GMAT Essays (AWA)

Argument: The following appeared as part of an annual report sent to stockholders by Olympic Foods, a processor of frozen foods:

"Over time, the costs of processing go down because as organizations learn how to do things better, they become more efficient. In color film processing, for example, the cost of a 3 by 5 inch parent fell from 50 cents for five-day service in 1970 to 20 cents for one-day service in 1984. The same principle applies to the processing of food. And since Olympic Foods will soon celebrate its 25th birthday, we can expect that our long experience will enable us to minimize costs and thus maximize profits.

Response:
This argument is flawed for multiple reasons. Three of the main reasons are that the argument is making assumptions that; the frozen food processing industry is parallel to the film processing industry, Olympic foods has been processing frozen food for 25 years, and that there are smart enough people running Olympic Foods to learn from previous experiences. If any one of these assumptions were found to be false, the argument could be destroyed easily.
The assumption that two very different industries, frozen food processing and film processing, are the same in terms of efficiency is extremely flawed. There could definitely be some similarities between the two, but to jump to the conclusion that frozen food processing becomes more efficient over time just because film processing does is ridiculous. Film processing may get cheaper because they find faster or cheaper ways to do it, but film processing does not heavily rely on keeping foods below a freezing temperature. If there have not been advances in finding new ways to keep food frozen, then efficiency may not have been rising along with the film industry.
Olympic foods is coming up on its 25th birthday, but the argument fails to mention if they have been in the frozen food processing industry for 25 years. A company can be alive for well short of 25 years and have a little experience in 10 different industries. It is likely that the multiple industries would be similar, but that does not mean that knowledge learned in one industry can be applied to a similar one. With what we know from the argument, Olympic foods could have started as a frozen food transportation service, and just recently began processing frozen food as well. If that is true, the company's 25th birthday turns out to not mean much at all to the frozen food processing sector.
The final assumption that is needed for the argument to hold true is that the people running Olympic Foods are able to comprehend how to learn from previous experiences inside the company. Organizations can only learn how to do things better if the people in charge have seen things not go well, and they are able to figure out what needs to be done to improve. There are multiple ways this assumption could turn up false. Olympic Foods could have had problems within the company that forced a massive turnover of administrative positions. If new people in charge were not there before, knowing how to improve on the past 25 years could be very difficult. Even if administration has been there for 25 years, it is possible that those people were not very intelligent, and could not figure out any new business practices.
This argument is poorly reasoned due to the lack of evidence for the assumptions made. There is nothing that states how film processing is similar to frozen food processing, or how long Olympic Foods has been specifically processing frozen foods, and definitely does not give insight to the people running Olympic Foods.