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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 over time, the costs of processing drop since when companies learn how to do things better, they will be more efficient. In order to proof this hypothesis, the author gave an example in color processing industry. Ultimately, the author concluded that since Olympic Foods will soon celebrate its 25th birthday, its long experience will attribute to minimize costs and therefore maximize profits. Stated in this way, the argument fails to mention several key factors, on the basis of which it could be evaluated. The conclusion of the argument relies on assumptions, for which there is no clear evidence. Hence, the argument is rather weak, unconvincing and has several flaws.
First, the argument readily assumes that whatever happened with color film processing industry will be duplicated with food processing industry. As a result, food processing cost will decrease since color film processing cost fell over the years. This statement is a stretch, not substantiated in any way. There are numerous factors that make the business costing of these two industries different. For example, while for color film processing, technology and machinery cost are the main costs of product, for food processing, labor and chemistry costs are primary costs. Possibly, in 1970, color film companies fortunately paid much less technology and machinery costs thanks to an invention. However, that does not happen with food processing industry. Food processing costs of a company at the 25th year of operation might not be lower than that at the 10th year of operation if labor and chemistry costs continuously increased during surveyed period. The argument would have been much clearer if it explicitly stated that similar things will happen between two mentioned industries.
Second, the argument claims that a company with long experience will be more efficient along the way and therefore, minimize costs. This is again a very weak and unsupported claim since the argument fails to address the correlation between experience length and efficiency. To illustrate, company A with longer experience does not necessarily do things better than company B with shorter experience. In fact, it is not at all clear that company A who spends more time doing a product will invest time, money and effort in improving the way it produces. Possibly, company A only hires low-skilled workforce and uses out-of-date machinery, leading to low productivity and poor product quality. As a result, the costs of product in company A do not decrease. If the argument had provided evidence that a long experience company do improve its efficiency, the argument would be a lot more convincing.
Third, assuming that the costs of food processing of Olympic Foods do minimize, how can someone be sure that Olympic Foods' profits will be maximized? What would happen if Olympic Foods used low-cost chemicals, which is the primary cost for food processing, in order to minimize the costs but failed to maintain its high-quality foods which led to a considerable drop in revenues? Without convincing answers to these questions, one is left under an impression that the claim is of a wishful thought rather than a substantive evidence. As a result, the conclusion has no leg to stand on.
In summary, the argument is flawed for above-mentioned reasons and therefore unconvincing. It could be considerably strengthened if the author clearly mentioned relevant facts. In order to assess the merits of certain situation, it is necessary to have a full knowledge of all contributing factors.