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[saurabhguptausa]

Analysis of an Argument

The following memo was circulated by the management team of a retail company:

"We are very pleased to announce that the relocation of our inventory, which had been located in four different warehouses throughout the country, to a single new warehouse near Company headquarters in Boston. This consolidated location will cut the company’s expenses for warehouse rent in half. As a result we expect our monthly profitability to go up by this amount."

Discuss how well reasoned you find this argument. Point out flaws in the argument's logic and analyze the argument's underlying assumptions. In addition, evaluate how supporting evidence is used and what evidence might counter the argument's conclusion. You may also discuss what additional evidence could be used to strengthen the argument or what changes would make the argument more logically sound.
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Stated argument concludes that consolidation of warehouses will cut the company's expenses for warehouse rent in half, and as a result company's monthly profitability will go up this amount. Author doesn't mention any other factors that are like to get affected due to this move. Without considering all other factors, it cannot be concluded that profitability will definitely go up by this amount.

First, by consolidating warehouses in one location in Boston, company will cut the warehouse rent in half, as per the claim given in argument. Even though reduced rent may help profits go up a bit but we cannot certainly confirm that the profits will go by this amount. To illustrate this fact, consider, for example, if the mentioned company is a manufacturing company, and it has manufacturing plants throughout the country. And before move, these manufacturing plants were actually near to the warehouse locations. Even though the company will save half the rent, company may incur shipping or transportation expenses more than the saved rent. Second example could be if the company is a retail company, and company can only ship from the local store to the customers. Then the company will have to bear the additional expenses of shipping from the store. This amount may again exceed the amount saved in rent, thereby reducing profits rather than increasing it. Moreover, there may be other expenses. For instance, sales taxes may not be applicable at other locations because of the tax law in those states in which warehouses were earlier. After the consolidation, to compensate for the taxes, price of the final product may need to be increased. But prices can't be increased because of the fierce competition in the industry. Thus company will end up bearing the burden of additional taxes. Therefore, it's clear that without considering the other costs that may be impacted due to this move, it's hard to find whether the new plan will be profitable.

Second, consolidation may also lead to mismanagement at the warehouse because of the increase in size. Thereby increasing the waste and increasing expenses. Without knowing that the size has not increased to an extent when it becomes unmanageable and that the effective management plan is in place for the consolidated warehouse, it cannot be confirmed that the suggested plan will always be profitable.

Clearly, the argument lacks evidences in supporting that the recommended plan will be successful. To strengthen the argument, all other factors that affect the profit due to this move need to be considered, and full-fledged cost-benefit analysis needs to be done in order to confirm that the plan will be profitable.


Analysis of an Issue

Issue: Monetary compensation is the most powerful stimulus for improving employee productivity.

Discuss the extent to which you agree or disagree with the position stated above. Support your viewpoint using reasons and examples from your own experience, observations, or reading.

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The issue at hand is that monetary compensation is the most effect way to improve employee productivity. This may be partly true but not in its entirety. In some companies in spite of compensating best in the industry, people are not most productive. Here are three reasons why monetary compensation may not be the most effective tool to increase employee productivity.

First off, for companies in which employees are not satisfied with the management because of poor handling of grievances or harassment from immediate supervisor, monetary compensation may not be the most effective tool to increase employee productivity. Because the reason for these employees why they are not as productive as they should be is that they are not satisfied with current management. Talking about issues and resolving grievances are the most apparent solutions here.

Secondly, employee productivity may be suffered because of the role that employees are playing currently may not be of their choice. Several studies have shown that interest has direct impact on the productivity of the people. If people are not interested in playing the current role or completing the current assignment, productivity will not be increased even if they are compensated for choosing a boring job over a job of their interest.

Third, employee productivity may suffer because of the personal trauma or emotional issues employee is going through currently. These issues could range anywhere from a recent divorce, a loss in the family, or an illness that may be bothering an employee. In these situations, supporting employee in the bad patch of his or her life could be the best solution.

To sum up, monetary compensation could be a very good tool to keep employees motivated but not appropriate in all situations. To effectively increase the productivity, one must find out why productivity is suffering. There may be numerous reasons for not being productive to one's potential. If not being compensated well is the only reason why employees are not productive, monetary compensation may be most effective.

[saurabhguptausa]

Why is this page broken?

[saurabhguptausa]

I have my GMAT in two weeks. Can someone please provide review for these essays and rating so that I can improve and write more, without repeating the same mistakes I made in these essays?

[StaceyKoprince]

Hi, thanks for posting your essays! Just an FYI that instructors don't grade or give feedback on essays (see the forum guidelines for details).

But I certainly hope other community members respond. Also, if you're in our class, you'll have an opportunity to get essays graded and get written feedback during the course (after class 6). Finally, you can get essays graded by GMAT Write (the official essay grading service from the makers of the exam) - they'll both grade the essays and provide feedback as to how to improve (for a fee). For details and pricing, go to www.mba.com and search for GMAT Write.