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

Argument concludes that centralization of operations will cut down operating costs and will result in maximization of profit. It also supports the idea of central supervision of employees in order to maximize efficiency and hence profit. As per the claim provided in the argument, company was more profitable when it had its all operations at one location.

To validate the claim in the argument, there are few questions to be answered. Questions like, what is the profile of the company? Who are the customers of the company’s products? What are the products? How far are the markets for the company’s products? From where are the raw materials coming to company? Whether manpower is available at the company’s central location? After getting, answers to above questions, it will be advisable to decide the strategy in order to maximize the profit.

Current argument neglects all the above questions. For example, if the market or customer location is far away from the central location of the company, it will take a lot to deliver the product to the customer. This will unnecessarily increase the transportation costs which could have been minimized had there been some field office or local warehouse or field office in that area. However, it is also required to study profit-loss to determine if there is need of opening a field office.

Second question which has not been talked about in the argument is about the kind of product or company is manufacturing and selling. Product type will help to decide the strategy- for example, if products life span is short or products are perishable, then it is not possible to serve the long-distance customers from a single central location. Or if the product is highly flammable, then also it is better to have multiple ware houses/ field offices in order to have more safe storage. Any unwanted incident may cause fire of destruction of the products.

Third important thing which is missing in the argument’s conclusion- if the location of raw material suppliers to the company. Raw material & its supplier’s availability is also an important parameter in deciding whether to have single location or multiple location. For example, end products requiring multiple raw ingredients have to optimize the location of field office or manufacturing location to minimize the transportation cost and better supervision of quality control of suppliers.

Fourth thing which is required to be considered is availability of manpower. Manpower scarcity in the area of its central location will lead to higher salaries to the employees. Skilled manpower hiring form distant places will require higher salaried to be paid to the employees.

Considering company’s end customer, export market, raw material supplier, manpower availability, it is advisable to conclude whether a single central location will serve better profits or not. Unless, all these aspects are considered, it is not advisable to conclude that central location will lead to profit maximization.