ARG-148

The following appeared in a memo from New Ventures Consulting to the president of HobCo, Inc., a chain of hobby shops.

"Our team has completed its research on suitable building sites for a new HobCo hobby Shop in the city of Grilldon. We discovered that there are currently no hobby shops in southeastern Grilldon. When our researchers conducted a poll of area residents, 88 percent of those who responded indicated that they would welcome the opening of a hobby shop in southeastern Grilldon. Grilldon is in a region of the nation in which the hobby business has increased by 300 percent during the past decade. In addition, Grilldon has a very large population of retirees, a demographic with ample time to devote to hobbies. We therefore recommend that you choose southeastern Grilldon as the site for your next HobCo Hobby Shop. We predict that a shop in this area will draw a steady stream of enthusiastic new HobCo customers."


Write a response in which you discuss what questions would need to be answered in order to decide whether the recommendation is likely to have the predicted result. Be sure to explain how the answers to these questions would help to evaluate the recommendation.


In this memo, the New Ventures Consulting suggests that HobCo should open a new hobby shop in southeastern Grilldon and predicts that this new shop will attract a steady stream of enthusiastic new HobCo customers. This recommendation is built upon the following lines of evidence. Firstly, according to a survey focusing on the residents of southeastern Grilldon, 88% of the respondents said that they would welcome the opening of a hobby shop in the area they live. Secondly, the hobby business in the region of Grilldon has increased by 300 percent during the past decade. Thirdly, Grilldon has a very large population of retirees, which have plenty of time to devote to hobbies. However, despite the information presented here, it still remains unclear whether the recommendation would have the predicted result. Before we could reach a final conclusion about whether or not this advice is reasonable, we need to raise several questions, and the answer to them would help us assess this recommendation.


To begin with, a string of questions regarding the survey need to be addressed. In this survey, 88% of the respondents, who live in southeastern Grilldon, indicated that they would welcome the opening of a new hobby shop in their resident area. In this case, we may ask whether or not these residents will indeed become HobCo’s customers in the future. The reason is that people’s behavior might be different than what they say. For example, if it turns out that the respondents are very busy with their daily works and none of them have time to develop their hobbies, or HobCo’s product prices are far beyond their total incomes, it is unlikely that they would go to HobCo’s new opening shop to buy relevant products. Therefore, the author’s viewpoint will be weakened. But if more evidence indicates that people who welcome the new hobby shop are very likely to become future consumers, it will help to strength the author’s conclusion.

Moreover, given that the hobby business of the region where Grilldon belongs has increased by 300 percent during the past decade, the author concludes that Grilldon’s hobby industry has lots of potentials. However, only with the percentage increase, we cannot assess this conclusion. Instead, we need to ask about the actual number of hobby business ten years ago, which serves as the baseline against which the author compares. It may be the case that Grilldon’s hobby business was very weak a decade ago, and a 300% increase has not bring about some significant changes. In this case, a lack of hobby business in the region of Grilldon may suggest weak demand, and opening a new hobby shop here might not be a wise idea. On the contrary, if the hobby business has increase distinctly during the past decade in Grilldon’s region, the author’s conclusion will gain supports.


Lastly,the author thinks that the large number of retireesin Grilldon will have plenty of time to develop their hobbies, and hence becoe HobCo’s customers. However, we cannot easily conclude that these retired people will devote their time into hobbies and buy hobby-related products from HobCo. Let’s consider these two questions separately. First, people live in Grilldon may not necessarily have to develop a habit simply because of the time they have. Instead, they may choose to do something else, such as looking after their grandchildren. Second, retirees in Grilldon might prefer hobbies that HobCo does not sell. Either of the two cases, if true, would challenge the author’s conclusion. However, if the retired population do show a strong interest in hobby-related activities which HobCo will be able to profit from, it will make the author’s conclusion more reasonable.


All in all, choosing a suitable building sites for a new shop is a quite complex task, and while southeastern Grilldon may have the potential to become the home to a lucrative HobCo store, this conclusion cannot be reached safely given the amount of available information. To effectively evaluate the author’s recommendation, a number of questions must be addressed.

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