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AWA Question:
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 maintains better supervision of all employees.”
Discuss how well reasoned you find this argument. In your discussion be sure to analyze the line of reasoning and the use of evidence in the argument. For example, you may need to consider what questionable assumptions underlie the thinking and what alternative explanations or counterexamples might weaken the conclusion. You can also discuss what sort of evidence would strengthen or refute the argument, what changes in the argument would make it more logically sound, and what, if anything, would help you better evaluate its conclusion.
Essay:
The above paragraph discusses about the Apogee Company's strategy of changing it's offices from multiple locations to a centralised position. The success of the strategy as mentioned in the above paragraph is doubtful taking in view of several positives and negatives occuring from it. Each of the flaws as well as strengths are discussed in subsequent paragraphs below.
Firstly, the writer of the paragraph compares Apogee's profitability over past compared to the present. He / She did not discuss about the market scenario that existed during both the times. A company similar to Apogee Company might have different portfolios during both the times based on the market needs. For example, let's consider that Apogee Company is a tyre manufacturing company, and it was manufacturing purely the truck tyres earlier catering the needs of Logistics Hubs in Mumbai, then a centralised location would have worked for that need. But, if in course of time, Apogee Company may have ventured into manufacturing two wheeler tyres which had a pan-India market, which makes the decision of a centralised location a bad choice.
Secondly, any company involves gathering raw materials / products which need to be utilised in their final product. And, the raw materials vary from location to location in terms of price depending upon the availibility and logistics costs. Let us take an food processing as an example, the raw materials for making a Pizza, such as Tomatoes, Jalapenos, Onions, Cheese etc. have varied availibility and varied costs based on the location of the centralised Office. Hence, it's mandatory for any company to locate it's offices in different places instead of a centralised one.
Thirdly, locating a centralised office in a single location involves requirement of huge amount of resources such as transport facilities for staff mobility and material logistics, large open space in a single location etc. which causes increase in expenses and also causes an increase in difficulty of finding employable talent as per job requirements and land areas. This may even force the Apogee Company to move to remote areas far from the cities or towns leading it to lose the advantage of readiness to approach the market.
Along with the flaws mentioned as above, there are a few benefits such as efficiency in in-house operations due to timely availability of company staff that can occur from the benefits of centralisation of Apogee Company's operations to a single location. But, that is so miniscule as compared to the above mentioned three major flaws that are not considered in the reasoning of the paragraph. Instead, the Apogee Company can locate it's manufacturing operations, back-office and warehouse operations to a single centralised location to cut costs and locate remaining sourcing, vendor management and other related offices at different locations based on the requirements.