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Profitability and Centralizing, a memorandum.

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Profitability and Centralizing, a memorandum.

Post Sat Jun 25, 2016 1:11 pm
Please review and provide your valuable feedback. Much appreciated! Very Happy


The following appeared in a memorandum from the business department of the Apogee Company:
“When the 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 all
employees.”
Discuss how well reasoned . . . etc.

My response:

The argument claims that as the company was more profitable in the past when it had all its operations in one locations, it should close down all its field offices and centralize and this would help in cost reduction along with better supervison of workers, which together will increase its profitability. Although the author might have some merit in making the claim, the argument as it stands in its present form shows unsound reasoning and is flawed because it does not consider some key factors which are necessary to assess the merit of the claim.

First, the author does not provide any evidence to support that the company would still be more profitable if it were to centralize its operations. Though it might have been a good choice in the past, but the conditions could have changed such that it would be better for the company to have diversified operations.

In addition, the author assumes that it would still be more profitable from having its operations centralized even if it has to incur the costs involved in converging and centralizing. This assumption is not backed by any evidence by the author. The argument would have been more convincing had the author provided some monetary figures to subtantiate his claim, like the cost of reorganizing, the current profit and the profit after centralizing. Furthermore, there is a lack of clarity on how exactly does better supervison of employee leads to more profitability. The author does not substantiate this claim by giving any evidence or citing any studies.


In closing, the argument would gain significantly if it addresses the above stated concerns. The author can provide evidence in terms of data and figures to make the argument more convincing. Without making the necessary changes, the argument stays open to debate and the claim remains unwarranted.

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