GMAT Essays (AWA)

Hi everybody,
This is my first argument assey.
PLS, rank it.
and tell me sugesstions.
Thanks a lot

The following is 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 3-5-by-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.”

The argument says that as costs of processing go down because as organizations learn how to do things better, they become more efficient. This conclusion is based on premise that In color film processing, the cost of 3-5-by-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. However there are several assumptions that may not necessarily apply to this argument. For example, for example, the cost of 3-5-by-inch print fell from 50 cents for five – day service in 1970 to 20 cents for one-day service in 1984 may the result not only of improving the production process, but also the cost reduction of recourses. Also, the result achieved in film processing industry is not necessary be analogy in food industry. And finally, costs minimization is not always guarantee of profit maximization.

The first issue to be addressed is whether In color film processing, the falling of cost of 3-5-by-inch print from 50 cents for five – day service in 1970 to 20 cents for one-day service in 1984 is the only result of companies experience to do films better. However it has a sense to think that cost reduction is a result of advanced technology process. But it also true that it is not the only reason. Other reasons maybe also: cheap natural resources and lower wages.

This argument also is relies on the idea that the same principle is applies to the processing of food. And since Olympic Foods will soon celebrate its 25th birthday, they can expect that their long experience will enable them to minimize costs. This argument can be refuted by the evidence, that long time experience of a company is not necessarily the guarantee of advanced production process. Many companies don’t change their technology year by year. Sometimes they do worse goods after some time. The reason is that they don’t change equipment or they use cheap resources after they gain customers. The true reasons why cost reduction appeared in film industry are not evident. So we don’t know the real reasons why can be expected cost reduction in Olympic Food procession.

Finally, one must understand that cost reduction is not only reason of profit maximization. Profit can be unchanged or even reduced if there is not demand on these goods, even though cost can be reduced.

In conclusion, while at first in may seem to have since that companies long time experience is the reason of improving production process and cost reduction, sometimes its truly does not make any changes in production process and cost reduction. Furthermore, one industries experience is not necessarily the similar to other. More over, cost reduction solely is not guarantee of profit maximization. Before any evaluation is made, all these sings must be considered and, not simply made promise to maximize the profit.