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-"
The argument claims that Olympic Foods will be able to minimize costs and thus maximize profits because of its long experience of 25 years. To support that claim, it indicates that the costs of processing, in general, in diverse industries, have gone down because organization have become more efficient over time. Stated in this way, the argument is unconvincing because it makes unwarranted assumptions and doesn’t provide enough information to support some of its premises.
First, the argument readily assumes that because costs of processing have gone down in general over time, the same occurs or takes place specifically in Olympic Foods. Yes, probably technology in general have helped companies to reduce costs and be more efficient, but there is not evidence to infer that this trend also took place in the company mentioned in the argument, or even in its industry or economic sector. Maybe technology in the industry of processing frozen foods has not changed at all in 25 years, and maybe the wages have increased in the same period. In this sense, the arguments makes a mistake in using the industry of film processing as an example. Therefore, if the author of the argument wanted to make it more convincing, he or she would have to provide more information about how costs have reduced in frozen foods industry and specifically in Olympic Foods.
Second, the argument claims that the costs of processing have gone down because organizations have learned to do things better. That’s not necessarily true. Costs of processing are function of diverse factors such as wages, raw material prices, electricity and fuel costs, and others. In this sense, even assuming that organizations are more experienced in processing, we cannot claim that costs of processing have reduced because maybe the cost of others mentioned factors has increased. For example, everybody knows that the price of the barrel of oil has increased very much due to the problems in the Middle East. Therefore, to make the argument more solid, the author should demonstrate that costs of processing are lower despite the influence of the other production factors.
Third, the author makes the unwarranted assumption that Olympic Foods will maximize profits because its experience of 25 years will help it to minimize costs. About this point, it seems that the autor forgets that profits are also a function of sales and revenues. If the company doesn’t have revenues, we cannot conclude that Olympic Foods will maximize profits. Therefore, the author should provide information about the sales, prices, and revenues of the company to confirm whether the company is able to produce profits for the stockholders.
In conclusion, the argument is weak because it makes assumptions without enough evidence to support them. Therefore, the author should provide the information required in the paragraphs above to solve any doubt that any reader could have.