GMAT Essays (AWA)

Argument: The following appeared in a memorandum from the business department of Apogee Company: "When 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 employees."

Response:
The argument about Apogee Company's profitability is not well reasoned, and almost entirely based on assumptions. The first and main assumption is that Apogee Company was more profitable when all operations were in one location versus today is because of the company being in one location. If that assumption was true, the argument still makes assumptions that moving all operations to one location is feasible from financial and capacity standpoints. An assumption that centralization would cut cost is also necessary for the argument.
Assuming that the reason for the company's decrease in profits was due to moving to multiple locations is absurd. There are so many factors that go into a company's profitability, so a detailed analysis would need to be performed in order to determine a reason for decreased profits. If an analysis was done, and it was figured out that moving was a key part of the decreased profits then the argument would be much more valid. It seems likely that an analysis could find multiple other reasons for the decrease, including down time of year, poor customer service, or increased fixed costs.
It is also assumed in the argument that moving all offices back to one location would not create even more expenses. The company may not own the same building they were in, employees could have been added to the company, or they could be in the middle of multiple leases for the current locations. There are many reasons that moving can become expensive and could possibly outweigh any positives created by doing so. If the company still owns a building that has the capacity for all employees, and they can make profits on their current locations then the argument would definitely be strengthened.
By moving all employees to one location, the total expenses for that location could possibly skyrocket. It is possible to have too many people at one location. They may have to purchase equipment and supplies to allow everyone to be comfortable and possibly even hire more managers to oversee so many people. Cost cutting always sounds like a good idea, but is often not the best thing for a company. If there are not many people at the current field offices then such a problem may not exist.
Apogee Company definitely needs more research to be done before making such a drastic change. The argument consists of many assumptions that if are proven untrue could completely destroy the presented argument.