Please rate this essay. It'll be much appreciated. :)

This topic has expert replies

How much would you rate it?

1
0
No votes
2
0
No votes
3
0
No votes
4
0
No votes
5
0
No votes
6
0
No votes
 
Total votes: 0

Newbie | Next Rank: 10 Posts
Posts: 2
Joined: Sat Jul 11, 2015 5:08 pm
AWA ESSAYS: Analyze Argument
ESSAY QUESTION:
The following appeared in a corporate memorandum of a beverage manufacturer:

"Our promotional price reductions on energy drinks have been highly successful, as we have seen a dramatic increase in unit sales. Further, surveys of our consumers indicate that this promotion was favorably received by the majority of our customers. Therefore, to improve our company's profitability and enhance its perception in the eyes of consumers, similar price reductions should be offered on all drinks produced by our firm."

Discuss how well reasoned you find this argument. Point out flaws in the argument's logic and analyze the argument's underlying assumptions. In addition, evaluate how supporting evidence is used and what evidence might counter the argument's conclusion. You may also discuss what additional evidence could be used to strengthen the argument or what changes would make the argument more logically sound.

YOUR RESPONSE:
The argument here is about the price reductions that the beverage manufacturer is keen on taking in order to increase the profitability of the company and to enhance it's perception in the eyes of the customer.

Firstly, giving an economic point of view, the law of demand says that lowering the price of a product will increase the demand (and hence the sale) of the product in question. Although, decreasing the price of the product would increase the demand of it, considering it is a normal good, it does not guarantee that it would increase the profitability of the company. The policy makers of the firm should first measure the cost of manufacturing the beverage. Simply decreasing the price, without considering how much it costs to actually produce it, on the contrary would have a negative effect on the profitability of the company.

Secondly, in economics, there's a term called the Snob Appeal. Some consumers have an affiliation towards costly products or let's say they do not take well with the products that are cheap. And certainly, they would despise a product that was priced higher and now "because they aren't selling enough, they've reduced the prices". This would be like a negative propaganda towards a certain class of people.

Thirdly, the company should have also thought about the long term viability of the proposal. Reducing the prices might have a positive effect on the revenue of the firm, but would the company be able to continue this pricing policy?
The answer is, the company should evaluate their pricing position. Now, since it is a beverage manufacturing company, there must be other beverage manufacturing companies and that would essentially make the beverage market an Oligopoly market. Now, a price reduction by this company should also lead to price reduction in other companies due to the tough competition. The company should evaluate their market position and make sure that other companies' price reductions wouldn't actually affect their sales in the LONG TERM.

To conclude, the company should first and foremost take a look at costs. The main motive of any company is to enhance profits and by first going over the costs of the company, the company could then adopt a reduction in pricing policy to go in that direction. It should also consider whether it is actually increasing the perception of the company in the eyes of the consumers or not. For this, the company should go over their customer base and the markets in which it holds the maximum position and evaluate that whether decreasing prices of it's beverages would have a negative impact. Lastly, no company is said to be a good company if it doesn't have a vision for future. For it to be maintain a going concern status, the company should evaluate whether this strategy adopted by them would be viable in the future or not.

GMAT/MBA Expert

User avatar
Master | Next Rank: 500 Posts
Posts: 205
Joined: Wed Jan 21, 2015 7:02 pm
Location: New York, NY
Thanked: 57 times
Followed by:26 members

by Katharine@GMATPrepNow » Sun Jul 12, 2015 8:55 am
Hello piyush.shah901,

I hope that these comments help you prepare for the exam.

Writing: Be careful with "it's" and "its" in your writing. You should only use "it's" as a short version of it is or it has, but you say "to enhance it's [the company's] perception." Instead, you mean "its perception." If you want to show ownership or possession, use "its" instead. Some of your sentences are long and overly complicated. Make sure to use simple sentences when possible, because they're better at conveying meaning to the reader. I'm also not sure what you mean in your final sentence by "for it to be maintain a going concern status," so I think you may have made a few typos. Try to save a few minutes to read through your work and catch errors before you submit your responses.

Structure: The intro isn't a full paragraph! You need three good sentences for a strong intro, so even though you have a reasonable first sentence, you have some work to do. Otherwise the structure was a great base for continuing your AWA prep.

Arguments/Examples: You found several flaws in the author's reasoning, and I like how you chose examples from several different fields. It's clear that you understood the author's argument, so concentrate on writing and structure in future responses.

Suggestions for Improvement: The content of this response was mostly good, but you need to look out for writing errors. Make sure that you write an intro with three strong sentences. I'd give this essay a 4-5, and I think that you will reach a top score once you improve these areas.

If you have other questions, please let me know.

Best,
Katharine
Katharine Rudzitis - BA
on hiatus until further notice
We have plans to suit every learning style and budget:
- Self-directed video course
- Private online tutoring from 99th-percentile experts
- Combination packages with video course & private tutoring
- Every plan includes 5 full-length practice tests
- Use our video course with Beat The GMAT's free 60-Day Study Guide
- We have dozens of free videos to try out before buying
Image

Newbie | Next Rank: 10 Posts
Posts: 2
Joined: Sat Jul 11, 2015 5:08 pm

by piyush.shah901 » Sun Jul 12, 2015 1:32 pm
Thank you Katharine for a detailed analysis.
I'll keep in mind the usage of it's and its.

Also. the final statement should've been "for it to maintain a going concern status"
A typo.
Anyway, thank you.
It helped. :)

GMAT/MBA Expert

User avatar
Master | Next Rank: 500 Posts
Posts: 205
Joined: Wed Jan 21, 2015 7:02 pm
Location: New York, NY
Thanked: 57 times
Followed by:26 members

by Katharine@GMATPrepNow » Mon Jul 13, 2015 6:11 am
Thanks for clearing up the last sentence. Good luck on the next response!
Katharine Rudzitis - BA
on hiatus until further notice
We have plans to suit every learning style and budget:
- Self-directed video course
- Private online tutoring from 99th-percentile experts
- Combination packages with video course & private tutoring
- Every plan includes 5 full-length practice tests
- Use our video course with Beat The GMAT's free 60-Day Study Guide
- We have dozens of free videos to try out before buying
Image