In this argument the author concludes that the Apogee Company should dose
down field offices and conduct all its operations from a single, centralized location
because the company had been more profitable in the past when all its operations were
in one location. For a couple of reasons, this argument is not very convincing.
First, the author assumes that centralization would improve profitability by cutting
costs and streamlining supervision of employees. This assumption is never supported
with any data or projections. Moreover, the assumption fails to take into account cost
increases and inefficiency that could result from centralization. For instance, company
representatives would have to travel to do business in areas formerly served by a field
office, creating travel costs and loss of critical time. In short, this assumption must be
supported with a thorough cost-benefit analysis of centralization versus other possible
cost-cutting and/or profit-enhancing strategies.
Second, the only reason offered by the author is the claim that Apogee was more
profitable when it had operated from a single, centralized location. But is centralization
the only difference relevant to greater past profitability? It is entirely possible that
management has become lax regarding any number of factors that can affect the bottom
line such as inferior products, careless product pricing, inefficient production, poor
employee expense account monitoring, ineffective advertising, sloppy buying policies
and other wasteful spending. Unless the author can rule out other factors relevant to
diminishing profits, this argument commits the fallacy of assuming that just because one
event (decreasing profits) follows another (decentralization), the second event has been
caused by the first.
In conclusion, this is a weak argument. To strengthen the conclusion that Apogee
should close field offices and centralize. This author must provide a thorough cost-
benefit analysis of available alternatives and rule out factors other than decentralization
that might be affecting current profits negatively.