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Joined: 16 Apr 2012
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Concentration: Finance, Leadership
GMAT Date: 09-02-2013
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plz help to rate this one, thanks [#permalink] New post 29 Apr 2013, 07:52
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 twenty-fifth birthday, we can expect that our long experience will enable us to minimize costs and thus maximize profits.”

Discuss how well reasoned you find this argument. In your discussion be sure to analyze the line of reasoning and the use of evidence in the argument. For example, you may need to consider what questionable assumptions underlie the thinking and what alternative explanations or counterexamples might weaken the conclusion. You can also discuss what sort of evidence would strengthen or refute the argument, what changes in the argument would make it more logically sound, and what, if anything, would help you better evaluate its conclusion.








The argument claims that 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. However, the color film and processing of food are totally two different industries, there is no such correlation between those two industries.
Stated in this way the argument fails to mention several key factors, on the basis of which it could be evaluated. The conclusion relies on assumptions, for which there is no clear evidence. Therefore, the argument is rather weak, unconvincing and has several flaws.
First, the argument readily assumes that the same principle applies to the processing food. This is clearly a mistake and absurd reasoning to stand alone. Because these two industries are two different industries and they have no connection and relation to each other. In addition, printing film industry has the cost of rubber tape which is quite cheap and inexpensive to spend, and this industry is quite groomy due to the current new movie cinermas appear and less and less of printing film will be used nowadays so the cost of printing film price would have gone down significantly, the company use this kind cost cutting strategy to reduce the expense on cost and try to turn big revenue instead is a wise choice. On the other hand, processing of food which is a new industry and the cost wouldn’t be easily reduced.
This statement is a stretch and not substantiated in any way. There are numerous examples: such as using garbage food which will cause food testing impassable before displayed in the store and using bad additional ingredients will cause law suits from customers, these two examples demonstrate that lower the cost wouldn’t beneficial to the company’s either short term and long term profits.
Clearly, author fails to mention several key factors above, on the basis of which it could be evaluated.
Second, the author claims that the cost of 3-by-5 inch fell from 50 cents for five-day service in 1970 to 20 cents for one day service in 1984 which leads to Olympic foods will soon celebrate its 25 anniversary by minimize the cost and thus maximize the profits.
This is again a very weak and unsupported claim as the argument does not demonstrate any correlation between film processing and food processing. To illustrate that the film processing is rather a cheap industry which doesn’t have much outside influence to its costs of film price while the food processing does have much influence as I mentioned eailer in the first reason. However food processing is a rather complicated and complex industry which it didn’t involve simple cost reduction and price increase, indeed it did involve keep cost of food to a certain passable level that can be ediable by people and didn’t involve any presecutions or any illegal behaviors. In fact, it is not at all clear that prossing of food industry can simply cut its cost by maximizing its profits, rather it should increase its cost which will maximize its profits. If the argument had provided evidence that the film processing and food processing have similiarities in all the way, the the argument would have been a lot more convincing.
Finally, is the food processing a really cost-minimizing - profit -maximizing industry as author stated in the argument. Without conving answers to these questions, one is left with the impression that the claim is more of a wishful thinking rather than substantive evidence.
In conclusion, the argument is flawed for the above-mentioned reasons and is therefore unconvincing. It could be considerably strengthened if the author clearly mentioned all the relevant facts as I mentioned above. In order to assess the merits of a certain situation, it is essential to have full knowledge of all contributing factors. In this particular case food processing can’t be applied to be compared to film processing. Without this information, the argument remains unsubstantiated and open to debate
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plz help to rate this one, thanks   [#permalink] 29 Apr 2013, 07:52
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