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.
The above paragraph is an excerpt of a memorandum from the business department of the Apogee Company. It states that as compared to an earlier situation where the Company had only one location, the company has several field offices in the present. However, the profits have reduced considerably. Hence, the business department suggests that the Company should close down its field offices, centralize all work from a single location which, in the department’s opinion would not only reduce cost and as a result maximize profit, but would also lead to better supervision of employees.
In the information provided, the nature of business of the company has not been specified. Hence, the explanation started henceforth will be on the assumption that the Company deals in every day consumer goods.
The paragraph states “When the Apogee Company had all its operations in one location, it was more profitable than it is today.” However, the precise location of the central office has not been given. Meaning, it is not specified whether the location was an industrial area or a residential area. But, going by the explanation, since it is a single office and there is no mention of manufacturing, it is assumed that they were once located in a residential area. This must have made sales go high which in turn doesn’t magnify rising costs as such. Hence, the paragraph states that profitability was better when the Company worked from one location.
Another point that the memorandum states is since profitability is taking a beating; the company should shut down its field office and operate from a centralized location. Again, location is a question mark. Also, the department has just assumed that several field offices lead to rising costs. But, the proportionate profitability arising from these field offices has been ignored.
Also, the paragraph fails to take into consideration the rising cost of living. Overtime, price index keeps changing. There is bound to be inflation in an economy without which the economy would be a flat line. With inflation, there is a rise in cost, but, the proportionate cost in selling prices may or may not be the same. The department needs to analyze this in detail.
In my opinion, the memorandum could have touched a few more points to make the memorandum more convincing. One, as stated above, the company should take into account the rising costs and then make a comparison so as to get a true and fair view. Second, the company should also take into account the sale made in the respective field offices with the corresponding costs. Any field office that is making loss overtime should be accordingly shut down. The Company also needs to consider the location of the field offices. Since it has been assumed that it is a consumer goods company, it needs to make sure that maximum field offices be located in residential areas. Location plays a very vital role in business. The company also needs to think about the cost that it will incur in transporting the goods from the centralized offices to farfetched locations. This may also lead to a rise in costs.
The point of better supervision of employees in a centralized location is fair. However, if the company does decide to keep a few field offices open, it can appoint a manager exclusively for field offices who can manage the field offices and the respective employees on a daily basis.
In conclusion, if the business department of the Apogee Company were to consider the points mentioned above, it would stand to make a better impression as to why certain field offices need to remain while the others may have to be shut down. Conclusions cannot be taken based on the past. The future is also important as far as business is concerned.