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angxif
- Newbie | Next Rank: 10 Posts
- Posts: 5
- Joined: Sun May 16, 2010 2:39 am
- Location: Bangalore
- GMAT Score:580
HI, this is the first time i am attempting the AWA argument and would request your valuable feedback/suggestion on improving. Also what score do you think i would get for a response as below
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 . . . etc.
MY RESPONSE
According to the argument, the author concludes that since Olympic foods has 25 years of experience in processing foods they will be able to minimize costs and hence maximize their profits. He bases his conclusion on insufficient premises that over time organizations learn how to do thing better and become more efficient. The author assumes many aspects and his assumptions are flawed
Firstly, the author assumes that there are no other factors which contribute to the cost of production.For example, costs like storage,transportation, raw materials etc all rise substantially over time and these are very important factors that contribute to the cost of the final product.Secondly, the author assumes that there would be no competition in concluding that he can maximize profits. This would not be so incase a strong competitor wages a price war in the market. In this case, Olympic foods will need to match prices or at least bring them down and this would reduce its profit margins. In addition, the author gives an example of color film processing which is not a fair comparison to food processing. Costs of color processing could have reduced over the years due to a larger number of people using the service rather than improved processing.
The authors argument would be justified incase the company has a monopoly in the market or has a patented process which cannot be implemented by competition. Yet the argument is vulnerable since it ignores other factors that contribute to cost and external market conditions.
Thus, based on the reasons cited above,the argument is ill constructed and Olympic Foods is unlikely to reduce its costs and maximize its profits over time based solely on being in the market for 25 years
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 . . . etc.
MY RESPONSE
According to the argument, the author concludes that since Olympic foods has 25 years of experience in processing foods they will be able to minimize costs and hence maximize their profits. He bases his conclusion on insufficient premises that over time organizations learn how to do thing better and become more efficient. The author assumes many aspects and his assumptions are flawed
Firstly, the author assumes that there are no other factors which contribute to the cost of production.For example, costs like storage,transportation, raw materials etc all rise substantially over time and these are very important factors that contribute to the cost of the final product.Secondly, the author assumes that there would be no competition in concluding that he can maximize profits. This would not be so incase a strong competitor wages a price war in the market. In this case, Olympic foods will need to match prices or at least bring them down and this would reduce its profit margins. In addition, the author gives an example of color film processing which is not a fair comparison to food processing. Costs of color processing could have reduced over the years due to a larger number of people using the service rather than improved processing.
The authors argument would be justified incase the company has a monopoly in the market or has a patented process which cannot be implemented by competition. Yet the argument is vulnerable since it ignores other factors that contribute to cost and external market conditions.
Thus, based on the reasons cited above,the argument is ill constructed and Olympic Foods is unlikely to reduce its costs and maximize its profits over time based solely on being in the market for 25 years
