Question- 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.”
My Response-
The argument stated is published as a part of an annual report by Olympic Foods, a processor of frozen foods and was sent to its stockholders. The argument is not well reasoned and concludes that the company can be "expected" to reduce costs and hence, increase profits.
The argument makes use of vague words by stating that as the business becomes more "efficient", costs decrease. It fails to mention what "efficient" means. Is it efficient in terms of cutting workload time, reducing labor costs, wear and tear of machinery? Without a solid explanation to this, the argument sounds illogical and flawed.
The argument rests on another unwarranted assumption. It presents an example of color film processing and how they cut costs over the years for a 3 by 5 inch print from 50 cents for a five day service in 1970 to 20 cents for a single day service in 1984. It then further assumes that since the color film processing industry could cut costs, food processing could do the same. It does not mention any market conditions of the color film processing industry and how they are similar to that of food processing industry. It is also possible that cutting costs might not be feasible in case of food processing, perhaps due to the requirement of more sophisticated equipment over the years. Without tangible answers to these questions, the fact presented appears flat.
The argument presents yet another inconclusive premise- more business years translated to minimized costs and maximized profits. The people in Olympic Foods just "expect" that their "long experience" will enable them to reduce costs and increase profits. Had the argument presented previous financial records that actually substantiate this claim, the argument would have sounded more convincing. It also fails to mention ways by which they expect to reduce costs and by how much and if those ways are persuasive. Without any numerical data to back up the claim, the argument is not sound.
The argument presented is neither sound nor persuasive. The annual report presented by Olympics Food has failed to convey reasons that their industry experience would enable them to reduce costs and in turn, maximize profits.
“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.”
My Response-
The argument stated is published as a part of an annual report by Olympic Foods, a processor of frozen foods and was sent to its stockholders. The argument is not well reasoned and concludes that the company can be "expected" to reduce costs and hence, increase profits.
The argument makes use of vague words by stating that as the business becomes more "efficient", costs decrease. It fails to mention what "efficient" means. Is it efficient in terms of cutting workload time, reducing labor costs, wear and tear of machinery? Without a solid explanation to this, the argument sounds illogical and flawed.
The argument rests on another unwarranted assumption. It presents an example of color film processing and how they cut costs over the years for a 3 by 5 inch print from 50 cents for a five day service in 1970 to 20 cents for a single day service in 1984. It then further assumes that since the color film processing industry could cut costs, food processing could do the same. It does not mention any market conditions of the color film processing industry and how they are similar to that of food processing industry. It is also possible that cutting costs might not be feasible in case of food processing, perhaps due to the requirement of more sophisticated equipment over the years. Without tangible answers to these questions, the fact presented appears flat.
The argument presents yet another inconclusive premise- more business years translated to minimized costs and maximized profits. The people in Olympic Foods just "expect" that their "long experience" will enable them to reduce costs and increase profits. Had the argument presented previous financial records that actually substantiate this claim, the argument would have sounded more convincing. It also fails to mention ways by which they expect to reduce costs and by how much and if those ways are persuasive. Without any numerical data to back up the claim, the argument is not sound.
The argument presented is neither sound nor persuasive. The annual report presented by Olympics Food has failed to convey reasons that their industry experience would enable them to reduce costs and in turn, maximize profits.
