thanks in advance.
Read the statement(s) and the instructions that follow, and then make any notes that will help you plan your response. Begin typing your response in the box at the bottom of the screen.
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 argument above claims that it is necessary for an industrial equipment company to reduce its lifelong warranty policy to a policy of two years. The argued is flawed in numerous ways and makes many awful assumptions. The value and length of a warrant is crucial in the purchasing decisions of almost all consumers, especially for consumer goods and electronics.
First, the argument presumes that the manufacturer is competing in a vacuum, as the industry standards are never mentioned. It is possible that all major players in this industry offer a lifetime warranty, and the exorbitant costs involved are simply part of doing addition. In addition, even if this company's warranty policy far exceeds the industry standard, reducing the warranty policy at or below industry stand would cause the company to lose one of its core strategic advantages.
Secondly, the memo does not address the customer prospective. A warranty as a security guard that acts to resolve problems if needed. Without a sense of security, many consumers will purchase equipment from competitors. This is especially true for the commercial market segment, where reliability is especially crucial. Even loyal customers will become likely to shop the field. While reducing the cost of servicing would appear to boost profit, the argument incorrectly assumes that decreasing the quality of a service will have no effect on overall revenue. For example, warranty costs are decreased by $250,000 a year, but revenue decreases by $2,000,000 and gross profit decreases by $500,000, the action recommended above would be detrimental to the company's overall profit.
Finally, the criticism has a narrow view on the customer service employee situation. Providing good service is important to customer satisfaction. The inherent problem is not with servicing warranties; customer service employees should specialize in certain products. Requiring all employees to "possess expert skills across the entire [product line]" including products no longer in product is a misuse of resources. Long time employees could focus on older products near the end or at the end of their life cycle, while new employees could focus on newer products. Anything new will get old, so as new employees grow with the company, they will move along with the product life cycle, creating an efficient, self-regulating system. By reducing the amount of knowledge needed, overall costs would decrease.
Additional market research needs to take place in order for the argument to be substantiated. Perhaps a lifetime warrant is too long and costly to execute, and a middle of the road approach would be beneficially. If research indicates, for example, that a 20-year warranty is sufficient to levy consumer confidence steady, such action would increase profitability. Moreover, this would reduce the amount of expertise and training needed for customer service employees. By reducing the scope of knowledge necessary, costs will decrease. Until all of these avenues are examined, the argument above has too many holes to be considered a viable option.![]()
Read the statement(s) and the instructions that follow, and then make any notes that will help you plan your response. Begin typing your response in the box at the bottom of the screen.
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.
--------------------------------
The argument above claims that it is necessary for an industrial equipment company to reduce its lifelong warranty policy to a policy of two years. The argued is flawed in numerous ways and makes many awful assumptions. The value and length of a warrant is crucial in the purchasing decisions of almost all consumers, especially for consumer goods and electronics.
First, the argument presumes that the manufacturer is competing in a vacuum, as the industry standards are never mentioned. It is possible that all major players in this industry offer a lifetime warranty, and the exorbitant costs involved are simply part of doing addition. In addition, even if this company's warranty policy far exceeds the industry standard, reducing the warranty policy at or below industry stand would cause the company to lose one of its core strategic advantages.
Secondly, the memo does not address the customer prospective. A warranty as a security guard that acts to resolve problems if needed. Without a sense of security, many consumers will purchase equipment from competitors. This is especially true for the commercial market segment, where reliability is especially crucial. Even loyal customers will become likely to shop the field. While reducing the cost of servicing would appear to boost profit, the argument incorrectly assumes that decreasing the quality of a service will have no effect on overall revenue. For example, warranty costs are decreased by $250,000 a year, but revenue decreases by $2,000,000 and gross profit decreases by $500,000, the action recommended above would be detrimental to the company's overall profit.
Finally, the criticism has a narrow view on the customer service employee situation. Providing good service is important to customer satisfaction. The inherent problem is not with servicing warranties; customer service employees should specialize in certain products. Requiring all employees to "possess expert skills across the entire [product line]" including products no longer in product is a misuse of resources. Long time employees could focus on older products near the end or at the end of their life cycle, while new employees could focus on newer products. Anything new will get old, so as new employees grow with the company, they will move along with the product life cycle, creating an efficient, self-regulating system. By reducing the amount of knowledge needed, overall costs would decrease.
Additional market research needs to take place in order for the argument to be substantiated. Perhaps a lifetime warrant is too long and costly to execute, and a middle of the road approach would be beneficially. If research indicates, for example, that a 20-year warranty is sufficient to levy consumer confidence steady, such action would increase profitability. Moreover, this would reduce the amount of expertise and training needed for customer service employees. By reducing the scope of knowledge necessary, costs will decrease. Until all of these avenues are examined, the argument above has too many holes to be considered a viable option.