Awa Gmat Argument 2 - Apogee Company

Topics: Profit Pages: 3 (807 words) Published: November 20, 2010
Question 2:


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 2 (405 words) :

   The author concludes that the Apogee Company should close down its field offices and centralize all of its operation in one location in order to cut costs and help the company to maintain better supervision of all staffs. As a result, the Apogee Company would improve the company’s profitability. The line of reasoning is that the Apogee Company had ever been more profitable than it is today because of its centralized operation in the past. However, this argument is problematic in two respects.

   First, the argument is based on the questionable assumption that centralization strategy that have ever proved effective in the past will work in today’s business world. This assumption is not necessarily valid. In fact, other factors could have been involved. For example, in the past the number of customers of the Apogee Company might be small and the company was the only single company that could produce this product. Therefore, it was suitable for the company to centralize all of its operations in only one location. However, at present the targeted groups of the Apogee Company expand and many companies enter into this market. Therefore, to sustain the market share in this segment, it is not a wise choice for the Apogee Company to centralize its operations to a single location.

   Second, the author assumes that the Apogee Company is less profitable than its performance in the past owing to its additional...
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