Thank you very much...
1. 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.”
In annual report sent to stockholder by Olympic Foods, a processor of frozen foods, the author concludes that the company develops itself in managing cost better and become more effective. And the enterprise will expect long term growth and will be able to maximize the company profit and minimize costs. The reasons offered to support this conclusion the author gives an example of the color film processing and mentions that the company has the same practices in applying. The argument is unconvincing because the author does not provide sufficient evidence to support the report.
Firstly, the author says that the costs of processing of the company which is a processor of frozen foods go down by using the evidence of color film processing as the example. Cleary, it is not the same industry and this can make the analogy not valid. Without providing the relationship of the example and the company cost, the exactly how the principle of the company apply to, thus the speaker cannot conclude that the company effectively reduce cost.
Secondly, the author write this report on assumption that the company is only company in the industry that can develop operation management cost well and lead the company to better management of the company. What if the other companies in the frozen industry also reduce the cost? So, it is possible that the cost of raw material is reduced and every company can reduce the cost. This means that the cost is not reduced by the well-management.
Thirdly, the author assumes that the company can reduce the cost and lead to maximize profit. How about other factors reflecting to the growth of the profit? How about innovation, technology development? What if customers look for the better taste, varieties of frozen food rather than low cost product? In this case, the customers may choose the rival’s product which has more line of products. This means that reducing cost is not the factor lead to high profit. It is better to study what customer want and plan the company to that way. So, the author must provide more evidence to support what the crucial factor reflect to the profit of the company.
In sum, the speaker’s argument is poorly supported and is short-sighted. To better evaluate the argument, we would need more information about the costs that company reduces and the factors reflect to the company growth. To strengthen the argument, the speakers must present the evidence that the Olympic is the only company that can reduce the cost.
