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."
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.
ANSWER::
The argument claims that with time the costs of processing goes down as the organisations learn to do things better
and gives the example of color film processing industry as an evidence of this idea.Hence, being a 25 year old organisation,
its shareholders can expect, by the virtue of its long experience that the company will minimize costs and maximize profits.
This conclusion is weakly evidenced and based on many flawed assumptions as fails to take into account many different
parameters and also wrongly generalizes a statement on the basis of a single example
Firstly, it fails to consider the fact that there can be things other than experience which can lead to a company making profits
and in the argument, it generalizes the same on the basis of one example.Also, it assumes that simply by learning how do to things better,
it can become more efficient. It talks nowhere about the implementation of the improvements that surface as a result of the experience.
For instance, if a company comes to know that at the moment it is not efficient in handling its manpower due to some union issue. Whether it is
able to solve it is a totally different issue. The author also fails to take into account the other factors like raw material costs
over whihc even new production techniques have no control but are instrumental to the costs and profits of any company.
Secondly,it applies the example of another industry upon itself without susbstaniating any similarities between the two.
For making such a comparison it would be very essential, if not mandatory for the author to lay down a basis on which he makes such a
comparison.It does not talk about any other methods due to which profits can increase, for example better advertising, marketing stategies,
competitive pricing, etc
Finally, but probably most important, the author says that by decreasing costs, they will maximize profits. This is a weakly reasoned statement
as profits will actually depend on how much our products sell for rather than on how much we are taking to produce them. A recent account of how
much profit margin the company has at present and how much are we looking at would have added strength to the argument.
In conclusion, it can be observed that the argument is weak, unsubstantiated and a general statement rather than a specific industry based forecast,
more wishful thinking than a calculated statement , probably to reinforce the trust of investors in the company.
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."
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.
ANSWER::
The argument claims that with time the costs of processing goes down as the organisations learn to do things better
and gives the example of color film processing industry as an evidence of this idea.Hence, being a 25 year old organisation,
its shareholders can expect, by the virtue of its long experience that the company will minimize costs and maximize profits.
This conclusion is weakly evidenced and based on many flawed assumptions as fails to take into account many different
parameters and also wrongly generalizes a statement on the basis of a single example
Firstly, it fails to consider the fact that there can be things other than experience which can lead to a company making profits
and in the argument, it generalizes the same on the basis of one example.Also, it assumes that simply by learning how do to things better,
it can become more efficient. It talks nowhere about the implementation of the improvements that surface as a result of the experience.
For instance, if a company comes to know that at the moment it is not efficient in handling its manpower due to some union issue. Whether it is
able to solve it is a totally different issue. The author also fails to take into account the other factors like raw material costs
over whihc even new production techniques have no control but are instrumental to the costs and profits of any company.
Secondly,it applies the example of another industry upon itself without susbstaniating any similarities between the two.
For making such a comparison it would be very essential, if not mandatory for the author to lay down a basis on which he makes such a
comparison.It does not talk about any other methods due to which profits can increase, for example better advertising, marketing stategies,
competitive pricing, etc
Finally, but probably most important, the author says that by decreasing costs, they will maximize profits. This is a weakly reasoned statement
as profits will actually depend on how much our products sell for rather than on how much we are taking to produce them. A recent account of how
much profit margin the company has at present and how much are we looking at would have added strength to the argument.
In conclusion, it can be observed that the argument is weak, unsubstantiated and a general statement rather than a specific industry based forecast,
more wishful thinking than a calculated statement , probably to reinforce the trust of investors in the company.
