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

The memorandum from the business department of the Apogee Company suggests that Apogee Company should close down all its field offices and conduct all its operations from a single location.The reasoning provided for this recommended action is based on the comparison of the profitability of the company when it had all its operations at one place to the current scenario.It also mentions about the cost savings one can achieve on implementing single operation scenario.At first glance, this argument appears to be fairly coherent and convincing.However, upon closer examination, several questionable assumptions, dubious facts and unsubstantiated reasoning rise, rendering the argument wholly unpersuasive.

To begin with, the memorandum starts with the profitability issue as the core reason to move from decentralisation to centralisation. But, how much profitability is affected or whether it is up for concerns or not is a debatable issue.Firstly, the profitability comparison made between what time frame is not specified clearly.Has the business just expanded or its been there for many years.If the business has just set up, then logically the profits would be low from previous comparison due to recent infrastructure and human resource investment.So technically one cannot conclude with this much information and comment regarding the business operations and its profitability.

Furthermore, memorandum cites about the cutting costs when operating from a single location which will eventually increase profitability.However, this depends on the consumer base of the Apogee company and how spread out it is.It is absolutely not necessary that single operating office will reduce the cost.For instance, if the consumer base is wide, the transportation costs and storage costs will also be higher.It may or may not offset the current costs due to various operating locations.Hence, many other variables as specified above also need to be considered that might affect the profitability rather than just the internal company costing.

Additionally, the centralisation has one major drawback - if the region is put under curfew or if some unforeseen calamity takes place, then the whole business of the company would come to a stand still.It would badly affect the revenues of the company and also will have a negative impact on its consumers.

In a nutshell, the suggestion given in the memorandum to shift all the operations to one location is not compelling enough.To make it convincing enough for the people, it should try to provide details regarding its expansion timeframe, try and analyse its consumer base and then consider other variables such as storage and transportation costs affecting the company revenues.Precisely, more in depth understanding and details are required.