GMAT Task 02: The Apogee Company

by PJWisaksono

Task 02

Date: 5 September 2016
Question:

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 that it is today. Therefore, the Apogee Company should close down its field offices and conduct all its operations from a singe 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 discussion what sort of evidence would strengthen or refute the argument, what changes in the argument would make it logically sound, and what, if anything, would help you better evaluate its conclusion.

Source: http://www.mba.com/~/media/Files/mba/NEWTheGMAT/AnalysisofanArgument100606.pdf

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My Answer (corrections and/or comments available in the brackets are made by Mrs Amanda, a teacher of IELC Solo):

A memorandum of the Apogee Company, the head of business department thought that based on history (what history exatcly) the company could make more profit when it only has one business location in operation. Hence, he suggested that it (be more specific. They wanted to shut down all other locations. This is an important detail) seems to be an idea. Moreover, the centralization may (include that this is the writer’s opinion) also improve its profits through cutting costs and maintaining better supervision towards all employees.

The head of business department should conduct thorough research and put a lot of consideration into such a drastic change. Using historical data and information (the writer did not even use historical information. He just jumped to a conclusion based on one fact) is not adequate enough to make corporate action. Such as whether to have a single business location or not. He must consider and compare between what happened in the past and what is happening at this moment in all aspects such as macro-micro economics, and its competitors.

Nowadays, lots of multinational companies can survive and expand their business almost all across the word. They use location saving to improve their profits. Hiring low-wage workers, building factories close to the sources, and implementing lower tax rates are some examples of the location saving benefits. Furthermore, most of the companies have been implementing tighter supervision towards all employees by using technology. They install CCTVs to monitor their daily business, use fingerprints to monitor attendance, practice Key Performance Indicator to make sure each employee’s work is based on his/her duties and responsibilities, and so on (avoid vague endings like this. Btw, what is the connection between your main idea [location saving] and the fallacies in the writer’s argument? Make a clear connection).

Hence, the Apogee Company has a lot to consider before making decision to close its business fields. But (Do not start a sentence with But, Because, etc) if they intend to pursue what was suggested by its business department, the closing process should not be done at the same time (try to focus more on the problems in the writer’s reasoning than what could happen to the company).

Italic Words: Words corrected by the teacher

Words in Brackets: comments from the teacher

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Sample Answer 1:

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.

The author argues that Apogee Company improves profitability by closing down its field offices and conducting all its operations from a single location. To support this argument, the author states that such centralization would improve profitability by cutting costs and helping the company maintain better supervision of all employees. In addition, the author points out that Apogee Company enjoyed a more profitable business in the past when it had all its operations in one location. However, the author’s argument is flawed in three aspects.

In the first place, the author regards a complicated managerial issue as a single-step change in operations and ignores many relevant factors. A company’s profitability is determined by a whole bunch of economic, social, political, and cultural factors as well as management skills and employees’ attitude. Luck also plays an important role. It can be reasonably assumed that Apogee Company is suffering a low profitability at present. The reasons can be many, so any single adjustment without considering other possible influential factors is incomplete, and any oversimplified conclusion is unfounded.

In the second place, it is dangerous for Apogee Company to cut costs deeper and supervise employees better by resorting to centralization. The company may lose its market share because it concentrates its entire resource in one single location and has no direct access to some of those markets that it has offices at present. It will be difficult for the company to get first-hand information and make quick decisions to fight competitors. Moreover, Apogee Company may also lose its customers’ interest and trust. People always tend to conduct business with somebody who they can see whenever they want to see. Apogee Company may easily become another unfortunate company that is forgotten by its customers in a region where it does not have a permanent office.

In the third place, it is senseless to compare the present operations of Apogee Company with the operations in the past. The world is changing and the business environment is different. Competition is probably more severe than before, for example, so Apogee Company does not have the relative advantage it had. The only way for the company to keep competitive is to keep tighter relationships with its customers and provide better and quicker services to them, but this may require Apogee Company to open more offices rather than to close most of the current offices.

In sum, the author’s conclusion is unfounded. To improve its profitability, Apogee Company should analyze its business environment carefully and, without losing its current business relationships, explore new opportunities. If it simply closed its current offices, the most possible result is that it loses its customers and therefore suffers even lower profitability.

Source: http://www.eduers.com/gmat/sampleargument02.htm

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Sample Answer 2:

The argument that the Apogee Company should close down its field offices and conduct all its operation from a single location is flawed. In drawing this conclusion, the author not only fails to take into account that there may be factors other than location involved in supporting the company’s profits but also fails to provide any information about the location of market. Furthermore, the author also fails to take under consideration the result of closing its field offices.

Firstly, the author provides no confirmation that the location is the only factor which supports the profit of the company. That is, there is no evidence provided about any other factors involved because of which the company had made profits. For instance, it may be that the employees were better than today or market position was better than in the current scenario.

Secondly, no information is provided about the location of the market, whether it is dense at a single place or distributed. If the market is distributed, setting up offices in the major market locations may be more profitable than condensing it into a single place.

Thirdly, the author fails to consider that unemployment would result if the company were to centralize, as, keeping more than one manager is definitely out of case if costs have to be cut down.

The argument can be strengthened by explicitly stating that location was the only factor when the company was centralized. As it stands, however, the argument is flawed for the reasons indicated.

Source: http://gmatclub.com/forum/please-rate-my-awa-essay-apogee-company-162314.html