The memorandum presented by the owner of Movies Galore is wrong for many reasons. Primarily, the memorandum is based on some unwarranted assumptions rendering the main conclusion, that to increase profits stores must compromise with their timings and stock, invalid. Hence, before coming to such conlusion and aiming to increase the profits, the owner has to answer certain questions.
The owner assumes that what happened correct in the store at downtown Marston will also hold true for other stores. However, he clearly overlooks that there may be difference in the conditions elsewhere. He presents the fact that on decreasing the closing time of the store in downtown Marston, from 9 to 6 in evening, the operating expenses went down. But what if at other places people find time only after 6 and go out for renting videos and the business time of other stores are high during that period? The citizens of downtown might not be interested in buying videos from 6 to 9 but this might not necessarily hold true for other places as well. Hence, the question stated will need to be answered before any such action is taken.
The question above also holds true for another assumption the owner makes. He states that reducing the stock by eliminating all videos of movies released more than five years ago also helped in increasing the profit. However, he clearly overlooks a question that what if the videos of old movies have good demand in other stores and, in fact, they are the new movies which do not interest people in those areas? This entirely depends on the interest of people which varies from place to place. Hence, this will require a survey to be conducted at all places, in order to know what interests people in particular areas.
The owner must also ascertain the reason of decline in profits instead of just applying “hit and try” methods at different locations to improve them. There may be reasons like, reduced quality of videos they provide or increased competition from other stores, which clearly cannot be prevented by the measures that owner is about to take as per memorandum.
Hence, if actions stated by the owner are implemented without answering the aforementioned questions, might exacerbate the issue instead of ameliorating it.