GMAT Essays (AWA)

Hello everyone,

This is my first attempt at writing an AWA essay, so can anyone please grade my essay and thank you for the help.

PROMPT

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 25th birthday, we can expect that our"¨long experience will enable us to minimize costs and thus maximize profits."


RESPONSE
The article in the annual report sent to stock market holders suggest that Olympic Foods will be able to maximize their profits because of their longevity in the frozen foods business. The report provides an example of cost reduction in the color film processing industry from 1970 to 1984 and uses that analysis to form a conclusion. But the conclusion of the article can be scrutinized because it is based on a faulty premise.

Olympic Foods wants to use the cost reduction in the color film industry as a template to project a decrease in future processing cost. The argument provides no evidence why the cost has decreased in the color film industry, other than a period time has passed. The use of the color film industry weakens the report because these are two fundamentally different businesses. So what applies to the color film industry may not be applicable to the frozen food industry. Another deterrent of this article is that while processing time has been reduced the cost of material may fluctuate, so that can affect the cost of production. The report assumes that experience and efficiency leads to a reduction in cost, but until Olympic Foods uses a suitable industry for comparison that assumption is not justified.

The theory that minimizing cost guarantees maximum profits is not supported by the report. The article does not share any information that the color film industry experienced any increase in profits due to a cutback in cost. Therefore the hypothesis that Olympic Foods with a certain amount of experience can expect maximum profits is defective. Olympic Foods assumes that minimizing cost will boost profits, but people may choose to buy another company's frozen food products or that the frozen food market has declined and those possibilities may affect Olympic Foods profits.

The report sent to the stockholders is not convincing because it is based on flawed logic. If further information is provided, or the ideas that have been discussed are elaborated on then report can justify its assumptions.


Thanks again for the help