Dear GMATClub community,
I will take the GMAT next week and I was wondering if any of you could please evaluate my AWA essay. I hope I will get a score of 4-5 on the essay, as it does not matter that much. Thank you guys in advance.
Here is what the
MGMAT CAT asked me:
AWA ESSAYS: Analyze Argument
ESSAY QUESTION:
The following memo was circulated by the management team of a retail company:
“We are very pleased to announce the relocation of our inventory, which had been located in four different warehouses throughout the country, to a single new warehouse near Company headquarters in Boston. This consolidated location will cut the company’s expenses for warehouse rent in half. As a result we expect our monthly profitability to go up by this amount.”
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.
YOUR RESPONSE:
The argument presents the decision of the management team of a retail company with respect to the relocation of their inventory from four different warehouses throughout the country to a single location in the proximity of the Company's headquarters in the city of Boston. Although the author attempts to mention the advantages of this decision, he fails to point out any negative impact caused by the above mentioned decision and thus, the argument not only fails to convince the reader but allows one to formulate a wide variety of scenarios with different outcomes. Furthermore, due to the gaps in the author's reasoning, the argument is susceptible to criticism. Three of the most important flaws in the argument will be presented below.
First, the greatest flaw in the argument is that the author, as in the management team, fails to express other factors, such as revenues, employee productivity or delivery time, in evaluating the company's profitability. When thinking about profitability, the cost side is a very important factor of the equation but, it is not the only factor. For example, it is useless that a company has decreased its costs of storing the inventory in half if the company's sales have dropped by more than 200% due to the bad delivery time. This bad delivery time could have been avoided if the company would have had more than one warehouse in a big country, such as United States of America, where the market is strongly connected but wide spread in terms of location. The author's argument could have been improved if in one sentence, it would be mentioned that most of the company's customers are located in the proximity of Boston.
Second, the author does not refer at all to the scale of the impact caused by the inventory relocation. For instance, if the costs associated with the storage normally would acount for about 10% of the company's total costs and the cost of transportation account for over 50% of company's total costs then it is more than natural to believe that a concentration of the inventories in one location would be the cause of an increase in the cost of transportation. This is the case because in an open economy, there is a very small chance for a monopoly and thus, it is fair to believe that those who purchase a product from the above mentioned company are spread throughout the country. The argument would have been better supported if the author would have mentioned what type of products does the company commercialize and more, if it would say who are the customers of the products and where are they located.
Third, the author fails to mention any detail about the production process of the comercialized products. If for example the products are produced in San Francisco but they are now stored in Boston, it implies that they have to be moved at a given costs. Additionally, if the customer of the stored products is located in San Francisco, the products again would have to be transported back to San Francisco from Boston. This fact would increase the price of the sold product which would ultimatelly affect the company's profitability more than it would benefit it. So one can actually ask himself if the author's business judgement is actually real and supported by facts.
In conclusion, the author's argument is flawed because of the above mentioned reasons. The argument is susceptible to critic and thus, cannot be trusted as a reliable sources of information.