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elti
Joined: 16 Jun 2018
Last visit: 22 May 2019
Posts: 8
Own Kudos:
Given Kudos: 4
Location: Israel
Schools: LBS '21 (A) Insead Sept19 Intake (A)
28 Sep 2018, 07:34
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Thanks in advance 
Your help is much appreciated
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.”
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The argument claims that by centralizing its operations again, Apogee Company would improve its profitability. Stated in this way the argument fails to mention several key factors, on the basis of which the argument could be better evaluated. The conclusion of the argument relies on assumptions for which there is no clear evidence. Hence, the argument is unconvincing and flawed.
First, the argument assumes that the decrease in profits over the years was mainly because of the decentralization of the company’s operations. This argument is a stretch as it readily assumes that all other factors of revenue and expenditure remained the same. For example, in order to sustain operations in the field offices as well as the headquarters, the company might have had to decrease its advertising budget, which resulted in a decrease of sales. The argument could have been much clearer had it explicitly stated what portions of the profits decreased after the company was decentralized for the first time.
Second, the argument claims that by closing down its field offices, other factors in the company will not be affected. This is again a very weak and unsupported claim as the argument fails to demonstrate any correlation between centralization and employee productivity. In fact, the reason that Apogee Company was decentralized in the first place might have been due to growing number of employees. Centralizing the company would then result in over-populated offices, which in turn will decrease productivity. In order to tackle this, the company might want to expand its office space, but this will result in increased rent payment. If the argument had provided evidence that the number of employees currently employed at Apogee Company as well as their backgrounds and preferences, are about the same as they were before the company was decentralized then it would have been a lot more convincing.
Finally, the argument concludes that by decentralizing, the company would be at least as profitable as it was before it was decentralized. From this statement again, it is not clear what the costs for closing the offices are nor is it clear what other effects this move might have on the company (i.e. productivity). Without convincing answers to these questions, the argument remains weak.
In conclusion, the argument is flawed for the above mentioned reasons and is therefore unconvincing. It could be considerably strengthened if the author clearly mentioned all the relevant facts.
Your help is much appreciatedThe 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.”
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
The argument claims that by centralizing its operations again, Apogee Company would improve its profitability. Stated in this way the argument fails to mention several key factors, on the basis of which the argument could be better evaluated. The conclusion of the argument relies on assumptions for which there is no clear evidence. Hence, the argument is unconvincing and flawed.
First, the argument assumes that the decrease in profits over the years was mainly because of the decentralization of the company’s operations. This argument is a stretch as it readily assumes that all other factors of revenue and expenditure remained the same. For example, in order to sustain operations in the field offices as well as the headquarters, the company might have had to decrease its advertising budget, which resulted in a decrease of sales. The argument could have been much clearer had it explicitly stated what portions of the profits decreased after the company was decentralized for the first time.
Second, the argument claims that by closing down its field offices, other factors in the company will not be affected. This is again a very weak and unsupported claim as the argument fails to demonstrate any correlation between centralization and employee productivity. In fact, the reason that Apogee Company was decentralized in the first place might have been due to growing number of employees. Centralizing the company would then result in over-populated offices, which in turn will decrease productivity. In order to tackle this, the company might want to expand its office space, but this will result in increased rent payment. If the argument had provided evidence that the number of employees currently employed at Apogee Company as well as their backgrounds and preferences, are about the same as they were before the company was decentralized then it would have been a lot more convincing.
Finally, the argument concludes that by decentralizing, the company would be at least as profitable as it was before it was decentralized. From this statement again, it is not clear what the costs for closing the offices are nor is it clear what other effects this move might have on the company (i.e. productivity). Without convincing answers to these questions, the argument remains weak.
In conclusion, the argument is flawed for the above mentioned reasons and is therefore unconvincing. It could be considerably strengthened if the author clearly mentioned all the relevant facts.
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