The following appeared in a memorandum issued by the strategic planning department at Omni Inc. "Mesa Foods, a manufacturer of snack foods that currently markets its products within a relatively small region of the country, has strong growth potential. Me

This Omni, Inc. memorandum recommends that Omni buy snack-food manufacturer Mesa Foods and aggressively promote its brand of salsa nationwide. To support this recommendation the memo relies on the exceptional profitability of Mesa's salsa during the last three years, along with the fact that Mesa's overall profits were up last year. However, the recommendation relies on a series of unsubstantiated assumptions, which render it unconvincing as it stands.

First of all, the memo indicates that Omni is interested in selling to 14-to-25 year-olds. Accordingly, the argument rests on the assumption that Mesa's snack foods appeal to this age group. Yet, we are not informed what types of snack foods Mesa manufactures, aside from its salsa. It is entirely possible that Mesa's foods, including its salsa, appeal primarily to other age groups. If this is the case, the recommended acquisition would not serve Omni's goal.

Secondly, the argument rests on the assumption that in the region where Mesa's products are sold the preferences of consumers between the ages of 14 and 25 typify nationwide preferences among this age group. If this is not the case, then it is entirely possible that Omni would not sell enough Mesa snack foods, including its salsa, to earn a profit from its Mesa operation. Thus, without more marketing information about the snack-food tastes of 14-to-25 year-olds nationwide it is difficult to assess the merit of the memo's recommendation.

Even if the memo's author can substantiate the foregoing assumptions, the author overlooks the possibility that last year's 20% increase in Mesa's profits was an aberration, and that in most other years Mesa has not been profitable. Also, the 20% increase might have been due entirely to sales of Mesa's salsa, and aside from the profit from salsa sales Mesa's profitability is actually declining. If either is the case, and if Mesa's salsa does not turn out to be popular among 14-to-25 year-olds across the nation, then Omni is unlikely to profit from the recommended course of action.

In condusion, the recommendation is not well supported. To convince me that the Mesa Foods acquisition would be profitable Omni would need to provide clear statistical evidence that Mesa's snack foods, and its salsa in particular, would appeal to 14-to-25 year-olds nationwide. To better evaluate the recommendation, I would need more information about Mesa's profitability over a longer time period, and about the extent to which Mesa's salsa accounts for any such profitability.