GMAT Essays (AWA)

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 you find this argument. In your discussion be sure to analyze the line of reasoning and the use of evidence in the argument. For example, you may need to consider what questionable assumptions underlie the thinking and what alternative explanations or counterexamples might weaken the conclusion. You can also discuss what sort of evidence would strengthen or refute the argument, what changes in the argument would make it more logically sound, and what, if anything, would help you better evaluate its conclusion.

Response:

The business department's argument for closing down Apogee Company's field offices it based on the observation that the company was profitable in the past when it operated from a single unit. The premise is based on the claim that centralization of operations helps in the reduction of operating costs and helps in maintaining better control over employees. However, the conclusion is built on a number of assumptions for which there is no clear evidence.

Firstly, the business department assumes that the business conditions that favoured Apogee Company to run operations from a single entity in the past are still in play. They could have ignored the fact that the company had customer base centered on the company's location which helped the company to stay profitable because the distribution and marketing expenses were bare minimum. So, it is necessary for the company to understand current distribution of its customer base so that it does not stand the risk of alienating itself from its customers by being distant and secondly does not increase its marketing costs significantly so as to

Secondly, the business department assumes that operations cost is the single most significant cost component which drives the company's net profit. There are other cost components like distribution cost, real estate cost etc. Without making a complete assessment and without providing evidence that the consolidation into a single location will not impact any of the other cost components, it would not be pragmatic to arrive at the conclusion of closing down its field offices

Lastly, the business department assumes that the company's decision would also help them to better supervise its employees. It again makes a couple of assumptions here without evidence. The first one being that supervision of employees is not per expected standards and that it needs to be improved. The second one being that all its employees will work from office rather that remotely. They could have very well ignored the fact that currently the majority of its employees will still continue to work remotely even if the company's operations were centralized.

So, it is very important for Apogee company's business department to establish facts , thus discarding the negative implications of the above mentioned assumptions, before deciding to close down its field offices and conduct its operations from a single location