how coincidental - well not very since its the first question in Official Guide! - i wrote the same one.
This argument is fundamentally flawed and will probably send a negative signal to the investors because it shows the incompetence of the company in presenting clear facts.
First, the example that was given did not clarify its objective, which is to show how the company is efficient. It is unclear whether the price or the time taken to process has fallen. This is crucial in identifying whether the efficiency refers to the ability to reduce the cost or reduce the time taken. For all we know, costs might actually have increased if the film processing continues to require a five-day and the total cost is $1.
Secondly, it is not logical to use the example given as it does not relate to the industry that is in. While the efficiency may have improved in one industry, it may not have improved in another industry. The efficiency of an industry often depends on the stage it is at in the industry cycle curve. Definitely an infant industry like nanotechnology cannot be compared to film processing technology which is at its declining stage.
It is well known fact that past results are not an indication of future performance. The conclusion that experience will enable them to “minimise cost and thus maximise profits” are unwarranted. If the long experience were positive experience that had provided them with good financial results, it is not indicative that they would be able to replicate their success. This is because there are many external factors beyond the company's control that will affect the bottom line of a company such as the increase in costs of oil which in turn cost the freight to increase.
The report can be made better if another example relating to its line of business is used and the reference of long experience is eliminated