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.

The argument claims that Apogee Company was more profitable in the past when all its operations were managed from single location. Therefore, the company ought to revert to the old model by closing field offices and running its operations from one location. Stated in this manner, the argument reveals examples of faulty causality, inappropriate comparisons and vague language. The conclusion of the argument relies on assumptions for which there is no clear evidence. Hence, the argument is unconvincing.

First, the argument readily assumes that profitability was damaged by having operations in multiple locations. The claim, presented as a fact, fails to recognize any other possible alternative for the cause. It is rarely the case that one variable would be the sole cause of any problem. Moreover, it appears natural that as company grows and expands, some of its operations will be managed elsewhere. The company may expand into other countries and in order to provide the service or goods to the locals will need to have operations in the given region. In fact, regardless of the geographical coverage, the company might still want to have operations outsourced in order to cut the costs since the labor might be cheaper overseas. The argument could have been much stronger if it provided specific evidence why is the decentralization of operations to blame.

For second, the argument does not take into consideration that things change. The argument advocates to close all regional offices and have all operations centralized. Assuming ceteris paribus, this could make some sense. However, in the real world things change and clearly it cannot be assumed that the past and the present are identical. Is demand, supply or competition, among other factors, same as in the previous period? Perhaps, the company was doing better before simply because there was a boom in demand for the product while now the demand for the product is satisfied and the product's demand is diminishing. Likewise, the argument assumes that operations in the past are identical to present operations. However, it is likely that over the company's life the operations became more complex and demanding. If the argument had provided evidence that the present situation is not as different from the previous point of reference then the argument would have been a lot more convincing.

Finally, even if the above issues would be fixed the vague language used cripples the strength of the argument and thus makes it weak. More specifically, in the first sentence, the author mentions that in the past the Apogee company was "more profitable". Unfortunately, it is not clear what exactly does this mean. Does it mean that the company had 1% higher profit or 100% higher profit in comparison with present situation? How exactly was the profitability measured? Perhaps, the difference in profitability can be attributed to different measuring techniques. Without convincing answers to these questions, one is left with the impression that the difference was maybe not as marginal, implying that author's conclusion is rather a wishful thinking than a proper analysis.

In conclusion, the argument is flawed for the above-mentioned reasons and is therefore open to debate. It could be considerably improved if the author used more specific examples and precise language. In order to assess the merits of a certain decision, it is essential to have full knowledge of all contributing factors. In this particular case it is not possible to do so.