AWA Topic---"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."
The argument states that as organizations learn more about how to do things better, over the time, hence they become more cost effective. This argument is supported by an example of color film processing in which price for services goes down from 50 cents to 20 cents in 14-year period of time. Stated in this way argument fails to consider several key factors, on the basis of which it could be evaluated. The conclusion relied on assumption for which there is no clear evidence. There argument is rather weak and unconvincing.
First, the argument readily assumes that long experience is the only key factor to evaluate cost effectiveness of a company. This statement is not substantiated in any way. There are several key factors which we must take into account while measuring the cost effectiveness of a company such as revenue, production cost, and expenses . There are several companies, which suffer from high expenses, low product quality, and employee attrition despite having several years of experience in the field, and yet these companies are not efficient to lower processing cost and to increase profits. This argument fails to clarify the effect of other factors such as taxes, employee's wages, and other costs that increases over the time. This argument would have been much clearer if it explicitly gave examples of that how long experience led to decrease in processing cost and increase in profits of other mentioned industries.
Second, This argument relies on the idea that effect of long experience on processing cost is same across different industries.This is not the case.Different industries have different production cost, expenses, and taxes. For example, a leading IT services company Infosys Ltd. suffered decrease in profit due to global financial crisis in 2008 despite of having more than 20 years of experience in IT services. But at the same time a company in entertainment and media industry sees increase in profits with few years of experience.
Finally, the author concludes that long experience can help to reduce processing cost and to increase profits. From this statement it is not clear that why companies with few years of experience performs better in terms of profits and cost effectiveness, Without supporting evidences and examples of other industries, one is left with the impression that argument does not hold on the basis of substantive evidence. As a result, this argument is weak to support to conclusion.
In summary, while at first it may seem that long experience helps companies to become cost efficient and to generate more profits but most of the time it does not make sense. Other analysis must be made to explain how do other factors affect profit and cost effectiveness. argument is weak and unconvincing. Without essential support and analysis this argument failed to convince that long experience leads to more profit and cost effectiveness.
The argument states that as organizations learn more about how to do things better, over the time, hence they become more cost effective. This argument is supported by an example of color film processing in which price for services goes down from 50 cents to 20 cents in 14-year period of time. Stated in this way argument fails to consider several key factors, on the basis of which it could be evaluated. The conclusion relied on assumption for which there is no clear evidence. There argument is rather weak and unconvincing.
First, the argument readily assumes that long experience is the only key factor to evaluate cost effectiveness of a company. This statement is not substantiated in any way. There are several key factors which we must take into account while measuring the cost effectiveness of a company such as revenue, production cost, and expenses . There are several companies, which suffer from high expenses, low product quality, and employee attrition despite having several years of experience in the field, and yet these companies are not efficient to lower processing cost and to increase profits. This argument fails to clarify the effect of other factors such as taxes, employee's wages, and other costs that increases over the time. This argument would have been much clearer if it explicitly gave examples of that how long experience led to decrease in processing cost and increase in profits of other mentioned industries.
Second, This argument relies on the idea that effect of long experience on processing cost is same across different industries.This is not the case.Different industries have different production cost, expenses, and taxes. For example, a leading IT services company Infosys Ltd. suffered decrease in profit due to global financial crisis in 2008 despite of having more than 20 years of experience in IT services. But at the same time a company in entertainment and media industry sees increase in profits with few years of experience.
Finally, the author concludes that long experience can help to reduce processing cost and to increase profits. From this statement it is not clear that why companies with few years of experience performs better in terms of profits and cost effectiveness, Without supporting evidences and examples of other industries, one is left with the impression that argument does not hold on the basis of substantive evidence. As a result, this argument is weak to support to conclusion.
In summary, while at first it may seem that long experience helps companies to become cost efficient and to generate more profits but most of the time it does not make sense. Other analysis must be made to explain how do other factors affect profit and cost effectiveness. argument is weak and unconvincing. Without essential support and analysis this argument failed to convince that long experience leads to more profit and cost effectiveness.
