Topic: 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 Food will soon celebrate its 25th birthday. we can expect that our long experience will enable us to minimize costs and maximize profits."
The argument claims that since the company existed for a long time, its experience will help to minimize costs and maximize profits. Stated in this way, the argument reveals an example of a leap of faith and poor reasoning. It fails to mention several key factors, on the basis of which it should be evaluated. The conclusion of the argument relies on assumptions for which there is no clear evidence. Hence, the argument is weak and has several flaws.
First, the argument readily assumes that experience is the only factor for minimizing costs. This statement is a stretch from the fact that over time, the costs of processing go down because organizations learn to do things better. The argument assumes that this principle applies to all types of costs that a company occurs. For example, salaries and wages are costs that will not change due to learning. The argument could have been much clearer if it explicitly stated what costs the company plan to minimize.
Second, the argument claims that the fall in the cost of printing will be the same case for processing food. This again is a very weak and unsupported claim. the argument does not demonstrate any correlation between printing and food processing. It ignores other factors such technology that could affect the costs. To illustrate, the decrease in the costs and time of printing could have been the result of better printers. If the argument had provided evidence that the decrease in the costs is due to people learning to do their job better, then the argument would have been a lot more convincing.
In conclusion, the argument is flawed for the above-mentioned reasons and is therefore unconvincing. It could be considerably strengthened if the author clearly mentioned all the relevant facts about how the company will minimize it costs.
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- Neta Saar
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