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.
The author concludes that Olympic Foods, a processor of frozen foods should be able to minimize costs and maximize profits because it has a long industry experience. The author's line of reasoning is that a similar result has been observed in color film processing. The argument is unconvincing for several reasons.
First of all, the reasoning of lowering the costs and maximizing profits is based on a questionable assumption of a similar observation in the color film processing. However, this comparision is unwarranted. Moreover, the various factors like costs of raw materials, processing costs, cost of storage and transporation, which might have led to color film processing cost reduction, may not apply equally well to the food processing industry.
Secondly, the author assumes that having a long experience is a established way of reducing costs and maximizing profits. However, it might be entirely valid that an organization existing for such a long period may have many outdated processes, which would be unfit in present scenario, leading to inefficiences. Also, it may have old machinery or lack of innovation which is a key facor to successfully compete in market. It seems equally reasonable to assume that having a long experience may infact deter the chances of making the organization efficient.
Finally, the author fails to consider the impact of the entire industry. For example, the entire food industry may be going through a depression period and with such a market trend, it may not be possible to further reduce costs and hence maximize the profits.
In conclusion, to convince me that Olympic Foods shall be able to lower the costs and increase the profits, the author would have to provide me with substantial evidence that the company is indeed following the most efficient practises. Also the company is flexible to any innovative changes. Without these additional evidence, I am not convinced that Olympic Foods will be able to reduce its various costs and maximize its profits.
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