GMAT AWA sample essay

Question:

The following appeared in the editorial section of a local newspaper:

“This city should be able to improve existing services and provide new ones without periodically raising the taxes of the residents. Instead, the city should require that the costs of services be paid for by developers who seek approval for their large new building projects. After all, these projects can be highly profitable to the developers, but they can also raise a city’s expenses and increase the demand for its services.”

Discuss how well reasoned . . . etc.

Answer:

The excerpt provided is from the editorial column of a local newspaper. It states that the city should provide its residents new services and improve the prevailing ones without raising the taxes. Instead, what has been suggested is that the cost of providing such services should be met by the developers who seek approval for new and large building projects. According to the author’s opinion, such projects are highly profitable to the developers and in turn raise the city’s expenses and increase the demand for its services.

One noticeable omission in the excerpt is the lack of information regarding the type of service. The author argues that since the large new building projects are highly profitable to the developers, they should therefore bear the cost of such services being provided to the residents. However, there is no mention of which service cost specifically. Say, for example, the city has plans of introducing rain water harvesting due to water shortage. This would entail that house owners invest in rain water harvesting for their own benefit and people living in apartment buildings form a society and everyone contributes toward providing the necessary infrastructure. As for the developers of building projects, they will also take into account the necessary regulations and contrast the projects accordingly. In this circumstance, the house owners and apartment dwellers cannot expect developers to undertake the cost of providing new infrastructure. Whatever their share of cost is, they will pay for that, why would they want to volunteer payment for someone else’s benefit?

As far as improvement of existing services is concerned, I agree, it is the government or the local municipality’s responsibility to provide services to its residents and no amount of compromise in this area would be acceptable. Services that are already being provided by the local body automatically needs to be improved and upgraded as and when redundancy or obsolescence sets in. This is the local body’s responsibility, to be of service to its residence. As there is development on the technological front, the definition of basic necessity keeps changing. At one point of time, it was merely food, clothing and shelter, and now the definition has started including various other factors such as education, maintaining a level of income so as to experience comfort and much more. The local body’s responsibility ends at ensuring that all its residents do have access to the basic necessities of life. If an individual wants more, they should be more than welcome to pay for it themselves and acquire it. If the government has to ensure that every individual is living a high end life with luxury on their fingertips, it would have to throw in the towel. All comforts and luxuries should be taken care of by the individual themselves, wanting it.

The author states that the developers of large new buildings should bear the cost of services being provided in the city. As stated in the second paragraph, the author is not being very clear while mentioning services. However, that point of omission has already been elucidated. This paragraph will be covering the question as to why the developers shouldn’t be paying for the services. Firstly, the author seems to have misunderstood that all building project owners and developers gain profits on their projects. Such developers are salesmen in their own right. They develop property and if there is a willing buyer, they make profits. If not, they write off the expenses and incur a loss. Hence, there is no guarantee that all the developers will make a profit on their projects. Secondly, the one point I fail to understand is why the developers would pay for the city dwellers’ services. The developers themselves are individuals. They are also entitled to the basic necessities overage by the local body as much as other citizens are. When this is the case, why would they go on to pay for services being provided or that should be provided to the citizens? Neither are they running a not for profit organization nor are they here to join the local body. They exist to do business and make profit and that is exactly what they will do. One more point that the author seems to have missed out is the truth about the sky high taxes that even the developers have to pay to the local body in order to erect their projects. That and the huge amounts that go under the table, all unaccounted for, all of it is added to the cost of the project. Hence, there is no question of developers paying for the services of the city.

Concluding, the author’s contention is partly agreeable. Yes, it is the government or the local body’s responsibility to provide the basic necessities with changing times and improvement thereof. However, the local body is not responsible for providing individuals with comfort and luxury that should be on their own accord. Building developers are doing their business and making a profit; that is their way of earning an income and it does not make them responsible for paying for the residents’ living. However, I must add that such developers need to adhere to the basic corporate social responsibility manoeuvres, thus giving back to the society in some way or the other.

Comments are most welcome!!

GMAT AWA Sample Essay

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 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.

Answer:

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.

GMAT AWA Sample Essay

Question:

The following appeared as part of an annual report sent to stockholders by Olympic Foods, a processor of frozen foods:

“Over time, the costs of processing go down because as organizations learn how to do things better, they become more efficient. In colour film processing, for example, the cost of a 3-by-5-inch print fell from 50 cents for five-day service in 1970 to 20 cents for one-day service in 1984. The same principle applies to the processing of food. And since Olympic Foods will soon celebrate its 25th birthday, we can expect that our long experience will enable us to minimize costs and thus maximize profits.”

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.

Answer:

The excerpt from the annual report sent to stockholders of Olympic Foods, a processor of frozen foods states that the Company expects costs to minimize so as to enable maximization of profits. This is stated on the rationale that when Organizations are in the business community for a long time, over a period, the costs generally reduce. An example has been provided with reference to colour film processing industry where the cost of a 3-by-5-inch print fell from 50 cents for five-day service in 1970 to 20 cents for one-day service in 1984.

The statement made by the Company is, in my opinion, based on several theories. One of those theories is specialization. When an Organization is in the field for a long period of time, it develops a specialization. Rather, its employees develop the specialization. As and when an employee gets trained in a particular field, he becomes a master. This enables him to find out his own short cuts of sorts while maintaining the quality level of work. These short cuts, somewhere or the other, help the organizations cut costs which even if by a small margin, help immensely.

The second theory which I feel has been relied on is more of an assumption. The Organization assumes that the economy is facing no ups or downs. It is a flat line. This would indicate that the Company is facing no inflation or deflation, for that matter. This statement then becomes a strictly theoretical statement, not applicable to real life scenarios. In the real world, we have inflation, deflation, at times the purchasing power is high, other times, it is not so. These points cannot be overlooked while presenting the financial statements since a true and fair view needs to be presented.

The third theory that the Company has overlooked is that fact that cost reduction alone may not help in profit maximization. It may so be assumed by the stockholders that if cost is reducing, the cost components may or may not be working up to the mark. This may in turn raise questions as to quality control done by the Company.

The Organization’s statement would have had a deeper impact had it included the concerns of inflation, the supplier information, pricing policies and marketing strategies. Inflation means the prices of goods keep increasing. It is not something that happens overnight. Organizations know about all this in advance and hence would be able to give a nearly accurate future profitability data. Also, as far as manpower is concerned, the Organization should ensure that the employees are not slacking off. It so happens that when a certain comfort level is reached, the employees start taking the Organization for granted. This shouldn’t be the case and the Organization needs to make several efforts to keep the employee motivated. This would not only help build a good corporate image but also show the stockholders that the Organization cares and gives everyone their dues. Again, as stated earlier, only reduction in cost is not going to help with maximization of profit. The consumers would want to share the benefit of cost by asking the Organization to reduce the price. Hence, the Company should also look to increase supply of the product, thus reaching out to the majority and increasing their sales.

In my opinion, had the Company taken into account the above mentioned points and then made an appropriate statement, it would have been well rounded and complete.

Comments are most welcome!