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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.
The argument indicates that Apogee Company produced more profits when its operations were concentrated in a specific location. Therefore, the author of the argument concludes that this company should close down its offices which are in different places and manage its operations in a single location. Consequently, this action would reduce the costs of the company and allow more supervision of the employees. This argument could seem very logic, but if we analyze more deeply, we will see that it is based on weak assumptions and doesn’t identify clear cause-effect relationships between the facts. Hence, the argument is unconvincing and has several flaws, which are the following:
First, the company was more profitable when it had all its operations centralized. In this point, the author doesn’t consider alternative variables that could explain why the company provided more profits during that period. An alternative explanation could be the monopoly which had the company during that period; because it was the only the company in the market, it profits were very high. If the author wanted to strength this point, he or she had to provide more evidence to identify the relation between centralized operations and profits.
Second, the argument claims that centralization would result in a reduction of costs. This is not necessarily true. Probably, the company decentralized its operations because it needed more distribution points in different regions of the country: this would allow it to reduce its transportation and logistics costs. If the company centralized its business in a single location, there could be the risk that the company would have to spend more in multiple shippings to their markets. In this sense, the argument should demonstrate how the company would reduce costs if the management decides to close its field locations.
Third, the author readily assumes that centralization would allow a better supervision of the employees. This is again a very weak and unsupported claim. Probably, the employees of the company shouldn’t be in the location because their functions demand to work in the field or streets (i.e. salesmen have to go to neighborhoods to offer the products of the company). If this is the case, it would be irrelevant having the employees in a specific location because the company couldn’t supervise the employees directly. This argument would be better if the author provides more detail about the functions of the employees.
In summary, as you can see the argument is unconvincing because doesn’t provide enough information to validate the assumptions that it presents. The author should provide more detail about the relationship cause-effect between profits and centralized operations. Also, he or she would have to provide more information about how centralization would help to reduce costs and improve employees supervision.
"Life’s battle doesn’t always go to stronger or faster men; but sooner or later the man who wins is the one who thinks he can."
My Integrated Reasoning Logbook / Diary: http://gmatclub.com/forum/my-ir-logbook-diary-133264.html