The following appeared in a memorandum from the owner of Movies Galore, a chain of movie-rental stores.
Because of declining profits, we must reduce operating expenses at Movies Galore’s ten movie-rental stores. Raising prices is not a good option, since we are famous for our low prices. Instead, we should reduce our operating hours. Last month our store in downtown Marston reduced its hours by closing at 6:00 p.m. rather than 9:00 p.m. and reduced its overall inventory by no longer stocking any DVD released more than five years ago. Since we have received very few customer complaints about these new policies, we should now adopt them at all other Movies Galore stores as our best strategies for improving profits.

In the argument the owner of a movie-rental store states that all stores should reduce operation time to promote profits. This strategy seems like an effective way to increase profit through cost constrain, further consideration and more solid ground to justify the conclusion are still in need.
The decision of shut down ten stores could be arbitrary without the actual performance provided. Even though we cannot reverse the fact that the company’s profit is declining, a store is not worth closing as long as it is still making money. In another word, the owner should keep the store operating if it is still contributing a share of profit, however minimal amount. Closing that store would lead to an even worse situation because all the revenue that the sore earn would become nonexistent, although all the operating and logistic cost are to be saved.
Moreover, right after the main topic is presented in the memorandum, the owner rules out the strategy of collect profit through raising its price. Here the owner mistakenly assumes that any amount of price inflation would result in losing of price advantage to its rivalries. But in fact since the store has been famous for its low price, there has to be a margin between the price of the store itself and the average market price that is significant enough to impact consumers' decision. For example, it costs 4 dollars to rent a movie in Galore but the average market price is 9 dollars. Galore is still at advantage is it raises the price to 6 or even 8 dollars. Thus this strategy should not be eliminated without insightful consideration.
Finally, the owner claims that his strategy is practical because there are not many complaints. Here the owner makes a false assumption that all customers express their dissatisfaction through complaints. An alternate way of showing dissatisfaction is that the customer would never come back ever again. And on the other hand, number of complaints received is not the best indicator of the store’s performance. The owner should measure the store’s profit, which is his ultimate goal, to justify his strategy’s effect. Although there are no complaints, the strategy is still a total failure if the store could collect only a tiny amount of profit or is suffering from a fiscal loss.
In sum, before providing with justifiable evidence that the ten stores are actually losing money, the strategy of raising price is eliminated reasonably, and the customers who claim complaints are the only ones unhappy with the store’s service, the owner’s argument is far from flawless.

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