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 maintains better supervision of all employees.”
The writer of the memorandum states that the only way to maximize Apogee Company is to close down its subsidiary offices and centralize the operation. While the writer address a significant problem for the company, the logic of his argument and the conclusion he reaches are both fundamentally flawed. His suggestions would probably do more harm than good to the company if implemented.
To begin with, the writer wrongly assumes that the dispersed location of operation is the main cause of low profit. There are many factors that he may have missed out. For instance, ineffective operation procedures and unclear guidelines may also reduce the products to be delivered on time. These factors may also lower productivity and hence lower the revenue to the company.
Moreover, recent profit with past profit may not be comparable. The economic environment changes over time. We cannot say that the current operation is totally wrong simply because the record of profit is low, and therefore we should change everything back. In reality, many business organizations modify their business strategies when their current strategies fail, but few of them would implement their previous strategy again.
In addition, not all offices are unprofitable. It is not wise to shut down all offices as some of them may have potential. A better way to make the decision is to conduct detailed investigation to reveal which locations are really unprofitable.
My final point is that the writer considers no other alternative to boost up revenue. Cutting cost is obviously not an effective way to raise profits. There are many positive ways to stimulate sales, such as conducting market promotions and improving customer services.
For the reasons stated above, the writer’s argument simply does not hold up. If he really wants to increase sales, the writer should devise more alternatives and suggestions to the management levels.
“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 maintains better supervision of all employees.”
The writer of the memorandum states that the only way to maximize Apogee Company is to close down its subsidiary offices and centralize the operation. While the writer address a significant problem for the company, the logic of his argument and the conclusion he reaches are both fundamentally flawed. His suggestions would probably do more harm than good to the company if implemented.
To begin with, the writer wrongly assumes that the dispersed location of operation is the main cause of low profit. There are many factors that he may have missed out. For instance, ineffective operation procedures and unclear guidelines may also reduce the products to be delivered on time. These factors may also lower productivity and hence lower the revenue to the company.
Moreover, recent profit with past profit may not be comparable. The economic environment changes over time. We cannot say that the current operation is totally wrong simply because the record of profit is low, and therefore we should change everything back. In reality, many business organizations modify their business strategies when their current strategies fail, but few of them would implement their previous strategy again.
In addition, not all offices are unprofitable. It is not wise to shut down all offices as some of them may have potential. A better way to make the decision is to conduct detailed investigation to reveal which locations are really unprofitable.
My final point is that the writer considers no other alternative to boost up revenue. Cutting cost is obviously not an effective way to raise profits. There are many positive ways to stimulate sales, such as conducting market promotions and improving customer services.
For the reasons stated above, the writer’s argument simply does not hold up. If he really wants to increase sales, the writer should devise more alternatives and suggestions to the management levels.
