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 fro 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 othat our long experience will enable us to minimize costs and this maximize profits.“

Discuss how well reasoned you find this argument. ....


The Author of the report argues that the efficiency of organisations increase over time, since organisations learn how to do things better. Following his example for color film processing, he concludes that the same applies to the frozen food processing. This argument appears to be weak for mainly two reasons.

Firstly, the author compares two very different industries to arrive at the conclusion why the frozen food processor should maximise profits. There is, however, no evidence to suggest that the two industries behave in the same way.
There is no connection made to the frozen food processing industry.
Furthermore, the passage does not even suggest that the color film processing organisation itself has become more efficient through improving their skills. The color film processing industry might have gone through major technological development in the timeframe mentioned, which reduced the cost and time of printing. This would have led to a more efficient way to print, however does not suggest the efficiency increase by a particular organisation through learning how to do things better.
A similar development could happen to the frozen food processing industry, but there is no evidence to support this. There is no evidence to support that the frozen food organisation has become more efficient.

Secondly, presupposing there is a related efficiency increase in both industries, the time frame mentioned in the paragraph for the film processing is much shorter than the existence of the frozen food processing organisation. It may well be that the frozuen food organisation is already at a point, where time alone will not increase the efficiency of the company. No reference is made to how long it will take either industry to reach such a point.

To conclude, the argument is flawed since there is no evidence to suggest the comparability of the two industries. Hence there is no support for the conclusion why the stakeholder should be in a position to expect maximum profits.
The argument could be severly strengthened if an example from the frozen food industry would be taken, or at least from an obviously related industry.
Otherwise, an explanation why the color film processing would behave similar to the frozen food processing, would support the author in his conclusion.