Analyze Argument - PLEASE RATE THIS

[sunil.r3]

ESSAY QUESTION:
The following appeared in a memo to executives at a company that manufactures industrial equipment:

"We are spending too much on free customer service after a sale has been made; we need to limit our warranty to two years in order to improve our profit margins. The current lifetime warranty can lead to costs decades into a product's life cycle. Also, we pay our customer service employees a premium because they must possess expert skills across the entirety of our very diverse product line, including products we no longer sell."

Discuss how well reasoned you find this argument. Point out flaws in the argument's logic and analyze the argument's underlying assumptions. In addition, evaluate how supporting evidence is used and what evidence might counter the argument's conclusion. You may also discuss what additional evidence could be used to strengthen the argument or what changes would make the argument more logically sound.
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The company's investment policy depends on the feedback of the customers. It has enjoyed the profits from this for a long time and is using the margin to further invest in the free customer service. The company assumes that the customers are well satisfied from the service and will continue to do so. And this has prompted the company to increase its margin by reducing the investment and still maintaining the benefits.
The company has also taken into consideration the investments being made for the obsolete products in the form of employee training and payments.
The major flaw in the company's argument is that it assumes that the customers will continue to buy the products even if the warranty period of their products is limited. The company however, supports its argument by stating that the skills its employees use to sell products is limited to the type of products and the skills for obsolete products cannot be used for selling new products. And thus, the company's investment is not efficient in bearing charges accounting to sales of its obsolete products.
However, it is quite possible that a large number of customers are still buying the product for the very benefit of lifetime warranty the company is offering. If that very incentive is removed, the company might face a severe decrease in its sales, for the customers may turn to other companies offering similar products with lifetime warranty, even if the products are of somewhat inferior quality. The customers may think of benefits of a product in terms of the lifetime investment they make in a particular product. And investing in buy new products after expiry of warranty period might not be that beneficiary as investment in a product with a lifetime warranty.
If however, there are several data available which infer that the products being offered by this company are of such superior quality which none of its competitor is able to make or sell, the company might get an even lead in its decision of limiting its warranty period for products offered. The sales also depend on the scale of the company's already established market. If the sales are huge as compared to those of any other company the company might be at an advantage on its decision and its argument would be more effective to put into practice.

[StaceyKoprince]

Hi, thanks for posting your essays! Just an FYI that instructors don't grade or give feedback on essays (see the forum guidelines for details).

But I certainly hope other community members respond. Also, if you're in our class, you'll have an opportunity to get essays graded and get written feedback during the course (after class 6). Finally, you can get essays graded by GMAT Write (the official essay grading service from the makers of the exam) - they'll both grade the essays and provide feedback as to how to improve (for a fee). For details and pricing, go to www.mba.com and search for GMAT Write.