Hi all,
I hope this post will not only benefit me but all of you guys as well! I just purchased GMAT Write 2 from the official MBA website and after JUST reading Manhattan Prep IR/Essay strategy book, I wrote an essay (timed) and scored a 5.
My question is this (probably to the instructors I guess): how closely, in your experience, is the GMAT Write 2 score and the actual score correlated? I know GMAT Write 2 has a complex algorithm that scores your essay for you.
For those of you who are curious, I pasted the prompt and my answer below. Hope this helps!
"The package of benefits and incentives that Ready-to-Ware offers to professional staff is too costly. Our quarterly profits have declined since the package was introduced two years ago, at the time of our incorporation. Moreover, the package had little positive effect, as we have had only marginal success in recruiting and training high-quality professional staff. To become more profitable again, Ready-to-Ware should, therefore, offer the reduced benefits package that was in place two years ago and use the savings to fund our current research and development initiatives."
Your Response
In the above excerpt, the director states that a reduced benefits package for the company's professional staff will lead to improved profitability for the firm overall due to the fact that not only is the current package very costly, but there also hasn't been enough positive effect to justify the current package. While reducing costs would in theory improve profitability, the director fails to take into account several factors that may render his argument illogical.
First and foremost, one flaw in the director's argument is the fact that he does not take into account the fact that a reduced benefits package may substantially hurt worker morale, which in turn will affect productivity. A benefits package does not only serve as an incentive for attracting talent, but also serve as as an incentive for retaining them. Reduced morale will negatively affect output, which will result in decreased profits.
Furthermore, the director claims that all the savings from a reduction in the benefits packages should be used to fund their current research and development initiatives in order to improve profitability. Ths claim is inherently problematic in that there is absolutely no guarantee that money spent in research and development will directly increase profits. Unless there is concrete proof that dollars spent in R&D for this firm in the past translated to increased dollars in revenue, it's likely that the money spent in research will simply eat into the firm's profits.
Finally, the director fails to take into account factors other than the benefits package that may have played a role in the declining profits. For example, it may be the industry standard for firms to take a hit in profits in the first few years of incorporation. The director should do some market research and see how comparable competitors are doing and whether their benefits packages are similar to that of Ready-to-Ware's. If the benefits packages are similar and it's only Ready-to-Ware that's having declining profits, then benefits package cannot possibly be at fault.
Ultimately, the director's argument that a reduced benefits package will improve profitability for the firm is riddled with flaws since his view of the problem is too narrow. There are multitude of factors to consider and if he does take the above points into consideration, he will be in much better shape to tackle the profitability problem.
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