Please rate my AWA essay: Apogee Company

My First Attempt at AWA - lets see how far I have to go...


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.”


Answer:

The argument claims that in order to improve profitability the firm will need to centralize its operations by closing down field offices, and these measures will result in reduced costs and better supervision of employees. The evidence the argument uses to support this claim is that firm before de-centralizing its operations was more profitable. This argument relies on assumptions that fail to explore other alternative reasons for reduced profitability, assumes that centralized operations implicitly means better supervision of employees without providing evidence, and assumes operating from a central location will reduce costs again without providing any metrics as support. Hence, based on the lack of evidence the argument is weak and unconvincing.
The argument claims that profitability for Apogee was higher when operations were centralized, and hence de-centralizing operations would restore the higher level of profitability. This argument does not consider the possibility that since de-centralizing operations other factors such as new competition, higher input prices, or general economic strength were the causes of lower profitability. Furthermore the argument doesn’t consider the possibility that the de-centralization of operations may have created short terms costs that will result in long term gains in profitability. Since the argument did not include information about these factors, the main conclusion cannot be substantiated.
The arguments assumes that more centralized operations inherently have better supervision than operations that are de-centralized. However, this argument isn’t supported by any empirical evidence or studies to support this claim. Furthermore, it fails to consider the possibility for companies with de-centralized operations there are smaller teams thereby giving management better insight into the productivity of employees. For these reasons, the claim with regards to supervision is flawed.
The argument also assumes that operating from a central location will result in significant cost savings without exploring any of the metrics associated with this change. The argument does not consider that operating from a central location may create new costs such as difficulty sourcing labor from the local market, increased rental expanses with a larger office location, having to pay travel expenses for employees interacting with customers in local field offices, and costs associated with closing existing field offices. Since this argument fails to consider these potential additional costs, it does not effectively support the main conclusion of increased profitability.
In conclusion, the argument as stated is unconvincing for the reasons mentioned above, and would be strengthened if it explored potential alternatives and provided more evidence for the claims mentioned above. Without these, this argument remains unsubstantiated and open for debate.