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04 Aug 2017, 17:48
Kudos
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Hello all -
First post here and first stab at an AWA question. Even as I typed the sample argument here, I was able to formulate better approaches to strengthen my analysis. Either way, my test date was supposed to be in two months but had to be rescheduled to one month due to poor planning on my part. I appreciate any input and can only pay with "thank you's."
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 a five-day service in 1970 to 20 cents for a 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 presented in this topic is primarily substantiated with data that is presented from an irrelevant field of business. Yes, film processing is a production trade, and yes, there are elements in the field of film processing that are similar to food production. But to assume correlation due to causation is a fallacy that can’t be overlooked. Simply put, if X happens in Y industry, does not mean X will happen in Z industry, however alike their manufacturing methods may be.
What technology goes into the processing of color film and how is this related to food processing? How new was color film in 1970, when this study on film processing was taken? In many new industries, it is not uncommon to see exponential progress and advances in research and development within the first few years of launch.
If color film became mainstream in the year 1967 (we do not know this for a fact, but we can not assume it as not either), then it is safe to assume that the market would have blossomed with entrepreneurs trying to make a name for themselves shortly thereafter. This level of competition breed’s innovation, and with innovation, you have increases in efficiencies. With increases in efficiencies, and a flooding of competition, you of course, see prices driven down. Once prices are driven down, manufacturers are forced to find more cost effective methods of production. This is elementary economics.
The assumptions listed prior are the assumptions in which this argument is based on, and the author fails to tie in how processing film and processing food are correlated. Food processing has been a consistent industry for centuries. And Olympics Foods has been in business for 25 years. Why, then, does the author of the annual report assume Olympic foods will now see such a dramatic decrease in costs of production? What will they do differently this year?
We do not know what year black and white film was created, and we do not know what year the use of color film was adopted, but for a company to assume in it’s annual report that because color film processing experienced decreases in costs of production in it’s early years, food processing will also see equivalent decreases in costs of production in a tenured company, within an age old industry, is to mislead shareholders and provide false expectations in the months and years to come.
First post here and first stab at an AWA question. Even as I typed the sample argument here, I was able to formulate better approaches to strengthen my analysis. Either way, my test date was supposed to be in two months but had to be rescheduled to one month due to poor planning on my part. I appreciate any input and can only pay with "thank you's."
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 a five-day service in 1970 to 20 cents for a 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 presented in this topic is primarily substantiated with data that is presented from an irrelevant field of business. Yes, film processing is a production trade, and yes, there are elements in the field of film processing that are similar to food production. But to assume correlation due to causation is a fallacy that can’t be overlooked. Simply put, if X happens in Y industry, does not mean X will happen in Z industry, however alike their manufacturing methods may be.
What technology goes into the processing of color film and how is this related to food processing? How new was color film in 1970, when this study on film processing was taken? In many new industries, it is not uncommon to see exponential progress and advances in research and development within the first few years of launch.
If color film became mainstream in the year 1967 (we do not know this for a fact, but we can not assume it as not either), then it is safe to assume that the market would have blossomed with entrepreneurs trying to make a name for themselves shortly thereafter. This level of competition breed’s innovation, and with innovation, you have increases in efficiencies. With increases in efficiencies, and a flooding of competition, you of course, see prices driven down. Once prices are driven down, manufacturers are forced to find more cost effective methods of production. This is elementary economics.
The assumptions listed prior are the assumptions in which this argument is based on, and the author fails to tie in how processing film and processing food are correlated. Food processing has been a consistent industry for centuries. And Olympics Foods has been in business for 25 years. Why, then, does the author of the annual report assume Olympic foods will now see such a dramatic decrease in costs of production? What will they do differently this year?
We do not know what year black and white film was created, and we do not know what year the use of color film was adopted, but for a company to assume in it’s annual report that because color film processing experienced decreases in costs of production in it’s early years, food processing will also see equivalent decreases in costs of production in a tenured company, within an age old industry, is to mislead shareholders and provide false expectations in the months and years to come.
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