 'Twelve angry men' and so on. Eliminating these classics from store would do no good in terms of reversing decline in profits because people would go for other stores to collect these movies.

The owner of the Movies Galore was not much careful when he/she suggested the the similar policy, taken by downtown Marston store, should be applied to all other stores. There are some assumptions taken as true without proof, and lack of relevant data in the argument make the suggestion by the owner not worth following.

shadman19922 21 / 74 10  
Aug 23, 2013   #2
Hi testtaker!

You seem to have a decent response. Let's have a closer look:

The downtown store reduced its expenses by reducing it's operating time. A question can be raised here. Did this reduction reverse the decline in profit? Reducing operating time by 3 hours is significant. This is very probable that it also reduced the amount of sales while it reduced the expenses. Does these two reduction result in increased profits? If not, there is no point in reducing the operating time and closing the store earlier.

You can also extend this argument by saying that just because closing the Marston store reduced costs does not necessarily mean that it would work well with the Galore stores. Also, you can also mention that Marston may have reduced stocks and operating hours due to reasons other than a reduction of costs in mind.

Another method that the particular store followed to reduce expenses was to eliminate older videos. This act is not much rational in the sense that the demand of old classical movies is always high. People will always like to watch the oldies such as 'The Godfather', 'The good, the bad and the ugly', 'Twelve angry men' and so on. Eliminating these classics from store would do no good in terms of reversing decline in profits because people would go for other stores to collect these movies.

You're taking a very strong stance by saying that old movies will always be in demand. Remember, the examiner's DO NOT want your opinion or stance on the details. Try writing something like "It is possible that old movies MAY still be in demand, and thus removing such films may harm profit margins"

These are flaws I see in your essay. Other than that, your analysis is pretty good.

Oh, and regarding the timing thing. why do you think it takes you the extra 3 minutes? Do you type slow or do you have trouble organizing your thoughts. If the earlier reason is true, I'm sure practice will fix it up. For the latter one, before you start writing your response, try organizing your ideas first, write your points on a sheet of paper and then use it as a reference guide.
mahgh123 5 / 14 5  
Aug 24, 2013   #3
Dear testtaker, about this statement,

is famous for offering great movies at low prices and it wishes to maintain this reputation.

it does not mean that store is special in bargain as mentioned in the task argument. So your criticism is not reasonable.

it is unwilling to raise the prices.

it is not said at all. it was an unwilling decrease not increasing...
Here the purpose of author is increasing profit against some situations that exist. Additionally, you have to stated some reasonable and wisely explanation that those reveal author cannot analyze it.

And concerning this statements,

Does these two reduction result

Oh my God,...you wrote wrong completely,...

Also, according this

reduce expenses was to eliminate older videos.

, I can say no at all... please read task again. You have some misunderstandings about task achievement.
OP testtaker 6 / 20 4  
Aug 24, 2013   #4
Hi shadman19922!

These two points:

just because closing the Marston store reduced costs does not necessarily mean that it would work well with the Galore stores.

and

t Marston may have reduced stocks and operating hours due to reasons other than a reduction of costs in mind.

are very intriguing! I regret that I missed these points. Many thanks.
Regarding your next judgement, you are right again. I feel now that I shouldn't have emphasized my opinion that much.
Thanks.
OP testtaker 6 / 20 4  
Aug 24, 2013   #5
Hi mahgh123! Thanks for evaluating my essay.

testtaker:
it is unwilling to raise the prices.
it is not said at all. it was an unwilling decrease not increasing...

But, consider this statement:

raising our rental prices is not a viable way to improve profits.

Doesn't it imply that Movies Galore is unwilling to raise prices?

testtaker:
Does these two reduction result
Oh my God,...you wrote wrong completely,..

You are quite right. It should be "Do these two ...", mixed up singular and plural...very silly mistake.

Also, according this
testtaker:
reduce expenses was to eliminate older videos.
, I can say no at all... please read task again. You have some misunderstandings about task achievement.

Consider this statement from the argument:

our store in downtown
Marston significantly decreased its operating expenses .... and by reducing its stock by eliminating all movies released more than five years ago.

Doesn't it imply that the store reduced its expenses by eliminating older movies?

Thanks.
OP testtaker 6 / 20 4  
Aug 24, 2013   #6
Hi shadman19222! Sorry that I forgot to address your last query. I think I crossed the 30-minute time limit because I'm slow in both typing and thinking! When I look at the prompt, I take more time to decide which point I would focus than is necessary. I tried to write my focus points on sheets of paper before I start writing on screen, but it takes even more time to complete the writing! I think I should practice more to overcome this shortcoming. Thanks for your suggestion.


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