The argument also depends on the assumption that Excelsior can afford a promotional plan similar to Superiors. However, free samples, price reductions, and discounts all reduce profits and may actually result in temporary losses. While a leading company with other profitable products in the same line can absorb a temporary loss, for a fledgling competitor this strategy might be very risky and may even result in business failure.
Finally, the argument relies on the assumption that Superiors promotional campaign for its newest coffee was successful. However, the memo provides no evidence that this was the case. It is possible that the promotion was entirely ineffective, and that Superior remains the leader in its field despite this small failure. If so, Excelsior may be ill-advised to follow Superiors promotional strategy.
In conclusion, the two companies are too dissimilar to justify the recommendation that Excelsior model its promotional strategy on Superiors. To strengthen the argument, the author of the memo must establish that Excelsior has sufficient operating capital to launch the recommended sales campaign, and that this strategy would be more effective than another strategy, such as using extensive media advertising.
61. The following appeared as part of a recommendation by one of the directors of the Beta Company.
The Alpha Company has just reduced its workforce by laying off fifteen percent of its employees in all divisions and at all levels, and it is encouraging early retirement for other employees. As you know, the Beta Company manufactures some products similar to Alphas, but our profits have fallen over the last few years. To improve Betas competitive position, we should try to hire a significant number of Alphas former workers, since these experienced workers can provide valuable information about Alphas successful methods, will require little training, and will be particularly motivated to compete against Alpha.
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