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29 Sep 2012, 00:24
The following appeared as part of an annual report sent to stockholders by Olympic Foods, a processor of frozen
“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.”
Olympic foods argues in its annual report that because of its experience in food processing industry for 25 years, it can reduce the cost of processing. It states that as organization learn to improve things,they become efficient. It gives the analogy of color filim processing. However, this argument is flawed because this argument fails to substantiate its argument with concrete evidence of how Olympic foods is going to achieve reduction in processing time and costs. Also, the argument fails to highlight technological advances that reduced color film processing cost and time. Further more, argument has not stated any example of improvements in food processing technologies that could bring in quoted reduction in costs and price.
First, argument states that organizaitons learn to do thing better and they become efficient over a period of time. This statement is valid, if the organizaiton tries to improve its processes and adopts to technological changes. If there is no initiatiative, then things will remain static. Argument fails to quote any such initiative taken by Olympic foods that will reduce processing time and costs. Mere existience for 25 years, will not improve things on its own. Further, argument should have been substantiated by examples what Olympic Foods has achieved over a period of 25 years and how it will further improve.
Second, argument gives the analogy of color fim processing industry. However, argument fails to highlight the technological advances that resulted in improvements in color film processing industry. Argument has not quoted any such technological advances that are made in refrigeration technology or food storage technology that could result in reduced food processing time or cost. Further, argument incorrectly argues that advances in film processing industry are becasue of industry's existence for a long period of time. Had there been no technological advancement, mere existence for long time would not have brought quoted improvements.
To conlude, this argument would have been strengthened if Olympic foods had provided details of initiatives that are taken to improve the processes. Further, argument's analogy of color fim processing is not correct, as it fails to highlight technological advances made in color fim processing. Attributing the improvements made because of technologial advances to existence of organization is not correct.