GMAT Essays (AWA)

My GMAT is in 5 days and I really need some feedback on my AWA practice essay. Any feedback is welcome. Thank you.

QUESTION
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 25th birthday, we can expect that our long experience will enable us to
minimize costs and thus maximize profits."
Discuss how well reasoned . . . etc.

ANALYSIS OF ABOVE ARGUMENT
The argument states that Olympic Foods, due to its long experience in the industry, will be successful in reducing its costs and increasing its efficiency in the processing of food, hence maximizing its profits.

However, there are many assumptions which may not apply to this argument. For example, it is assumed here that the company becomes more efficient as it gains experience in a certain industry. Also, there is a parallel drawn between the color film processing industry and the food processing industry which is not a sound example. Furthermore, the argument assumes minimizing costs to be the only factor that leads to maximization of profits.

The first issue to be addressed is whether experience of a company is necessarily responsible for the increase in efficiency. There may be several other agents that help increase the efficiency, for example, technological advancements in the industry. Recent historical events such as the introduction of the conveyor belt at the Ford manufacturing unit, provide evidence for this example.

The above argument also relies on the assumption that the food processing industry, like the color film processing industry, will see a reduction in costs as years go by. However, these two industries are independent of each other and the factors affecting one might not affect the other, for example, the target audience for each industry differs and change of technology may occur at different times for both. Hence, the comparison is not supported by enough empirical data to support the argument.

Lastly, it is stated in the annual report that experience will help minimize costs and maximize profits for Olympic Foods. But maximizing profits is not dependent only on minimizing costs of the company. To maximize profits, one must keep into account the increase of sales and revenues while minimizing costs. There are also several other costs which must be taken into account which may increase as the company tries to increase its efficiency in food processing.

Therefore, the conclusion does not follow from the premise of the argument. At first it may appear that increase in efficiency due to the experience of Olympic Foods might maximize profits, the underlying assumptions and lack of evidence thereof makes this conclusion flawed. Several factors must be accounted for, including effects of changes in technology in the industry and maximizing revenues.