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125. The following appeared as part of the business plan of the Capital Idea investment firm.
“Across town in the Park Hill district, the Thespian Theater, Pizzazz Pizza, and the Niblick Golf Club have all had business increases within the past two years. Capital Idea should therefore invest in the Roxy Playhouse, the Slice-o’-Pizza, and the Divot Golf Club, three new businesses in the Irongate district. As a condition, we should require them to participate in a special program: Any customer who patronizes two of the businesses will receive a substantial discount at the third. By motivating customers to patronize all three, we will thus contribute to the profitability of each and maximize our return.”
In this argument, the author reaches a conclusion that the Capital Idea (CI) should make investment in the Playhouse (PH), the Slice-O'-Pizza(SOP) and the Divot Golf Club (DGC),the three new businesses in the Irongate district. To buttress his conclusion, the author points out the fact that three businesses across the Park Hill (PH) district made profit during the past two years. In addition, the author suggests a plan by providing coupon to those customers patronizing two stores so as to motivate the profit increase in the three business. At first glance, the lines of reasoning are somewhat plausible, but a closer examination will reveal how groundless it is. The argument has several flaws as follows.
First, the argument commits a fallacy of All Things are Equal. In the argument, the author assumes that all the conditions will remain unchanged as it was during the two years. However, it is not necessarily the case. The future is uncertain. For example, customer might lose interest in the entertainment in local area and shift to travel abroad. It is equally possible that the overall economy experience an unexpected slowdown. Without ruling out these uncertainties, the reasoning is unwarranted.
Second, the argument suffers a false analogy. The author contends that the three new businesses in Irongate District will make profit in the future because the business in PH District has achieved a success. Yet it is questionable for the author to assume that the two districts are same in all the aspects. For instance, it is possible that the residents in PH District have more leisure time to have entertainment while the residents in the Irongate District are busy with their daily work and hardly have some private time. Unless the author can make a more detailed analysis that the two districts are analogous to each other in all the aspects, otherwise the conclusion is groundless.
Third, the author falsely establishes a casual relationship. The author suggests that coupon be distributed the customers of the two business and therefore the customers of the three business will increase. However, the distribution of the coupon and the increase of customers are only positively related and have no casual relationship. It is entirely possible that customers with the coupon do not go to the three businesses. Even though they frequently patronize the three businesses after obtaining the coupon, it is still hasty to conclude that the profit will increase. Because the profit is affected both by revenue and by cost. If the increase of total cost outnumbers the total revenue, the profit will drop.
To sum, the argument is not convincing unless the author can make clear in the following aspects. 1) All the conditions about the economy will keep unchanged as it used to be. 2) The Irongate District is analogous to the PH district in all aspects. 3) The distribution of coupon will definitely spur frequent patronizing of the three new businesses and increase the profit accordingly.
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发表于 2005-9-7 17:23:00
