GMAT Essays (AWA)

ESSAY QUESTION:
The following appeared in a memo to executives at a company that manufactures industrial equipment:

"We are spending too much on free customer service after a sale has been made; we need to limit our warranty to two years in order to improve our profit margins. The current lifetime warranty can lead to costs decades into a product's life cycle. Also, we pay our customer service employees a premium because they must possess expert skills across the entirety of our very diverse product line, including products we no longer sell."

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 states that an organization wants to cut the lifetime warranty on each of its diverse product lines, including the products that do not sell anymore , in order to improve the profit margins. The argument has some assumptions which needs to be addressed to better evaluate the argument.

Firstly, the argument assumes that the only way for the company to increase its profit margins is by limiting the warranty. Also, the argument does not mention about the average life cycle of the product line. If eitherways the average life cycle of the each of the products is three to four years, then typically most of the free customer service would be for the relatively new line of products and hence reducing the warranty to two years would not have a substantial reduction in spending on customer service.

Secondly, the argument fails to address whether customers would still buy any of the produts in the product line, if the company changed the life time warranty to a two year one. It is possible that the life time warranty gives the product line an edge over other products in market and limiting the warranty would move those customers to other products thus reducing the sales of the products and reducing the profit margin.

The argument also assumes that in the current structure of the customer service, each of the employees involved in customer service should posses expert skills across the entirety of the diverse product line. Though it may be possible that employees who provide customer care for old products may charge a premium, but the calls related to old products will also be fewer and hence, not everyone involved in customer service requires to be paid a premium salary. Hence, even though the costs may be cut by reducing the employees who charge premium , it may not lead to an substanitial increase in profit margins.

To conclude, the above assumptions needs to be addressed to substantiate the argument and if supporting evidence is provided to address the above, it would help in better evaluating the argument.