In the memo sent by Apogee’s business department, a strong concern for the business’ well-being and profitability is voiced, along with a recommendation to help minimize the cost. The business department feels that closing down the company’s field offices and reverting back to its former single office operation, is the best way to increase profitability. They argue this positive outcome could be effectively achieved by cutting costs and improving employee supervision. However, there are a few flaws within the presented argument.
The business department associates its small operation to be the reason for its profitability, but aside from the empirical claim, there is no evidence given about how different the profitability in terms of expenses has been over the course of its development. It is possible that a few thousands of losses might be a huge loss for the company back in the day, but now, a few thousands could be a necessary expense for advancement and progress. In addition, costs aren’t the only factor that affects profitability. So, their view that having a single location is the only way to achieve profitability, is an oversimplification of the problem.
Aside from not being backed by factual research, it could simply be impractical for the company to take jump back to its former position. Apogee’s expansion would have resulted in an increase in clients. A smaller firm would not be able to cater to the larger client base covered by multiple field offices. In addition, competitors could simply take advantage of the company’s restructuring and snatch a few accounts from Apogee, which would add to their losses.
Thirdly, the business department supports their recommendation by listing lowered costs and greater supervision to be a great way to increase profitability. As stated above, not only will the business be suffering losses from its loss of market hold, profitability is influenced by several factors. Leadership and management styles, if inefficient, could be a result of lowered profitability. But, in such a case, fixing the problem, instead of reverting back to a better time, would be less costly and more beneficial for the company. It would help them learn for the future and ensure that their business runs strong for decades to come—no matter how much expansion is done by the firm in order to gain more market share.
Hence, while the company might be going through hard times, shutting down their field offices without analyzing the real reason behind real costs, would be an expense the company might not be able to survive. The current argument could be made stronger by providing statistical proofs and trajectories of future growth, as well as coming up with a strategy on how reverting back to its single-form would be taken on. Until then, the company should be weary about implementing any such change that could result in greater losses than they are currently suffering.