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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 twenty-fifth 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.
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The piece extracted from the company's annual report considers a possibility of cost reduction approach to profit maximization to invite confidence from its stockholders. It's a fact that prime objective of any company is to win satisfaction and confidence from its shareholders. Profit , by far is the prime instrument but not the objective. Any profit earned through incorrect practices , may script startling figures on the annual reports, yet, an investigation on the production methodology can punish the reputation the company. The case considered also raises some doubts over company's future approach.
Firstly , the annual report counts upon the wrong premises of profit maximization, i.e. cost reduction. It must be understood that in the food sector and other non durable commodities, cost reduction is not the appropriate method to increase profits. Such rules apply only to durable products like film prints or mega structural projects , where project weight and manufacturing cost counts. For a food product, there are 2 reasons why cost reduction cannot be really done , first. since these products are normally within consumer budget, he always seeks to obtain more from the fixed price. and second , there is a greater demand for "homemade" commodities where traditional attention are closely related to the taste and feel of product. Examples of which could be the expensive wines or even chocolates , where machines fail to give a homely feeling.
Second, the report tends to generate a doubt over the source of food. Are they choosing inferior sources for food items ? Are they adding additives ? Is low cost unskilled manual labour being used ? Are children being used to cut the labour cost ? Such doubts are often associated when the product quality seems inferior. 25 years of confidence from costumers can be used as an umbrage to use some malpractices once in a while , since it has not been clarified by the company , the promise of reducing the cost using unhealthy practice is highly probable in such cases. A typical scenario can be understood why a supermarket food item are often cheaper than their branded counterparts. Since the costumers have a choice, the supermarket does not really count on these inferior food items to show profit.
Third and most important reason for the doubt is the manufacturing process and quality assurance. Quite often the companies try to reduce this to show promising efficiency to its shareholders. Speedy packaging, larger pressure tanks or faster conveyor belts could be seen as instruments often used for making the production process rapid, but at the cost of a trustworthy quality inspection. An example has been taken as the basis by the report itself. But while photographic or video output makes one print , and each frame has to be seen and analyzed compulsorily, food items on the other hand are inspected on a random basis. In such a scenario, there is a tremendous probability of inferior packaging or unhealthy products getting packaged with the food. Such a situation happened around a decade ago when packaged drinking water and cold drinks were found to contain toxic chemicals due to rapid and unchecked production.
In sum, one can clearly demarcate the rules which govern efficient manufacturing for durable products and the quality manufacturing of non durable product. Since these products are used directly for human consumption, profit maximization by cost reduction instead of sale maximization is an unhealthy tool to lose the faith of its shareholders. Companies in food processing industry must therefore, shun away from making statements as made by Olympic foods.
Thank you for reading my previous essays. Would continue to improve using your suggestions.
Need your expert suggestion on this one too
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 twenty-fifth 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.
=======
The piece extracted from the company's annual report considers a possibility of cost reduction approach to profit maximization to invite confidence from its stockholders. It's a fact that prime objective of any company is to win satisfaction and confidence from its shareholders. Profit , by far is the prime instrument but not the objective. Any profit earned through incorrect practices , may script startling figures on the annual reports, yet, an investigation on the production methodology can punish the reputation the company. The case considered also raises some doubts over company's future approach.
Firstly , the annual report counts upon the wrong premises of profit maximization, i.e. cost reduction. It must be understood that in the food sector and other non durable commodities, cost reduction is not the appropriate method to increase profits. Such rules apply only to durable products like film prints or mega structural projects , where project weight and manufacturing cost counts. For a food product, there are 2 reasons why cost reduction cannot be really done , first. since these products are normally within consumer budget, he always seeks to obtain more from the fixed price. and second , there is a greater demand for "homemade" commodities where traditional attention are closely related to the taste and feel of product. Examples of which could be the expensive wines or even chocolates , where machines fail to give a homely feeling.
Second, the report tends to generate a doubt over the source of food. Are they choosing inferior sources for food items ? Are they adding additives ? Is low cost unskilled manual labour being used ? Are children being used to cut the labour cost ? Such doubts are often associated when the product quality seems inferior. 25 years of confidence from costumers can be used as an umbrage to use some malpractices once in a while , since it has not been clarified by the company , the promise of reducing the cost using unhealthy practice is highly probable in such cases. A typical scenario can be understood why a supermarket food item are often cheaper than their branded counterparts. Since the costumers have a choice, the supermarket does not really count on these inferior food items to show profit.
Third and most important reason for the doubt is the manufacturing process and quality assurance. Quite often the companies try to reduce this to show promising efficiency to its shareholders. Speedy packaging, larger pressure tanks or faster conveyor belts could be seen as instruments often used for making the production process rapid, but at the cost of a trustworthy quality inspection. An example has been taken as the basis by the report itself. But while photographic or video output makes one print , and each frame has to be seen and analyzed compulsorily, food items on the other hand are inspected on a random basis. In such a scenario, there is a tremendous probability of inferior packaging or unhealthy products getting packaged with the food. Such a situation happened around a decade ago when packaged drinking water and cold drinks were found to contain toxic chemicals due to rapid and unchecked production.
In sum, one can clearly demarcate the rules which govern efficient manufacturing for durable products and the quality manufacturing of non durable product. Since these products are used directly for human consumption, profit maximization by cost reduction instead of sale maximization is an unhealthy tool to lose the faith of its shareholders. Companies in food processing industry must therefore, shun away from making statements as made by Olympic foods.
Nine-tenths of wisdom is being wise in time ~Theodore Roosevelt
