Joined: 15 Apr 2013
Concentration: Human Resources, International Business
GMAT 1: 570 Q44 V25
 , given: 43
Kindly rate my second attempt at AWA. [#permalink]
28 Sep 2013, 07:32
This post received
“When the Apogee Company had all its operations in one location, it was more profitable than it is today. Therefore, the Apogee Company should close down its field offices and conduct all its operations from a single location. Such centralization would improve profitability by cutting costs and helping the company maintain better supervision of all employees.”
Discuss how well reasoned . . . etc.
In the passage above, it is argued by the author that Apogee Company should close down its field offices and conduct all its operations from a single location because when the company had all its operations in one location, it was more profitable than it is today. However, on a deeper analysis, it becomes apparent that certain relevant aspects have not been taken into account, leading to a number of mistaken and logical flaws.
One such flaw is the author’s claim that closing down of field offices would improve profitability by cutting costs and would help in maintaining better supervision of all employees. This statement is a stretch as the author has not supported it with any data. Moreover, the authors has not taken into account the cost increases and inefficiency as a result of centralization. For example, the company will face the problem of increased delivery time which could lead to dissatisfied customers. Also, the employees travel costs will increase as they will have to travel to areas which were formerly taken care of by the field offices. The argument could have been much clearer if the author have given a cost-benefit analysis of the costs incurred while operating from a central office as compared to operations from field offices.
The author claims that Apogee Company was more profitable when it had all its operations in one location. This is again a very weak and unsupported claim as the argument does not demonstrate any correlation between profits and the factors which contributed towards the profit. Is centralization the only factor which would contribute towards greater profitability? There are several other possibilities responsible for decreased profits which have not been taken into account by the author. For example, it is possible that the management has become inefficient leading to poor management of funds and the company’s operations. Another reason could be that the company has started manufacturing ill quality products which have lead to decreased sales and profits. Decreased profitability could also be the result of change of leadership in the organization leading to sudden changes resulting in decreased efficiency of employees. If the argument provided evidence for increased profitability when Apogee Company was working from a central office and also some analysis of factors that lead to decreased proficiency in the present, the argument would have been a lot more convincing.
The author also wrongly concludes that reducing the number of offices of an organization is going to increase profits. The flaw in this assumption is that doing so can increase the profits but may result in decrease in revenues. Profits are always calculated as a percentage of total sales, so by reducing the offices the number of point of purchases for customers will also decrease which can lead to decreased sales. For example, if before the Apogee Company had a profit percentage of 40% on total sales of $100000 it would be $40000. However, after reducing the field offices if the profit percentage rises to 50% on total sales of $70000 it would be $35000 which is lesser that before. To make this argument more valid the author should demonstrate the reasons for decrease in profits and how will reducing the field offices result in increased profits. Also the author should clearly mention what effect will closing down of field offices have on the sales of the company.
In conclusion, the argument is flawed for the above mentioned reasons and is therefore unconvincing. It could be considerably strengthened if the author mentions all the relevant factors that lead to decreased profitability of Apogee Company. In order to assess the merit of a particular situation it is essential to have full knowledge of all the contributing factors. In this particular case, increased profitability of the company in the past, the after-effects of closing down of field offices and how will it help in cutting costs, reason for increase and decrease in the profits of the organization. Without this information the argument remains unsubstantiated and open to debate.