GMAT Essays (AWA)

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.


The argument is that Olympic Foods will minimize its costs and maximize profits as celebrating its 25th birthday, because with experience organizations learn to be more efficient as supported with the evidence of color film processing industry. This line of reasoning is flawed with several fallacies and unsupported assumptions. I will explain those as follows.

Firstly, the author's assumption is that learning of various business practices in past will help to improve business efficiency in future is unsubstantiated. There are several future developments that may not be linked with past business practices. For instance, presently the use of computers or high tech CNC machines in the production increase efficiency or decrease the various expenses. These modern machines were not available in the past, say five years back. So the experience learnt in the past may not helpful in using these machines to improve the efficiency of organization, but organizations need to learn with time.

The other flawed assumption is analogy of the success of past experience in the color film processing industry with the same in Food processing. The operations in both the industries are entirely different from each other. In food processing industry, the new modern scientific practices need to be inducted to increase profits such as packaging of foods, storage of perishable food items, or safe transportation of raw food items to the production site, whereas the color film processing industry does not demand all these modern needs. So, the learnings from old experience are sufficient in color film processing industry but not in food processing industry, where new business practice is in no relevance with old learnings.

Additionally, the author has assumed that the past experience with time is the only way to minimize the costs and maximize the profits. There may be several other factors that may affect the expenses incurred in production such as manpower development & training, quality of materials used, or the induction of new scientific methods. So, not only past experience but also the other factors can affect the costs incurred in the production.

To conclude, I must say that this argument is flawed with fallacies as explained above. To make the argument more logical, the author needs to add some more supporting premises such as specifies the type of experience in the past not only based on the number of years. The analogy of color film processing industry with the food processing industry can be strengthen with explaining more about their operations that have similarities. To consider other factors such as manpower or business practices that may affect the efficiency of business.