GMAT Essay Topic 444 - The following appeared as part of a plan proposed by an executive of the Easy Credit Company to the president. "The Easy Credit Company would gain an advantage over competing credit card services if we were to donate a portion of the proceeds from the use of our cards to a well-known environmental organization in exchange for the use of its symbol or logo on our card. Since a recent poll shows that a large percentage of the public is concerned about environmental issues, this policy would attract new customers, increase use among existing customers, and enable us to charge interest rates that are higher than the lowest ones available." Discuss how well reasoned . . . Etc.
Gain of easy credit company
The above argument says about the plan of the Easy credit Company who want to gain advantage over the other competing credit card services. As per the plan, the company will donate a portion of the proceeds from the use of their cards to a well-known environmental organization in exchange for the use of its symbol or logo in their card. As per the author this plan would attract many new customer, would help to increase the use among existing customers and would also enable them to charge higher interest rates than the lowest ones available. However the argument is flawed because of the following reasons.
First of all, the argument has assumed that the customer would have no problem with the proposed plan. But this may not be the case. There would be many customer who may have problem with the plan. Many customer may themselves contributing to the environmental organisation and donating again would may cause them financial problem.
Moreover the author has not mentioned anything about the environmental organization reactions. They may or may not want just the logo or symbol in the card. This plan may not bear any profit to them. Further if the bank would donate a portion of the proceeds from the use of the card then the company have to bear the remaining amount of the purchase. This may cause the financial burden on the company. Moreover the author has not mentioned anything about the company’s revenue.The company may not have high revenue to bear the remaining expenses.
Secondly, the author has proposed to eliminate the lowest interest rate. But this may bring loss rather than profit. The lowest interest rate may have the large customer base. The author has not provided any data regarding the relation of interest rate and customer base. Therefore by eliminating the lowest interest rate, the bank would loss large number of customers.
Finally, charging a higher interest rate to the customer may account for the negative response from the customer. Hence instead of getting new customer, the company may lose its existing customer. Therefore the given reasons ahs weaken the argument.
Hence to strengthen the argument, the author should have provided data regarding the customer, a figure or data showing relations of customer and interest rate provided by the company. A reaction from the customer, enivormental organization and retailer is also require to analyses the plan.