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."
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.


In this argument, the author concludes that Olympic Foods will be able to minimize its cost and maximize its profits as it is nearing its twenty-fifth birthday. To support the argument, the author references the decrease in the cost of a 3-by-5 inch plate in color film processing industry because of increased efficiency. However, the author fails to take into consideration factors other than a firm's efficiency that affects the bottom line of a company. While the argument has some merit, it contains several questionable assumptions which need to be addressed.

Most conspicuously, the author assumes that the nature of costs incurred in frozen food processing and color film processing are similar. However, the author fails to provide any information which proves that the trends followed by frozen food industry will be similar to that of color processing industry. For instance, it is possible that the decrease in the cost of ink occurred due a technological advancement in the field of print during the period from 1970 to 1984 and has nothing to do with the efficiency of the industry. To strengthen the argument, the author will have to show that the decrease in the price of the print was due to the increased efficiency in the color film processing sector.

Additionally, the argument assumes that the increased efficiency of the frozen food processing sector will lead to reduction in cost and an an increase in the profits. However, the argument fails to consider factors other than efficiency of the sector such as cost of raw materials, cost of refrigeration which cannot be brought down and depend on the government policies and weather conditions. Additionally, the author fails to consider factors such as increased competition and price, other than reduction costs, which can lead to profit maximization. Without this information, the argument cannot be properly assessed.

Finally, the argument assumes that as the food processing industry is nearing its twenty-fifth birthday, it will be able to minimize its cost and maximize its profits. However, the argument fails to provide any information about the time period required for the companies in food processing industry to reach their maximum efficiency and the management practices followed by the company. For instance, it is possible, that unlike the color film processing industry, the food processing industry takes fifty years to peak its efficiency and is still learning how to do things more efficiently.

In conclusion, the argument is weakly supported and is unconvincing. To strengthen the argument, the author will have to show that the cost trends followed in color film industry will be repeated in food processing industry. Additionally, the author will have to provide more information about the factors that affect the cost in the food processing industry and will have to show that the food processing industry has reached its maximum efficiency. Without this information, the argument cannot be properly evaluated and is thus unconvincing.