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02 Nov 2020, 10:36
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Prompt: 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.”
Discuss how well reasoned . . . etc.
Essay:
The argument is based on several assumptions, which need to be addressed in order to substantiate it. Firstly, the assumption that the food industry follows the same business principles as the film processing theory is not supported by any figures or data. It could be possible that the operating costs in the former is consistently much higher, and hence this assumption cannot be validated.
Secondly, the fall in prices in the color film processing industry could be due to numerous factors, which the argument fails to address. For example, the introduction of a cost saving technology in 1984 may have led to a prominent price drop as compared to that of 1970, however there is no evidence that the prices continued to drop post 1984. Hence, the assumption that over time processing costs consistently reduce is not addressed.
Finally, there is no information about the previous performance of Olympic Foods or the demographic it serves to indicate the supply and demand. The argument also does not indicate that the company has adopted new cost saving technologies to minimize their costs and maximize profit.
As the argument is unable to address several concerns, as iterated above, it is neither sound nor persuasive. If the argument was able to explain the costs involved in the two industries, and how they can be compared, one could draw parallels and arrive at a sound conclusion. Similarly, the if the argument addressed the measures taken by Olympic Foods to improve their processes and drop operating costs, the argument would be more convincing.
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.”
Discuss how well reasoned . . . etc.
Essay:
The argument is based on several assumptions, which need to be addressed in order to substantiate it. Firstly, the assumption that the food industry follows the same business principles as the film processing theory is not supported by any figures or data. It could be possible that the operating costs in the former is consistently much higher, and hence this assumption cannot be validated.
Secondly, the fall in prices in the color film processing industry could be due to numerous factors, which the argument fails to address. For example, the introduction of a cost saving technology in 1984 may have led to a prominent price drop as compared to that of 1970, however there is no evidence that the prices continued to drop post 1984. Hence, the assumption that over time processing costs consistently reduce is not addressed.
Finally, there is no information about the previous performance of Olympic Foods or the demographic it serves to indicate the supply and demand. The argument also does not indicate that the company has adopted new cost saving technologies to minimize their costs and maximize profit.
As the argument is unable to address several concerns, as iterated above, it is neither sound nor persuasive. If the argument was able to explain the costs involved in the two industries, and how they can be compared, one could draw parallels and arrive at a sound conclusion. Similarly, the if the argument addressed the measures taken by Olympic Foods to improve their processes and drop operating costs, the argument would be more convincing.
Moderators:
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