more efficient. In color film processing, for example, the cost of a 3"by"5"inch print fell from 50 cents for fi ve"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.
In their annual report to stockholders, Olympic Foods makes the cheery prediction that they will minimize processing costs. Their arguments in support of this, however, rely on unsound assumptions with evidence that is dubious at best.
Olympic Foods begins its report by stating that "as organizations learn how to do things better", the costs of processing will decrease over time. This assumption would have some merit if processing costs depended solely on the technical knowledge of employees. In reality, there are various factors that decide whether processing costs will go down, such as technological improvements. This is true no matter what industry one is in. Olympic Foods, however, does not mention any other reasons in its statement and thus wrongly implies that as long as organizations learn, processing costs will definitely go down.
The company then proceeds to make the troubling comparison to decreased film processing costs, claiming that "the same principle applies" to food processing. This comparison is completely illogical considering that these are two completely different industries. The factors that contribute to a lower processing cost in film--which the author does not even mention in his example--are not the same as those for food. Therefore there is no backing to the belief that because film processing costs decreased, the same will naturally occur for food processing.
Olympic Foods concludes by asserting that due to their "long experience", they will be able to cut down on costs. There are multiple flaws in this argument. First of all, the report mentions previously that the company will be celebrating its 25th birthday. Considering that there are companies with several decades or even a century's worth of experience, 25 years is not that long of an experience. Even if Olympic Foods was in existence for much longer, there is no correlation between being around for a long time and learning to do things better, which is what they claim as the reason for lower processing costs. Thus their final argument does not hold.
For the reasons mentioned above, Olympic Foods' report gives a fundamentally flawed argument for why their processing costs will decrease. It is strongly suggested that they reconsider this argument if they wish to make a favorable impression on their stockholders.
Any feedback would be appreciated! Thanks in advance
