The following appeared in a memo from the chief operating officer of the Presto Manufacturing Company.

“Since orders for our major product increased by over 200 percent last quarter, we should promptly expand production by building a new manufacturing plant in Summit City. Summit City is the ideal location for the new plant because it has low property taxes, extensive blocks of land available for immediate purchase, and a large number of residents who are not currently employed.”

The chief operating officer of Presto Manufacturing Company is of the view that they should build a new manufacturing plant and expand their production since the orders of their major products have increased to a great extent. He suggests building a new plant in Summit City and gives certain reasons to support his point of view. However, he seems to be making a judgment without giving it a logical thought. In order to make the argument convincing the chief operating officer should consider the following discussion and amend his argument accordingly.

In the beginning, he refers to an increase of orders of their major product by over 200 percent in the last quarter. If he is mentioning the quarter of a year, it must be brought to his notice that this is a very short time to observe the trend of orders. If the orders of certain products have shot up in just three months, it is likely to drop just as soon. There could be some reasons that have resulted in the sudden increase in the orders of their products, which the chief operating officer should consider before taking the decision. For example, he must find out if the increase in the order is temporary or it is likely to remain so in future. If the increase in orders is related to some change in fashion, or is due to the latest fad, it might just change with another change in trends. The increase of orders could also be a result of some ongoing events; for example, a sports event encourages the people to order more sports goods. However, when the event is over, people stop ordering for the same. Therefore, building a new manufacturing unit relying on a sudden increase in the orders in the past quarter of a year only proves lack of judgment on the part of the officer.

With the reasons given in the argument, it seems that Summit City is an ideal location for building a new manufacturing plant. However, there are many other things related to the location that have a great effect on the success of a plant that have been ignored by the officer. Firstly, if the property taxes are low and there are great blocks of land available for purchase, it suggests that Summit City is not a very popular location for commercial use. It is likely that not many manufacturing units have opened in this city due to the difficulties that can arise in such a place. For example, it could be very far away from the main city and would require transportation of goods. Moreover, it is likely that Summit City is not connected to other places by highways or good roads and transportation of goods is all the more difficult.

Further, the officer points out that a large number of the residents of Summit City are currently unemployed. He probably suggests employing them in the new unit as their workforce. However, it is not mentioned if the residents are educated enough to understand the manufacturing work. These residents would not be trained enough and it would require a great amount of time and effort to make them learn the skills of working on the new unit. This can increase their costs of production and delay the production process. The officer does not seem to pay attention on the need of training of new workforce and simply jumps to his conclusions.

In a hurry to build new unit in order to meet the increasing demand, the chief operating officer gives a suggestion that does not have a strong backing. As discussed above, his argument fails to explain certain points which are very important to consider before opening a new unit. He must, therefore, give it a second thought and make appropriate changes to his argument.