Dear Friends...Please suggest the argument with your comments....

[architect.praveen]

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.


The author concluded that with the long experience of 25 years, Olympic food will be able to minimize cost and maximize profits as the processing cost of photo industry has gone down. The argument is not sound because the author is comparing two different industries with the same strategy. It is not necessary that the same approach will be applicable to food industry when compared to photo industry.

Firstly, the food industry can be categorized under perishable products which can be preserved for certain amount of time frame and which also requires advanced equipments to preserve, which indeed may lead that the cutting costs may go up instead coming down. Whereas, the photo industry will be categorized under the consumer products and can withstand for long time, so there is all possibilities to cut-down the costs.

Secondly, there are other factors which have strong influence on any product in the marker such as the management strategy, product demand, selling price and market competition to be considered. The present market scenario is that, buyers are very cautious and can buy the product, which has lowest price and has similar quality when compared. Therefore, consumers can switch on to the other companies food products which offers low price with the same quality than the Olympic food.

Finally, to support the above argument, speaker also needs to include the information pertaining to Olympic management approach rather than giving vague statement on the long experience. There is also rough correlation between experience and profit; it is always not the case. If the Olympic fails to accumulate valuable management experience, such as proper strategic plan and learning from failures, etc, the Olympic long experience will be enable it to minimize the costs thus to maximize profits.

In sum, the argument is not compelling because it omitted many other factors which must be addressed in order to make proper conclusion. If the author considered difference between film industry and food industry, selling price and product quality, the argument would be more convincing