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10 Sep 2014, 12:28
Topic:
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.
Essay:
The argument proposes that by aggregating all operation centers into one location, the Apogee Company can increase profits because of lower costs and better supervision. However, this argument is flawed and makes unproven assumptions. In order to make this argument stronger and more convincing, it needs more evidence and debunk its potential doubts.
First, the argument states that having one centralized location can lower costs and thus raise profits. However, the argument neglects the fact that profits depend on costs and revenue while assuming that revenue is constant despite the number of locations. A great example would be Apple. Apple has offices and distribution centers all over the globe. Although these global centers increase costs, they also increase revenue, because they allow Apple to distribute the products globally in a more efficient and knowledgeable manner. In other words, despite the rising costs, Apple is making more revenue by selling more. Apple’s success shows that expansion can actually help the company. Thus, the Apogee Company, in order to strengthen the argument, needs to show that expansion is not a viable option or that centralization, for the time being, is the only option to go.
Second, the argument assumes that centralization can lead to better supervision and that better supervision can lead to more profits. However, the Apogee Company is making the assumption that one person or a small group of people can supervise the entire company and make decisions for a diverse geographical group. For example, McDonalds has restaurants all over the world with customized menus made for different countries. In China, McDonalds might sell Asian-themed burgers. If McDonalds has only one American supervisor or supervision team, an Asian-style menu would have never been proposed, let alone passing the product quality screen, because a centralized, American team would not understand the situation in China. Thus, the Apogee Company needs to show that it has a homogenous consumer base before arguing that a centralized team can do better.
Finally, the company compares the past with the present by saying that it was profitable in the past by having the only one location. However, the company does not show that the situation is the same as it was before. If in the past the Apogee Company was the only company in the town and now there are a lot more competitors, one can then attribute the profitability to its monopolistic power, rather than its centralized location. Furthermore, closing down field offices would not dissolve the competition. To strengthen the argument, the company needs to show that the situation now is similar to the situation in the past. Also, it can strengthen the above-mentioned flaws by showing that it does not have the resources to expand and that its products are currently made for a small, homogenous population within the geographical area.
In conclusion, the argument makes ill-founded assumptions and does not prove that these assumptions are valid. To make a better argument, the company needs to prove the points mentioned above
Thank you so much!