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Please need help in AWA

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Joined: 22 May 2014
Posts: 26
Location: India
GMAT 1: 560 Q46 V29
GPA: 3.64
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Please need help in AWA  [#permalink]

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New post 21 Nov 2017, 05:31
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.”

The author concluded that Gigantis, a development company, needs to rent its space to outlet stores. To support his conclusion, he gives the two reasons : outlet stores, dealing exclusively in reduced price merchandise, have good sales, and success of stores will enable company in recovering its cost of building. The author's reasoning is flawed for couple of reasons.

First, In analysing the argument, the author oversimplified the situation. The author asserts that the only outlet stores are suffice to cover the full space and recover the cost of building.The author's assertion may be refuted if most of the outlet stores are already located in commercial area. As a result, outlet stores may not like to relocate. The author's business may get desired results if he follows a influential course of action. The author needs to attract a "mall genie" known as the anchor stores. For example, Timestyle mall, with exclusive range of such anchor stores as "seventh avenue" a largest retailer of London and a 12 floor snow skiing dome for indoor activity, has been attracting immense foot fall since last few years and thereby, attracting other retailers to occupy the mall space. In addition, the company should lease some space to entertainment and restaurant anchors. For instance, Sapphire mall leased some of its space to the chain of restaurants serving exclusive indo-western cuisine and to the theaters showing famous plays of time and therefore, generating a huge revenue and fame.

Second, the author assumes that if the company's mall at particular location such as Pleasantville becomes central location of outlet stores, it may take the advantages of its success.The authors fails to account that patrons may not travel at this location even if some good malls are there, because the company's mall is far away from nearby town markets. Consequently, mall may go dark after some time. For instance, White Flint, an upscale destination in washington suburbs, sits forlorn because patron gets the same stuff in nearby area.and thus patron avoids a long journey. Therefore, the company's mall may not able to catch immense foot fall. In this case, outlet stores's owners may not prefer to open their store at this location. In addition, if outlet stores's owners does not get the skilled staff required to maintain the store in suburb area, they will not like to move at this mall.

Finally, Only outlet stores may not occupy the full space and will enable the company to recoup its cost of building. The author needs to come up with different strategies in order to attract the patron and therefore may help to generate the revenue.

In conclusion, the author's recommendation is unpersuasive. It could be strengthened if the author follows the above mentioned strategies. In order to assess the merits of certain situation, It is essential to have knowledge of all contributing factors.
Joined: 10 Jan 2018
Posts: 10
Location: Morocco
Schools: HEC Montreal '19
GMAT 1: 490 Q36 V20
GPA: 3.1
Re: Please need help in AWA  [#permalink]

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New post 19 Feb 2018, 15:55
Please rate my AWA and provide me with your remarks.
Broadly speaking, the vice president memorandum comes as a significant step towards taking a decision to build a new mall in the city of Pleasantville. He states that in the context of a continuous expected increase in sales in term of outlet shopping, the new mall will be dedicated only to outlet stores which eventually presents a good business decision. He also adds that this plan will be successful to the extent that the mall is expected to be fully occupied and building costs recovered at last. This argument is clearly flawed at many aspects of the argument skeleton, as it failed to mentioned the points that we will discuss below.

Firstly, the argument underlines that as long as the country wide outlet sales have increased during the past 5 years nationwide, therefore a certain mall in a certain city which happens to be Pleasantville is to be publicized as an outlet shopping mall. This alone doesn’t certainly constitute a proof or evidence of a potential business opportunity at Pleasantville. In fact, and given the information stated in the argument, we are still unaware of the potential market for outlet shopping in Pleasantville : What if the city doesn’t present any interest to outlet shopping? And what if the city’s population doesn’t have the required purchasing power to afford any of the outlet shops items for instance? The argument would have been more convincing if it provided more information about the market signs and potential in this city, as even if the sales have risen during the past five years, it doesn’t mean that the city would present similar country results. Again, the statistics provided are global and unfortunately no more details about cities sales have been provided.

Moreover, if the plan was put to success, the vice president states in his argument that the mall will be all occupied as all of the potential shops would be interested and eager to buy/rent a certain space. Stated this way, the argument failed to provide any details about the spaces costs, the mall’s position in term of potential business location,etc… That being said, the argument didn’t provide any justification about the potential shopping outlet buyers interest in this mall : Why would they buy/rent a new retail shop in the mall at last and not elsewhere?

Furthermore, the mall building costs recovery remains subject to quite a few other parameters involving the sales during a certain period after the mall is opened to public for instance. However, the argument should have mentioned financial costs details related to the mall’s construction and more importantly respond to how well the new shopping outlet stores will be occupied.

In summary, the memorandum was convincing on certain points but not persuasive overall, in regard to the points mentioned above. Clearly, the argument would have been more sound if it provided statistical data supporting the vice president decision of publicizing the mall as an outlet shopping mall, in addition to some demographic data prooving the purchasing power of the population in the city of Pleasantville in general.
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Re: Please need help in AWA   [#permalink] 19 Feb 2018, 15:55
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