标题: argument 60 [打印本页] 作者: kaileezhu 时间: 2014-9-13 15:51 标题: argument 60 It is true that home heating oil business tend to thrive in cold areas, however, jumping to the conclusion that we should invest in
Consolidated Industries is too hasty and ignorant of many important factors: Residents in cold areas may switch to more sustainable
resources; increasing number of residents may not be gauranteed; and harsh competition may jeopardize the profit of oil industry.
First and foremost, residents are very likely to abandon the traditional way of heating if they can forsee the large expense
associated with it. Since the below-normal temperature persisted over 90 days last season, it should be clear to the residents how
expensive it was to use oil as heating avenue. Assuming the climate forecasters are accurate, this pattern will continue for several
years, which means a even bigger bill to the household and a greater financial burdan. Many residents will look for cheaper and more
sustainable heating options, such as electricity, wind energy and solar energy. It is an overestimation, therefore, to include the
residents who has bought oil before in the target market given that many of them will not buy home heating oil any more. Even if they
do, they may use oil interchangeably with cheaper energy resources to reduce the total cost of heating. As a result, the actual
consumption of oil may even decrease in the near future.
The exaggerated number of potential customers is not only due to the assumption that past costumers will be royal, but also derived
from the flawed logic that new homes equaled to more immigrants. Even though new homes are being built and population increases
recently, it is unclear how much the increase is and whether the increase will continue in the next following years. There could be
only a small and unremarkable amount of increase in the population, thus having no impact on the oil market. New homes can not
accurately prediet the market needs, either. Furthur research about the sales of new homes are needed in order to drive a compelling
conclusion of the actual increase in population.
Last but not least, even though all the residents stick to the oil as heating option and a large number of increase in population
also means more furture costumers, the flourish of oil industry can not be gauranteed. In deed, when there is huge demand, there are
lots of providers who are very likely use low price as a stradege to win over customers. The previous reasonable price is not
competitive enough, therefore companies are forced to decrease the price. Not surprisingly the profit will be very low. We will
inevitably fall into a dillema that low price brings no profit while high price brings no customers, which in turn brings no profit.
Therefore, it is not a wise investment when harsh competition in the market are clear.
In conclusion, the uncertainty of the popularity of oil as heating option, of the increase in population and of the future of the
market make investment in Consolidated Industries unresonable.