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Author Message
Intern
Joined: 06 Sep 2012
Posts: 1
Location: India
Concentration: Entrepreneurship, Finance
GMAT 1: 680 Q49 V34
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Kudos [?]: 5 [0], given: 4

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22 Sep 2012, 11:38
Analysis of an argument:

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.”

My Response:

The business department of the Apogee Company states that the company's profitability has decreased after decentralization. The author arguments that for this reason, the profitability may be increased by centralization. This argument, without citing any reasons why the decentralization was implemented in first place and then by not providing any supporting evidences, clearly does not have merits to stand on its own.

First, the author fails to provide any reasons, whatsoever, which might have prompted the company for decentralization at first place. For instance, the decentralization very well might have been introduced because of managerial issues, like unavailabilty of enough space for all the employees of a growing organization at the desired location. If the step was taken for such an issue, and if it is successful in solving the issue, and the profitability decrement only marginal, then it stands justified still now. Without having information on these reasons, the argument is totally unfounded.

Second, the argument does not provided any substantial evidence to if decrement in profitability was cause by decentralization alone, or even if decentralization was a part of the cause for the decrement. There are numerous examples of very large organizations which are decentralized and are raking in huge profits. In fact, most, if not all, of the Fortune 500 companies do follow this strategy. The author could have taken in other factors like economic situation, revenue generated by the company per person etc. and provided a compelling comparison to substantiate this argument.

Finally the argument claims that centralization will result in better supervision of employees. At the same time, the author does not provide any evidence regarding if the employee efficiency has decreased after decentralization. In fact, if the decenralization is based on operational areas or departments, managers should be now have the opportunity to be around the employees more, and hence result in better supervision. Nor can it be concluded from the statement any how that the employee efficiency havs gone down. The author could have substantiated the argument better had he have cited any complaints by managers or employees in this regard.

On the basis of the aforementioned fallacies, it appears the argument of the buisness team is more of wishful thinking than a cmpelling evidence. The author could have very well supoorted it with relevant facts to give the argument legs to run on.
Please review my Analysis of an Argument   [#permalink] 22 Sep 2012, 11:38
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