Joined: 15 Jun 2013
GMAT Date: 12-05-2013
, given: 26
Earn kudos, Rate my first ever AWA [#permalink]
12 Nov 2013, 19:45
Read the statement(s) and the instructions that follow, and then make any notes that will help you plan your response. Begin typing your response in the box at the bottom of the screen.
The following appeared in a memo to executives at a company that manufactures industrial equipment:
"We are spending too much on free customer service after a sale has been made; we need to limit our warranty to two years in order to improve our profit margins. The current lifetime warranty can lead to costs decades into a product's life cycle. Also, we pay our customer service employees a premium because they must possess expert skills across the entirety of our very diverse product line, including products we no longer sell."
Discuss how well reasoned you find this argument. Point out flaws in the argument's logic and analyze the argument's underlying assumptions. In addition, evaluate how supporting evidence is used and what evidence might counter the argument's conclusion. You may also discuss what additional evidence could be used to strengthen the argument or what changes would make the argument more logically sound.
The argument is about a companies post sales strategy, initially the company used to give life time warranty to all its customers but sooner they felt that they need to curb few expenses inorder to make some profit.
The argument is very much in line with the reasons given by the author, in todays life the industrial sector has developed a lot and spend millions of dollars to get to best product that can make customers life convenient. The company does three things to ensure it is highly competitive.
1- Spend millions of dollars on Research and development.
2- Invest a huge amount on advertisement to generate awareness.
3- Producing the units on time to meet demand and supply.
4- Selling and make sure customers are happy by post sale services.
Its very important to understand that its very difficult for a company to generate profits after all the steps mentioned above.
Lets discuss these points in details..
1- A company spends a huge amount on research and development inorder to make sure that they are generating the best and the most innovative product in the market.
2- The work is still half done, unless consumers are aware of the product or know its uniqueness, they would not turn up and buy the product.
3- Now in the third stage the customers are showing interest, so its very important to spend another good chunk of money so that the supply can meet demand. These should not be any shortage.
4- Very important phase, a company always looks for loyal customers so that they believe in there product. A trust is very important.A significant way to gain trust is by assuring the customer after sale guaranty, by indirectly saying that a buyer seller relationship wont end because its based on trust and believe.
However, since we have discussed the 4 phases a company goes through, its very important that they get profit out of it. Ultimately, it’s a business and the prime goal of every business is to generate profit.
For instance, lets talk about ABN telecom limited, they are the top company and makes mobile phones.They spend 40% on the first phase research and development, 25% on phase 2 advertisement , 25% on phase 3 demand and supply, and finally 10% on phase 4 which is post sale service. According to there newest journal they now have made 20% profits which will ensure that there customers get more innovative products.
The argument is very well reasoned and I strongly believe that its best for the company to cut their life time warranty service to a limited time of 2 years.It will benefit the company in two ways, one they don’t have to pay extra cost on the defected units after 2 years and secondly they will save a huge amount on customer service.
kindly rate my awa, this is my 1st awa so i am sure there will be a lot of mistakes. I have my gmat in 3 weeks and from now i have started taking AWA with each mock.
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