GMAT Essays (AWA)

Topic - "Over time, the costs of processing go down because as organizations learn 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 25th birthday, we can expect that our long experience will enable us to minimize costs and thus maximize profits."

Discuss how well reasoned you find this argument. In your discussion be sure to analyze the line of reasoning and the use of evidence in the argument. For example, you may need to consider what questionable assumptions underlie the thinking and what alternative explanations or counterexamples might weaken the conclusion. You can also discuss what sort of evidence would strengthen or refute the argument, what changes in the argument would make it more logically sound, and what, if anything, would help you better evaluate its conclusion.

The above argument is mistaken in assuming similarity in trends across market sectors. What happens in the film processing industry is in no way indicative of the behavior of the food processing market.

It starts out by stating that costs of manufacturing decrease over time as the requisite technology becomes more commonplace and thus, less expensive. It goes further to provide factual data representing the same trend. This justifies the conclusion that manufacturing costs will follow a similar trend across the photo-film industry.

Where the argument slips up however, is when it generalizes this statement across consumer sectors. While the costs of processing film depend on the cost, availability and technological advances in film-processing, these factors have no bearing on the food-processing industry. It might very well be possible that the food-processing industry is facing increasing manufacturing costs as a result of rising costs of vegetables and meat.

A further flaw in the argument is that it fails to take into the account the differences in market competition. While film-processing industries provide the same service - that of developing photo-film , the food processing industries involve a certain level of consumer bias. The taste of Company X may appeal to a certain group of consumers who may prefer that over other alternatives despite a higher cost. This would mean that Company X could hike its prices over time despite lower production costs and yet hold its consumer base.

My conclusion therefore, is that the argument wrongly presumes trends in consumer and producer behavior to hold across various industries as this assumption is not supported either by fact or logic.