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 increase within the past two years. Capital Ideal should therefore invest in the Roxy Playhouse , the Slice-o’-Pizza, and the Divot Golf Club, three new business in the Irongate district. As a condition, we should require them to participate in a special program: Any customer who patronizes two of the business 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 plan, the writer recommends that Capital Idea should invest in the Roxy Playhouse, the Slice-o'-Pizza, and the Divot Golf Club, three new businesses in the Irongate district, and participate in a special program. In support of this recommendation, he points out that in the Park Hill district, the same businesses have all had account increases within the past two years. While the plan seem to be somewhat convincing at first glance, a deeper investigation will reveal that the recommendation does not take into account the unique condition of every district. Doubtless, faulty analogy makes the argument problematic in several respect.
First of all, the writer cites that the Thespian Theater, Pizzazz Pizza, and the Niblick Golf Club across town in the Park Hill district have all had business increases within the past two years. However, he forgets to compare difference between two districts. Whether it is a residential district or industrial estate, different type of ditrict has totally different strategy of investment. For example, Park Hill district might be a residential district. Thus, the residents are going to have fun at those entertaining businesses, and make those businesses increase. Yet, if the Irongate district is a industrial estate, the final result would be reverse. Needless to say, no one wants to have fun there. According to this assumption, it is not a good idea to invest in the Irongate district.
In addition, the author also recommends that any customer who patronize two of the businesses will receive a substantial discount at the third. Nevertheless, not every customer has enough money to consume three of their businesses. For instance, playing golf needs some equipments which are not afforded for everybody. Furthermore, each of business has their own customer, some are teenages and some are elder. The younger might rather go to theather than play golf. On the other hand, the elder might not like eat pizza because of teeth. Therefore, deeper investigation is nescessery to support this recommendation.
In summary, the writer should reconsider his plan, and look for more evidence to support his position. He uses incredibly circumstantial evidence to make a plan on investing three new businesses in the Irongate district. Only one district booming last two year does not mean it will success everywhere. Therefore, it does not makes me find this plan well-reasoned.
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