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The following appeared in a memorandum from- Rate

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The following appeared in a memorandum from- Rate [#permalink] New post 14 Apr 2012, 05:04
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The following appeared in a memorandum from the business department of the Apogee Company:
“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.”


The argument states that the company Apogee should close down all its field offices and conduct all its operations from single location. The reason provided is that the company Apogee was more profitable when it had all the operations in one place than now when it has the operations spread out across multiple locations. I think the reason provided in the argument is either wrong or insufficiently substantiated with proper evidences.

Firstly, the argument assumes that field offices are unnecessary and they can be closed down. Field offices are part and parcel of some businesses. The businesses cannot even function without field offices. One such example is a retail chain business whose fundamental operating principle is based on having multiple stores. Closing down the stores is equivalent to closing down the business itself. The nature of business done by the company Apogee is not mentioned in the argument and no clear decision can be made about closing down its field offices.

Secondly, the argument fails to consider other factors which might have led to the reduction in the profit. Reasons such as increased competition, increased production cost, increased marketing cost, increased spending on manpower, etc… can also contribute to a loss in profit. Nothing is mentioned about such factors and they cannot be ignored in evaluating this argument.

Thirdly the argument states that better supervision of employees is possible only if the company is located in a single place. This is not true in most of the cases. Almost all the successful big companies have offices in multiple locations. There are huge multinational companies whose offices are located across continents and yet they are highly profitable. As long as the roles and responsibilities of employees are well defined and a proper system is in place, supervision of employees will not be a big issue.

In conclusion, the argument does not provide enough supporting evidence to support its claims. If it had presented information about the nature of business the company is performing, the critical factors such as competition, production costs, labor costs, etc., it would have provided more insight for careful evaluation of the argument
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Re: The following appeared in a memorandum from- Rate [#permalink] New post 05 Aug 2014, 03:54
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Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

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Re: The following appeared in a memorandum from- Rate   [#permalink] 05 Aug 2014, 03:54
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