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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 reaches the conclusion that the apogee company should close down its field offices and conduct all its operations from a single location to improve profitability based on the company was more profitable when it had all operations in one location. At first glance, the author's argument appears to be somewhat convincing, but further reflection reveals that it omits some important concerns that should be addressed to substantiate the argument.
First of all, the company did not fully assess all aspects of current situation of low in profits and derive the conclusion from only one single fact. There are a number of elements could cause a company’s falling in profit: reduced selling volume, the increasing cost of the raw material, and macroeconomic environment as well as the increasing cost in operation. There is no solid evidencefield offices and umbrella-like operation is, if not the only, one of the reasons to impact on the company profits. It is obvious that under current economic environment that most companies are less profitable comparing to they were before.
Secondly, the company did not research into the results of the action of closing down the field offices. We do not know how the field offices support the current sale or after sale services. It could be a key advantageous feature to the company. The Company needs to weigh the positive effects against the negative effects to determine whether or not to take certain actions. The consequence may be irreversible and financially significant. Furthermore, Field offices and multi-location operations can even be a money-saving strategy as the operation costs in the other locations are lower than the centre location.
In conclusion, the author fails to provide adequate justification for the conclusion. The solution to increasing the profits is rather light and thin due to lack of strong evidence and logical assessing the case in a full picture. It is not seen as direct relation between high profits and single location operation.
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