When the Apogee Company had all its operations in one location, it was

Question

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 that the Apogee Company should close down its field offices and conduct all its operation from a single location is flawed. In drawing this conclusion, the author not only fails to take into account that there may be factors other than location involved in supporting the company's profits but also fails to provide any information about the location of market. Furthermore, the author also fails to take under consideration the result of closing its field offices.

Firstly, the author provides no confirmation that the location is the only factor which supports the profit of the company. That is, there is no evidence provided about any other factors involved because of which the company had made profits. For instance, it may be that the employees were better than today or market position was better than in the current scenario.

Secondly, no information is provided about the location of the market, whether it is dense at a single place or distributed. If the market is distributed, setting up offices in the major market locations may be more profitable than condensing it into a single place.
Thirdly, the author fails to consider that unemployment would result if the company were to centralize, as, keeping more than one manager is definitely out of case if costs have to be cut down.

The argument can be strengthened by explicitly stating that location was the only factor when the company was centralized. As it stands, however, the argument is flawed for the reasons indicated.

crackgmatg · Answer

Hi ShreyaMotwani,

I would rate it to 4.
Some pointers:
1. Explain the flaws
2. If any assumptions are not clear
3. If more evidence is required
4. Whether some points in the argument are actually valid and can further be investigated
5. Some examples to prove all this.

Good luck
Please press KUDOS button on the left, if my post was of help ..

ShreyaMotwani · Answer

Thank you so much for pointing out the gaps. I will certainly use these pointers to improve the essay writing.

vishal152511 · Answer

Hi Guys

This is my first attempt to write the essay. Please rate it. Any feedback and comments will be appreciated.

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 business department of the Apogee Company in its memorandum has claimed that Apogee company should centralize and conduct all its operation from a single location. As it would help in cutting down the costs, increase profitability and better supervision of Employees. The conclusion is based on the premise
that Company was more profitable earlier when it conducted its operation from a single location. I think there are several flaws in the line of argument. Hence, the argument sounds little weak and unconvincing.

First of all, the primary reason for low profitability can be completely different from the reason mentioned in the memorandum. There is not substantial evidence to cement that centralization would improve profitability. Profitability depends on the cost and the market price. It can be the case that the market price of the product has decreased over the past few years hence resulting in low profitability.

Secondly, the cost Analysis has not been mentioned. Due to Centralization the employees would have to travel to field for client meetings and other work. This will result
in the additional cost and inconvenience for the employees. It can be the case that most of the talented work force may not shift from their present working location. Also the company’s goodwill may take a hit by suddenly closing all the field offices and may lose some of the business to its competitors. A proper cost analysis would have helped to establish that centralization would result in lower costs.

Thirdly, the argument assumes that having a centralized office will help in the better supervision of Employees and eventually will improve efficiency. This assumption will not be applicable if the management doesn't have the right skills and are themselves at flaw. A little more in depth investigation to find the root cause would have strengthened the argument.

Without the relevant and contextual information, it is difficult to judge the efficacy of the argument suggested in the memorandum.

JatinBhandari1 · Answer

Hi Vishal Well penned. You've correctly identified the primary assumptions. Below are a few points that you may consider : Have a developed conclusion. Keep the transitions consistent: firstly, secondly.... or First, Second Time yourself well; it seems you ran out of time by the end State the assumption before you explain why it is unreasonable. Also refer to the points mentioned by crackgmatg. Best! Dolly Sharma

redabkf · Answer

Hello Guys

This is my attempt over this essay. Please rate it. Any feedback and comments will be much appreciated.

Thanks in advance!

em20 · Answer

Hi, would be great to receive some pointers on my AWA. I used chinesburned's template.

Thanks!

"The argument claims that centralization of Apogee Company’s operations would lead to better profitability due to cost cuts and help Apogee Company maintain better supervision of all its employees. The company states that when all its operations were based out of one location, it was more profitable than it is today. Stated in this way the argument fails to mention several key factors, on the basis of which it would be evaluated. The conclusion of the argument relies on assumptions for which there is no clear evidence. Therefore, the argument is rather weak and had several flaws.
First the argument readily assumes that centralization will lead to profitability because it cut costs. This statement is a stretch and cannot be substantiated in any way. It isn’t supported with any data or projections. There are numerous examples in other areas of business or commerce, where the entities reduced their costs by decentralizing their operations. For example, Dish corporation, a top accounting firm in United States of America, is an organization which decentralized its operations to the capital of each state instead of having all its employees work from New York. This benefited the company in serving its customers all over the country readily and without any delays which led to increased business. The company didn’t have to maintain a large head office to house all its employees under one roof which saved the company from having majority of its funds blocked in rent. The employees had greater job satisfaction as those who were not from New York City, were able to choose the offices in their home state and small teams with a designated manager made operations smoother. All these factors led to a greater profitability for Dish. The argument could have been much clearer if it explicitly gave examples of how centralization of operations would lead to an overall minimized cost.

Second the argument claims that centralization will lead to better supervision of all employees. This again is a very weak and an unsupported claim as the argument does not demonstrate the correlation between quality of supervision and centralization of operations. In, fact the argument does not even state the quality of its supervision of employees when Apogee Corporation had all its operations in one location, nor does it state the quality of its supervision of employees at the currently maintained various locations. If any such correlation had been shown between employee supervision and centralization of operations, then the author would have sounded a bit more convincing. In addition, if the argument provided evidence that decentralization led to poor employee supervision, the argument could have been strengthened further.

Finally, the argument concludes that the company should close its field offices and conduct operations from a single location. From this statement again, it is not at all clear how centralized operations are better than decentralized operations. Without convincing and supporting evidence and examples from other businesses where currently centralization of operations has done a great job, one is left with the impressions that the claim is more of a wishful thinking rather than substantive evidence. As a result, this conclusion has no legs to stand on.

In summary, the argument is flawed for the above-mentioned reasons and is therefore unconvincing. It could be considerably strengthened if the author clearly mentioned all the relevant facts. In order to assess the merits of a certain situation/decision, it is essential to have full knowledge of all contributing factors without which the argument remains unsubstantiated and open to debate."

Dvaishnav · Answer

Here is my attempt. I will appreciate your feedback.

The argument seeks to establish that the primary reason behind the low profitability of Apogee Company is geographically diverse locations for field offices. However, it fails to provide robust evidence to establish this link.

The author compares and contrasts the past and the present. While it is a fact that the profitability of the company was better in the past, the argument would benefit from a more comprehensive comparison of the past and the present. We especially need to understand how the customer base, size and number of employees, and product portfolio have evolved over the period. The centralized location may offer a better cost structure, but it also puts the company away from local customers. This can lead to reduced brand visibility, lack of knowledge about the local markets, and increased logistic and transportation costs. All of these factors can affect revenue and ultimately reduce profitability. 
 
Towards the end of the argument, the author also implies that proper supervision of the employees leads to enhanced profitability. However, it is not clear as to why the current setup is not allowing better supervision and how is it linked to profitability. The Apogee company can leverage modern IT technologies to stay in contact with all of its remote employees to ensure proper supervision.

More importantly, if the company thinks that employees are not able to deliver without supervision, it points to more serious underlying issues such a lack of self-motivation, skills, and training. A centralized location will fail to address these issues and hence may not increase profitability.
Many companies have to make such decisions as they grow over time. While a company should always learn from its past experiences, a business model that worked in before under different circumstances may not always produce the desired results today. Hence, I would suggest a more comprehensive approach as suggested above before deciding to close all the field offices.

When the Apogee Company had all its operations in one location, it was

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