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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.”
Discuss how well reasoned … etc.
Apogee Company should consider their actions before it takes action on the memorandum provided by the business department because of logical issues and fallacies contained in the memorandum that I will address herewith. In the memorandum the success Apogee Company has had in the past is attributed to having only one location. There may actually be other reasons why the company has been profitable in the past. While the memorandum may be an internal document and doesn't necessarily need to address the business Apogee Company is in, it is important for the reader to know whether closing a field office will have a minimal impact on the business. Sales from certain 'field offices' may be a great source of revenue and by closing them, would make Apogee Company less profitable. In addition to these issues, why is consolidated supervision of employees necessary? Supervision may not be enough of a justification for consolidation. I will address these issue henceforth.
At some point in time Apogee Company was profitable. There could be a million reasons why it was. However, the memorandum writers seem to think that having a centralized location was the primary reason why the company was profitable. Lets imagine that Apogee Company implement the major change of consolidating their field offices into one location. Is it possible that the company would not see anything in terms of profit? Is it possible that a profit wouldn't be realized for the short term or the long term? We don't know our time horizon and we don't know how events in the market will affect profit, revenues, and expenses for the company. The memorandum needs to justify why having one location determined profitability in the past.
If the filed offices have some type of sales or regional necessity, it may be a bad idea to close all of the field offices across the board. It may be a very good idea for Apogee Company to determine which field offices have the most impact on the region they lie in as well as determine which field offices generate the most sales (if that's what these field offices functions are) thereby aiding in which offices to keep and which ones to shut down. This would help maintain revenue for those regions and lower expenses for the company overall.
Does supervision actually aid with profit? Not necessarily. Increased supervision may hinder employee satisfaction due to micromanagement and may hinder the company in the long-term which wouldn't be good for company profitability. It may be necessary for Apogee Company to make a more compelling and comprehensive case on what benefits the company will receive due to consolidating their offices before the company takes any action on the memorandum.
With a more rigorous analysis of the past determinants of Apogee Company profitability, the company may have some useful information that can aid it in making a decision. However, the past doesn't equal the future and there are a multidude of factors that can affect company profitability. It will be important for Apogee COmpany to make an analysis in this regard.
File comment: Essay Question
GMAT Essay Question 5-16-2016.PNG [ 55.3 KiB | Viewed 2474 times ]
“In a recent citywide poll, 15 percent more residents said that they watch television programs about the visual arts than was the case in a poll conducted five years ago. During these past five years, the number of people visiting our city’s art museums has increased by a similar percentage. Since the corporate funding that supports public television, where most of the visual arts programs appear, is now being threatened with severe cuts, we can expect that attendance at our city’s art museums will also start to decrease. Thus some of the city’s funds for supporting the arts should be reallocated to public television.”
The City's art museum can't definitively justify a reallocation of City funds to supporting the arts via public television when a direct relationship can't be made between why there is an increase in attendance to the art museum. Correlation doesn't mean causation. An increase in TV visual arts viewership doesn't necessarilly mean that the arts museum attendance will directly increase in proportion.
Has there been an increase in tourism to the City? Has there been a large increase in the population of the City? Are there more residents in the City than in the past? Has the art musem had exhibits that are wildly popular? The answers to these questions could help explain the increase in poll respondents in the past. The council needs to include more information about the increase in respondents to the poll and whether there were any increases in population, tourists attending the art museum, or residence increases from five years ago to the present to help explain the increase in the art museum attendance.
It is possible that more people are engaged in the poll and in the arts than five years ago. However, a correlation can't be made between the increase in the respondents who watch visual arts shows and the attendance to the City's art musem. I would surmise that there is a direct correlation between the increase in viewership of the visual arts program and the museum attendance if the poll from five years and the recent poll had a question such as "If you responded 'yes' to watching visual arts programs on TV, do you find that you are more interested in attending the City's art museum as a direct result of the visual arts programs on TV?" Another good question that can be asked on the poll would be, "If you are now more interested in attending the City's art museum than in the past, please explain why." This would help in developing a more keen awareness of the casual relationship between the TV visual arts programs and the increase in the City's museum attendance.
In conclusion, the City needs to explore the possibility that the TV visual arts program viewership and the increase of attendance to the City's art museum may not have a direct correlation and before the City reallocates any funding, the City will re-examine the reasoning why there is an increase in art museum attendance.
The following appeared in a report presented for discussion at a meeting of the directors of a company that manufactures parts for heavy machinery:
“The falling revenues that the company is experiencing coincide with delays in manufacturing. These delays, in turn, are due in large part to poor planning in purchasing metals. Consider further that the manager of the department that handles purchasing of raw materials has an excellent background in general business, psychology, and sociology, but knows little about the properties of metals. The company should, therefore, move the purchasing manager to the sales department and bring in a scientist from the research division to be manager of the purchasing department.”
Discuss how well reasoned … etc.
The following appeared as part of an article in a magazine devoted to regional life:
“Corporations should look to the city of Helios when seeking new business opportunities or a new location. Even in the recent recession, Helios’s unemployment rate was lower than the regional average. It is the industrial center of the region, and historically it has provided more than its share of the region’s manufacturing jobs. In addition, Helios is attempting to expand its economic base by attracting companies that focus on research and development of innovative technologies.”
Discuss how well reasoned … etc.