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17 Oct 2016, 06:14
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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."
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Olympic Foods sent an annual report to its shareholders, convincing them that the company has lowered the cost by running business efficiently. However, some arguments in the report appears to be weak. The report provides an inadequate example to support its point that the company can be more efficient in the future. Also, the company doesn’t specify how its 25-year-experience can benefit the company in turns of enhancing its efficiency. Last but not least, the point that the profit can be maximized by lowering the cost is reckless.
The example used to support the point that the Olympic Foods can be more efficient in the future is inadequate because the example given is dated from 1970 to 1984. At that time, color film processing is a rather immature technology. As a result, there is a lot of space for improvement. However, nowadays, the technology of processing frozen food has become mature. There might be not so may space for improvement in terms of frozen food processing. Instead of giving historical examples, the author should provide information of any possible frozen food processing technology innovation in the future the convince its shareholder that the processing can be more efficient.
Moreover, even though the company was established nearly 25 years ago, it doesn’t necessarily mean that the company has that many experience in producing frozen food and that the company can be more efficient based on its experience. The company might just introduce the business of processing frozen foods only few years ago. In that case, they won’t have sufficient experience in producing frozen foods. On the other hand, even though the company is experienced in processing frozen foods, they might not have innovative technology to process frozen foods more efficiently because it would be costly to switch all equipment to the latest technology.
Finally, even if Olympic Foods produce managed to lower its cost, it doesn’t mean that the company can maximized its profit. If the company successfully lower its cost because of a rather cheaper ingredient in the market, the company’s competitors might also be able to lower the cost due to the same ingredient they adopt. Therefore, some frozen foods companies might further lower the selling price to attract more consumers to choose their products. As the result, the overall selling price might be lowered due to the competition between frozen food companies. The Olympic Foods would not be able maximize its profit simply by lowering the cost.
The argument that Olympic Foods has become more efficient and profitable due to the lower cost still lacks strong and supportive details and examples. The example of color film processing is incomparable. Also, the company won’t be efficient simply because of its long history. Finally, the cost deduction doesn’t mean that the company will be profitable. This report still needs more detailed information to be convincing.
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Please kindly rate my essay on a scale of 6. Thank you!
"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."
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Olympic Foods sent an annual report to its shareholders, convincing them that the company has lowered the cost by running business efficiently. However, some arguments in the report appears to be weak. The report provides an inadequate example to support its point that the company can be more efficient in the future. Also, the company doesn’t specify how its 25-year-experience can benefit the company in turns of enhancing its efficiency. Last but not least, the point that the profit can be maximized by lowering the cost is reckless.
The example used to support the point that the Olympic Foods can be more efficient in the future is inadequate because the example given is dated from 1970 to 1984. At that time, color film processing is a rather immature technology. As a result, there is a lot of space for improvement. However, nowadays, the technology of processing frozen food has become mature. There might be not so may space for improvement in terms of frozen food processing. Instead of giving historical examples, the author should provide information of any possible frozen food processing technology innovation in the future the convince its shareholder that the processing can be more efficient.
Moreover, even though the company was established nearly 25 years ago, it doesn’t necessarily mean that the company has that many experience in producing frozen food and that the company can be more efficient based on its experience. The company might just introduce the business of processing frozen foods only few years ago. In that case, they won’t have sufficient experience in producing frozen foods. On the other hand, even though the company is experienced in processing frozen foods, they might not have innovative technology to process frozen foods more efficiently because it would be costly to switch all equipment to the latest technology.
Finally, even if Olympic Foods produce managed to lower its cost, it doesn’t mean that the company can maximized its profit. If the company successfully lower its cost because of a rather cheaper ingredient in the market, the company’s competitors might also be able to lower the cost due to the same ingredient they adopt. Therefore, some frozen foods companies might further lower the selling price to attract more consumers to choose their products. As the result, the overall selling price might be lowered due to the competition between frozen food companies. The Olympic Foods would not be able maximize its profit simply by lowering the cost.
The argument that Olympic Foods has become more efficient and profitable due to the lower cost still lacks strong and supportive details and examples. The example of color film processing is incomparable. Also, the company won’t be efficient simply because of its long history. Finally, the cost deduction doesn’t mean that the company will be profitable. This report still needs more detailed information to be convincing.
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Please kindly rate my essay on a scale of 6. Thank you!
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