GMAT Essays (AWA)

I am posting 4 Analysis of Arguments essays.

Please rate the following and let me know where do i lack and how can i improve ? What could be my potential score ?

First One

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 print 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 twenty-fifth birthday, we can expect that our long experience will enable us to minimize costs and thus maximize profits.”


Response:
The author in the above argument states that profitability of the Olympic foods should increase as it has completed 25 years in the industry and has enough experience to lower production costs. The argument is based on a casual evidence from film processing industry. It also relies on the fact the, lower production costs are the only factor impacting the profits of a corporation. A quick glance of the above statement might appear sound and convincing, but a deeper analysis suggests that evidence in the argument, atmost provides a scant support to the conclusion.

Firstly, the author points out that production costs in the film industry have declined from 50Cents to 20 cents over a period of time. However it does not provide the reasons for decline. There could be other reasons apart from low production cost, the reduced cost might have been a result of stiff competition in the industry.
It is possible that, While in 1970's, there were not enough film processing units and hence to begin wiht the costs were extremly higher, so they had to balance out to a reasonable level.

To add to the above point, even if the author is able to convince that the reduction in prices were due to lower production costs, there is no evidence to support that there were simialr technological advancements in the food processing inductry to lower the production costs. The evidence would have better served the conclusion, if an example of food processing unit comparable to the size/turn-over of Olympic foods were present in the argument.

Simiarly, the argument does not give a clue about the present economic growth. It does not provide details about the demand of the frozen foods in the market. The performance of a corporation is based on the effectives of demand supply model it implies. If the demand for the forzen foods decline in the market, then the profits are sure to get a hit and corporation would have to define new processes and strategies to tacke that. The profitablity is only going to increase with a increase in demand.

Lastly, the argument says that with 25 years of experience the executives should maximise the profits. It does not mention the use of experince in the devisiing effective strategies during marketing fluctuations. It fails to mention about the changes in work ethics and work culture at Olympic foods due to the experince gained over the period of time.

As it sums up, the argument above is not convincing. It would have been more conclusive, if there were more statistical evidence from a comaprable food processing unit.
Also, the work culture and the gains from the experience by the management in the Olympic foods corporation should have provided a much needed support to the argument.


Second One

“According to the most recent survey of our readers, nearly 70% of the respondents indicated that they are planning to build or purchase a new home over the next 2 years. These results indicate that the growth in the construction industry is likely to accelerate in the near future. Therefore, this industry continues to offer lucrative opportunities for investment.”
The above argunment states that there will be a likely increased growth in the construction industry, because 70% of the readers of the Home Builder magazine have indicated to purchase a new home over next 2 years, and hence, the industry continues to be a good source for investement. The argument relies on a casual statistical evidence from a survey conducted by a magazine and is seriously flawed. A closer inspection of the evidence reveals that at most it provides scant support to the conclusion.

Firstly, the author points that 70% of the readers of the magazine are interested to buy homes, however it does not mention the number of people who are actually subscribed to the magazine. This therefore does not provide the clarity of the number of people actually interesetd in buying the homes. Depending upon the number of subscribers the people who are interested in buying homes can range from few hundereds from few thousands. The author should have mentioned the number of magazine subscribers, to help the evidence strengthen the conclusion.

Likewise, the argument also fails to mention whether the magazine is a regional magazine or it reaches to most of the states in the country. If the magazine is localised in a small state, then the survey suggests that the construction industry is likely to boom in that small state where as the construction industry in the rest of the country is not growing as the same pace.

Similarly, if the author is able to conbince us that the magazine has a naiton wide following and most of the people in coutry are subscribed to it, even then it does not mention about the effectiveness of the survey. Few questions which could have benfited the argument could be such as :- How effective have been simialar surveys in the past?. Has any other magazine wih a similar subscriber base has conducted such surveys ? and whether such surveys simulated the inevstements in the construction industry.

To sum it up, as it clarifies that the argument cannot stand on its own based on the evidence it contains. The conclusion would have been more logical, if the author had provided more substantial evidences like client base, the reach of magazine and effectiveness of previous surveys.


Third One

“Our promotional price reductions on energy drinks have been highly successful, as we have seen a dramatic increase in unit sales. Further, surveys of our consumers indicate that this promotion was favorably received by the majority of our customers. Therefore, to improve our company’s profitability and enhance its perception in the eyes of consumers, similar price reductions should be offered on all drinks produced by our firm.”

Response:
Author in the above argument concludes that the profitability of the soft drink company could be increased by reducing the price of its products.
To support his conclusion, he gives out the following 2 evidences, firstly, Increased sales of a particular product due to reduced price and secondly, result of a survey that favors the price reduction strategy. Although the first look at the argument suggests that it is indeed a compelling statement, but a closer inspection reveals that only those 2 evidences are not good enough to reach the conclusion.

Firstly, the increase in sales of the particular product for which the company has reduced price may not even have been a result of lowering the price. Such as for example, the increased sales could have been a result of the competitor shutting off a similar product. Other factor which needs to be explored in the detail, whether other beverage companies experienced a increase in sales of a similar product and if the answer is "Yes", it leads us to the fact that there is definitely an another invisible factor here enhancing the increase in number of units sold. The argument should explore that invisible factor to help relate the evidence and conclusion.

Secondly, the argument suggests that the result of a survey show that promotional strqtegy was popular amongst consumers. The first question which could be asked here, Whether the organization could rely on survey ? Some additional questions which could provide helpful answers are : Who conducted the survey?. Whether the survey was fair enough to rely on? Were only the consumers of that particular product questioned or did it include people who are not customers of the beverage ?. Did any simialar survey was conducted before and actions taken based on the results ?. Answers to all those questions will surely relate one way or other, the evidence and the conclusion.

Even if the author is able to convince us on the price reduction strategy and the results of the survey, it still cannot be concluded that similar price cuts to additional products will increase the profitability. For One, price cuts on other products may well affect the quality of a product, and as we all know that reduced quality will eventually affect the sale of a product. Also, if the beverage sales price is reduced and cost price is not reduced, Organisation is likely to suffer losses instead if the sales dont go up, which is not what the company expects.

Finally, to sum it up, the argument is not strong enough to reach the conclusion. The conclusion would have been ably supported if it had included details such as the sales results from similar other companies, the effective ness of simialr surveys and whether while reducing the prices do organisations maintain the level of quality to previous levels.



Fourth One
The following appeared in an announcement issued by the publisher of The Mercury, a weekly newspaper. “Since a competing lower-priced newspaper, The Bugle, was started five years ago, The Mercury’s circulation has declined by 10,000 readers. The best way to get more people to read The Mercury is to reduce its price below that of The Bugle, at least until circulation increases to former levels. The increased circulation of The Mercury will attract more businesses to buy advertising space in the paper.” Discuss how well reasoned . . . Etc


The above argument suggest that the lower price of a competing newspaper, Bugle is the possible cause of the reduced circulation of newpaper,Mercury. The possible remedy to reduce the deficit and increase the circulation is the lower the price of Mercury newspaper. The conclusion of the above argument is based on a casual assumption
that only factor which did impact the circulation, was price. The closer inspection of the argument reveals that their could be other causes than that and conclusion drwan is not the best one.

Firstly, the argument did not say anything about the quality of news in the Mercury news. It could be possible that Bugle, which is a competitor, is giving better news on time as compared with Mercury. Another reason could be that, Bugle newspaper might be more organised and has more sections that those of Mercury. Thereby most readers will find something for themselves in the newspaper.

Similarly, Bugle could have employed effective attractive strategies to increase its customer base, which Mercury failed to employ. Examples for which could be giving additional supplements every day along with main paper. Additional supplements could one dedicated day for each of them. On Monday it could be a Celebrity News day. Tuesday will have an additional supplement for Job Hunters and advertisors and so on. Another effecitve strategy to get people hooked to the newspaper is to organise events amongst it subscribers. Like holding championship events for the subscribers who play Sudoku in their newspaper.

Likewise, argument should have mentioned the impact to circulation levels of anyother newspaper with similar price after the arrival of Bugle.
Some questions which could have been useful to answer here are (1) Whether their circulation levels dipped down ? (2) What strategies have those guys to counter the effect of reduction in circulation?

As it sums up, the argument is simply very weak in the context of the evidence provided here. The conclusion would have been ably supported if the argument had cited examples of newspapers with similar circulation/turn-over, difference in the marketing strategies between 2 news papaers and the news quality.
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