以前A公司把所有的业务中央化，它的盈利比今天要好

 

"以前A公司把所有的业务中央化，它的盈利比今天要好。所以，A公司应该关闭所有的分区业务，而把全部业务集中在同一个地方。如此中央化应能减低成本和帮助公司保持管治所有顾员的能力，从而改善盈利。"

 

No. 2. Obviously the Apogee Company is not happy about decreased profitability and increased supervision problems with the present network of field offices. But I question the belief that centralization would improve profitability by cutting costs. Now profit is always determined by 2 components: revenue less cost. In order to determine whether the field offices hurt profitability, we need to know whether the revenues they bring in justify the costs, whether the revenue generation or cost-reducing potential from specific locations has been adequately tapped, or perhaps some locations are more profitable than others or even the central location. When we have a network of operations, it is rare to find them all equally profitable. Some may be stars and some may be dogs. Some may have a lot of upside potential and some exhibit considerable downside risks. Before we have done a detailed analysis of the profitability at all locations, it is premature to jump to conclusion that Apogee should close down its field offices and conduct all its operations from a single location. One option is keeping the more profitable field offices and closing down less profitable ones. We can compare the profitability of such different options with that of the single location model to help us decide wisely.

 

We do not have information regarding the type of business Apogee is in, but the field offices must have been set up to serve customers better in markets away from Apogee's central location. If we jump to conclusion and close down field offices, we may be hurting customer service in local markets and jeopardize continued business relationships. Some customers may even choose not to continue doing business with Apogee from their reduced network or future single location! Things like this affect future revenues and must be factored in the option scenarios for informed comparison. Because of such possible interactions, sensitivity analysis, by asking "what if" questions to arrive at the impacts of sensitive factors in different scenarios, must be performed to assess the likely effects of closing down specific field offices and point to the optimal network.

 

Tangible profitability considerations may only be part of the decision determinant. Intangible issues like supervision problems may also play a part. But I question the belief that centralization would help the company maintain better supervision of all its employees. For example, is the supervision issue with traveling salespersons or with in-house employees? If the problem is with in-house employees, then stronger managers or more effective systems are needed to effect better supervision, whether the office is local or central . Bringing everybody under one roof may not be the answer if management is weak. Good reporting and communication arrangements between the central and local offices, both with competent management, may be a better option. If the problem is with traveling salespersons, then bringing everybody together at a central location would make matters worse because now salespeople need to travel more to non-central markets. Apogee needs to come up with a better option for improving supervision. Centralizing everything might incur considerable opportunity costs of foregone sales, customer service and market presence, and should only be one of several options to be considered. For example, can we hire stronger management at local offices and what are the costs and benefits? Can we examine the feasibility of using GPS supervision of company vehicles if we provide company cars for local office salespeople? Can we use Wi-Fi Internet to improve communication between field people and office people? Apogee should understand their real needs, get themselves informed of viable options, and thinking things through, before making a final decision. Then they will most likely make a better choice than hastily jumping to conclusion to close down all field offices and keeping only one central location. A better argument will be:

 

"To improve company performance, the Apogee Company should examine the profitability and the effectiveness of employee supervision at its field offices to arrive at an optimal strategy. Some field offices are less profitable than others, and at some locations the lax supervision of employees brings poor morale and incurs wastage and productivity loss. Improvements in the quality of management and supervision and communication systems appear essential."