Beat The GMAT a GMAT & MBA community

The following appeared in a report from a management-consulting firm to the CEO of Telamon Industries.
" Ten years ago, Telamon Industries had factories in 11 states. Over the last decade, as Telamon has centralized all of its operations in one plant located in its home state, it has also become less profitable. Thus we recommend that Telamon reduce the size of the central facility in its home state and open smaller facilities in other states. Doing so will enable the company to increase profitability by taking advantage of the lower labor costs in other states. "

Discuss how well-reasoned you find this argument. In your discussion be sure to analyze the line of reasoning and the use of evidence in the argument. For example, you may need to consider what questionable assumptions underlie the thinking and what alternative explanations or counter-examples might weaken the conclusion. You can also discuss what sort of evidence would strengthen or refute the argument, what changes would make it more logically sound, and what, if anything, would help you better evaluate its conclusion.

The management-consulting firm claims that the company, Telamon, began losing money because it became a centralized company. The report also claims that if the company were to decentralize and branch out into other states it would lead to increasing profits because it would be taking advantage of the lower labor costs in other states. The author of this report is not persuasive at all, and has many flaws.
The author assumes that the centralization of the company was the only cause for lower profits for the company. Could it be that the economy no longer demands Telamon Industries products or services? There are not any statistics showing by how much less the company is making as compared to previous years.
The author also assumes that if the company decentralizes away from its home town, and makes smaller facilities in other states that it can take advantage of the lower labor costs in those states. The author of the report fails to realize that in some states property taxes are higher. The author does not take into account all the other variables that take place, and only assumes that the lower labor costs will allow the company to increase profits.
Now you might be able to argue against this and state "no matter what variable you change the company will still be better off if it has a lower labor cost in other states." Although this might be true, you have to remember that the company is less profitable. We need to know "why" is it less profitable? Is it because it has too many employees or is it because it is not selling enough products?
The argument would be much stronger and much more persuasive if it contained evidence and proof on to why the company has lost profits over the decade, and also proof to if centralizing is the cause of lowered profits. Any CEO reading this would read it with a grain of salt. The argument the author uses is largely flawed because it is not supported with good statistical evidence. The argument also lacks any proof for its claims. Any management-firm can make a pitch, but if a it is looking to get a deal, the management firm has to come up with a better argument.



I'm coming really close to my test - almost 10 days away, if I could get this graded id be very thankful THANK!