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 memo states that company is spending too much money on free customer service and there is a need to limit the service to two years. Current lifetime warranty is resulting in more costs into a product life cycle. Even customer service employees are paid by the company to possess skills regarding all the products of company, including products they do not sell.

The company is planning to reduce the warranty period to two years since current lifetime warranty results is more costly. But if the customer prefers the product only because of its lifetime service, then limiting warranty can impact the sales of the product. If the product indicates some problems only after the usage of two years, then in that case lack of free service may force the customer to opt for another product. For instance, Many washing machine companies like LG, Whirlpool provide a warranty of 5 years. If suddenly they reduce the warranty to one or two years, It will definitely impact the customer decision while purchasing the product.

The company needs to consider to what services of their are incurring more costs compared to others. If some services are exceptionally resulting in more costs to the company such as product damage during transportation, those problems need separate solution or service for which charges can be applied to the customer or the one responsible.

The company pays the customer service employees a premium because they possess skills for all their products. But the company needs to consider whether skills regarding the products they no longer sell is necessary for the service. If the expert skills regarding old products are not necessary, then the premium payed because of the old products is unnecessary expense that can be cut down to increase the profits.

The argument as is may not be the right decision for the company to improve the profit margins. It is preferred to consider aspects such as customers opinion, market conditions, Competing products and their services etc before going for a decision. Also there can be few services or skills for which service employees are unnecessarily being paid. The company needs to review all the above factors and various other options before concluding the argument.