According to the memo, the president of Primo Doll Manufacturing predicts that the company
's profits will surpass those of its competitor, Optima Doll Manufacturing this year becau
se, according to a survey, 80% of consumers would recommend more durable dolls to their fr
iends. Therefore, the author argues that enhanced dolls made from the same materials as th
e competitor will be purchased by parents and are less likely to wear out. Although the au
thor's argument has some logic, whether or not his prediction will produce the expected re
sults depends on the answers to the following questions.First, we need to know the validit
y of the survey results mentioned by the author. More specifically, we need to know how ma
ny people were surveyed and whether the results truly reflect consumer perceptions. If onl
y a small number of people were surveyed, then 90% of the people claiming to have bought t
he less durable dolls may not be representative, so the author cannot assume that the doll
s of their company are just more prone to wear and tear. Therefore, the author's predictio
n would be weakened. Furthermore, even though many people were surveyed and 80% of them cl
aimed that they would recommend the dolls to their friends if the quality of the dolls is
improved, we are still not sure that doll quality is the only criterion for consumers to m
ake such recommendations. If consumers actually value the price of the dolls more than the
quality, and they just don't indicate this tendency in the survey, then the author's pred
iction would be challenged. However, if it turns out that the survey results actually refl
ect the general opinion of consumers, then the author's prediction would be strengthened.S
econd, even if Primo did need to improve the durability of the Elkie, should they use the
same materials as the Optima? This is because even if the Optima is successful, its succes
s may not be due to the durability of this material. Here, we need to ask what factors beh
ind the success of Optima were. If we find that Optima's success is indeed due entirely to
the durability of its dolls, and that this material ensures that durability, then it woul
d be more reasonable for Primo to use the same material as Optima. However, if Optima's su
ccess was not due to the doll's durability, but rather to other reasons such as marketing,
price, etc., then Primo's use of the same material as Optima would not have produced the
desired results and the author's conclusion would be invalid.Finally, even if Primo could
use the same materials as Optima, would Primo's profits this year necessarily exceed those
of its competitors? Switching to the new material would require a series of plant modific
ations and equipment upgrades, and these costs would affect Primo's profitability. If this
is the case, the author's prediction that Primo's profits will exceed those of its compet
itors will be untenable. Moreover, even if Primo's own profits rise, the profits of its co
mpetitors may rise during the same period. If this is the case, Primo's profits will not e
xceed those of its competitors. However, if Primo is able to control its costs well and it
s profits rise faster than its competitors, then the author's conclusion is strengthened.I
n conclusion, while I fully understand the reasoning behind the argument, I withhold my ap
proval of the prediction until the author can provide clear answers to the aforementioned
questions.