AWA #2. the Apogee Company
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25 Dec 2014, 02:37
"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."
Any input or critics on this essay is welcomed and appreciated!
The argument concludes that to increase profitability, Apogee Company should operate its offices in a single location because this centralization helps the company to cut costs and maintain better supervision of all employees. To reach conclusion and reasoning, the author bases on the fact that Apogee Company was more profitable when it had all its operations in one location than it is today. This argument has some flaws and thus is voluntary to debate.
First, this argument assumes that closing down the firm’s field offices and open new offices in the same location would reduce the costs. However, it fails to provide the accurate data to evaluate this transaction cost. If Apogee Company locates in a place where land renting, electricity, and labor cost are expensive, the transition cost and further maintenance cost will be relatively high. Thus, the argument would have been much clearer if it explicitly gave examples to compare costs of dispersing operation and centralizing operation to justify the benefit of converting all existing facilities to one location.
Second, this argument considers that better supervision of all employees lead to profit maximization – that relies on no solid ground. Nowhere in the argument defines what “better” implies and explains the how “better supervision” turns into profitability. It would be the case that to achieve better supervision, Aopgee Company must finance more and allocate more resources for this activity – which in turns actually raise the expenses and cut down the profit. Hence, if any such correlation had been shown for profitability and the supervision indicator, then the author would have sounded a bite more convincing. In addition if the argument provided evidence that in other similar case in the same industry the supervision boosts the company’s profit, the argument could have been strengthen even further.
Third, this argument fails to consider the whole picture including other factors that affect profitability. Whatever industry Apogee Company is in, such factors as market potential, competition, industry environment, costs of raw material will deeply influence its profit. If Apogee is facing market fluctuation or the rising of costs of raw material or high competition for its products, it is likely to face profit shortage. If this argument presented other relating aspects, it could have been more throughout and less voluntary to debate.
In summary, the argument is flawed and therefore unconvincing for the above-mentioned reason. It could be considerably strengthened if the author clearly mentioned all the relevant facts. In order to assess the merits of a certain situation, it’s essential to have full knowledge of contributing factors. Without this information, the argument remains unsubstantiated and open to debate.