ARG-162

The following is a recommendation from the Board of Directors of Monarch Books.

"We recommend that Monarch Books open a café in its store. Monarch, having been in business at the same location for more than twenty years, has a large customer base because it is known for its wide selection of books on all subjects. Clearly, opening the café would attract more customers. Space could be made for the café by discontinuing the children's book section, which will probably become less popular given that the most recent national census indicated a significant decline in the percentage of the population under age ten. Opening a café will allow Monarch to attract more customers and better compete with Regal Books, which recently opened its own café."


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 recommendation, the author believes that in order to avoid competition with BB and reap higher profits, M bookstore should transform their children's book area into a cafe. While the author’s recommendation may be beneficial to some extant, we still need to answer several questions to better evaluate the effectiveness of the argument.


The first series of questions we need to ask is whether RB setting up a store location at C will threaten the operation of M. If it turns out that RB’s cafe business model may not be very competitive, the author's conclusion will wane. Further, even if RB’s bookstore cafe model does indeed provide it with a competitive advantage, we should not turn a blind eye to the reputation M has built up over the years and M’s customer loyalty. It is likely that citizens living in C may have a deep emotional connection to M; they may love the M’s bookish atmosphere and not easily abandon it for a new bookstore. If either of the two cases above is not established, the author's conclusion will be challenged.


Additionally, the author mentioned that sales in children's books may decline based on the results of a national survey that found the percentage of children under 10 years old to be down. However, we still need more evidence to prove the validity of the survey. First of all, the survey of the national population does not necessarily reflect the population structure of C. If the natural environment and medical conditions of C are much better than that of most cities in the country, the birth rate of C may be far higher than the national average, thus the proportion of children under the age of 10 years old could potentially be much higher than the national average and could continuously increase. Second, even if the proportion of children under ten years of age in C is decreasing, the population base of C is likely to increase, which would lead to an increase in the number of children, thus stimulating the sale of children's books. Third, even if the number of children in C is truly decreasing, this trend will not necessarily continue. If this trend does not continue, then M would not have to worry too much about the impact of changes in the number of children on book sales. Forth, even if the number of children under 10 years of age in C does proceed to decline steadily in the future, the demand for children's books is likely to continue to increase with an increasing emphasis on education. The number of children will decline, but the volume of reading per capita will increase. Finally, even if the sale of children’s books will decline, the price of the book can be raised probably because of the increasing income of local residents and thus help to offset the influence from the declining sales of children’s books. Therefore, understanding the exact number of children under 10 years of age in C in the future, is what’s beneficial to the prediction of whether or not sales of children's books will decline. If there is an absence of specific information, the author’s assumption that there will be a decline of children's book sales would be ungrounded.


Finally, even if sales of children's books continue to decline in the future, the author's advice may still not be feasible, are advantages of establishing a coffee area greater than the disadvantages? The opportunity cost, which will be affected by the transformation of the children’s area into a cafe, shouldn't be neglected. First, the cafe in M Bookstore may make the bookstore noisier than before, causing the atmosphere in the store to no longer be reader-friendly, thus the bookstore will lose a large portion of its readers. Second, M Bookstore's experience in opening a cafe is probably far from that of BB bookstore, and they could potentially end up providing readers with an unpleasant experience and tarnish the bookstore’s reputation. Third, opening a cafe in M Bookstore, construction, maintenance, and operation on a daily basis may require a large sum of money, thus the overall operation cost of the bookstores would increase significantly, which would also lead to significant operation cost increases. If revenue does not exceed said increase in cost, the profit of the bookstore will plummet. Therefore, M bookstore could possibly lose a large number of readers due to this transformation, resulting in loss of profit and leaving the bookstore hopeless in the competition against BB.


To sum everything up, in order to better evaluate the author’s conclusion we need to address the aforementioned questions.


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