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Gigantis Corp - OG Prompt - Help in assessment!

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Joined: 03 Jan 2016
Posts: 73

Kudos [?]: 8 [0], given: 53

Location: India
GMAT 1: 640 Q49 V29
GMAT 2: 760 Q51 V41
GPA: 3.2
Gigantis Corp - OG Prompt - Help in assessment! [#permalink]

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New post 05 Mar 2017, 00:24
Question:
The following appeared in a memorandum from the vice president of Gigantis, a development company that builds
and leases retail store facilities:
“Nationwide over the past five years, sales have increased significantly at outlet stores that deal exclusively in
reduced-price merchandise. Therefore, we should publicize the new mall that we are building at Pleasantville as a
central location for outlet shopping and rent store space only to outlet companies. By taking advantage of the success
of outlet stores, this plan should help ensure full occupancy of the mall and enable us to recover quickly the costs of
building the mall.”
Discuss how well reasoned . . . etc.

=================================================================================

The vice president of Gigantis claims in his memorandum that they should publicize the new mall as central location for outlet shopping and rent store space only to outlet companies. However, the author presents a poorly reasoned argument based on several questionable assumptions and unsubstantiated premises.

First, the author assumes that publicizing any mall as a prime location for outlet stores would be enough to make outlet companies want to buy space in that mall. However, such an assumption is a stretch. For instance, what if there are other important parameters that outlet companies take into consideration in making the decision about where to buy outlet spaces. If the outlet stores are only successful in non-urban areas, and the new building in Pleasantville is located in an urban area, then the outlet companies may not be willing to buy space there.

Second, the argument is severely flawed as it depends on the assumption that just because there has been an increase in sales at outlet stores, they are doing profitable business and are successful. This may not be the case in reality. To illustrate, even if the sales have increased significantly, if the sales were drastically low five years ago, then even today, the sales might be below what the outlet stores would like. Moreover, the argument uses vague terminology in its use of the word 'significantly' to describe the rise in sales, and it does not give any numerical data. Also, the success and profitability of any company depends, not just on sales, but also on other factors such as costs, of which the argument does not provide any information.

Finally, the argument displays poor reasoning, as it presents a premise in which only the outlet stores that deal exclusively in reduced-price merchandise have been said to have increased sales, but then goes on to make a claim about all outlet stores in general. This is not a sound reasoning, as what is true for only a subset of outlet stores, may not be true for all outlet stores in general. Had the author made his conclusion about only the stores that deal exclusively with reduced-price merchandise, then the argument would have been strengthened.

In summary, the argument is flawed for the aforementioned reasons and is, therefore, unconvincing. If the author had included the items discussed above, then the argument would have been more thorough and sound.

Kudos [?]: 8 [0], given: 53

Gigantis Corp - OG Prompt - Help in assessment!   [#permalink] 05 Mar 2017, 00:24
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