The following appeared in a memorandum from the owner of Movies Galore, a chain of video rental stores.Argument Topic :“In order to reverse the recent decline in our profits, we must reduce operating expenses at Movies Galore’s ten video rental stores. Si

Movies Galore a chain of video rental stores is seeing a decline in their profits and recommend to implement changes in their stores by reducing the operating costs to increase their profits. Profits are important for any store and a decline in the profits is a major concern for the store owner. Just reducing the operating cost would not lead to increase in profits. A proper analysis needs to be made to find the actual reason behind the decline in the profits.

Firstly, we need to see why is there a decline in profits. Is it because the operating costs has increased or it may be so that the major section of the people or customer base of Movies Galore have shifted to some other thing. Like watching a movie might not be their hobby now or they might not be getting sufficient time to watch movies due to work pressure.

Secondly, what needs to be checked is if there are other video rental stores operating in the same locality. This would have lead to a shift of customer data from their store to the other store which might have lead to the decline in profits.

Also, it would be important to see how the operating costs can be reduced and can they be reduced or not. Is the operating cost a major reason for decline in profits? For example, had the operating costs being constant over the past years how can that be reduced now or if it is being reduced now it meant that till now they had been putting a lot of money in operating cost. This needs to be properly analysed.

Closing of the store early might not be a good idea as been done in one of Movies Galore store because it might initially lead to reduction in cost but on a larger scale it will lead to loosing of customer as all customers might not be able to get to the store before 6.00. Since it has worked well in one of the Movies galore store, it needs to be considered that its just one month that this change has taken place. Is one month result sufficient enough to make changes in other store. Also it depends on where are the stores located. If the stores are located in a office area, closing it by 6.00 would be still ok but if the stores are located in residential area, closing it early would not be beneficial as people tend to get home from office a little later than this and at this time they might think of renting a movie video. So location would become important.

It is true that the store is famous for its bargains and so raising a rental would not be a better idea to increase profits but they can add different offers which would lead to more customers renting movies. Also by removing stock of old movies they can reduce the cost and increase profits.

Thus as per my view, Movies Galore should make a complete analysis on why is there a decline in their profits and then bring about changes in the other stores to in reverse this decline, without compromising with the quality of videos and their reputation for offering movies on rent at the best price possible.