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# Pls rate this Argument essay, then I'll rate YOURS!

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Retired Moderator
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Pls rate this Argument essay, then I'll rate YOURS! [#permalink]

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14 Oct 2010, 13:44

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.

 The argument claims that experience and time make companies more efficient. In this sense, the author states that Olympic Foods will be more productive and reduce costs because of the experience gained in almost 25 years. This argument could seem very logic, but if we analyze more deeply, we will see that it is based on weak assumptions and wrong comparisons.First, the argument assumes that the color film processing industry is similar to the food processing industry. Maybe the variable experience and knowledge is important to reduce costs in film processing, but probably this situation is not the same in food processing. It is possible that obtaining good prices in raw material is the key factor to reduce costs in the food industry. Therefore, the author of the argument has to indicate that these two industries have similar traits in order to make valid this comparison.Second, the author doesn’t provide enough information in the example of the color film processing industry to conclude that experience and time make companies more efficient. For instance, the argument doesn’t consider whether there were other factors which contributed in the reduction of costs in film processing. One alternative cause could be, for example, that there was a reduction in the costs of materials, therefore the result was a reduction in the cost of production. Other alternative explanation is that new technologies, such as digitals cameras, reduced the demand of color films, consequently film processing companies had to reduce their labor costs in order to reduce their prices to make their products more attractive. If the author wants to make stronger the argument through this example, he or she would have to mention that the other possible variables which could reduce the costs in film processing industry remained constant.Third, it is not necessary true that time and experience make companies more efficient. That could be true if the markets and technology does not change. However, that does not happen always. For example, in the photo cameras industry the time and experience were not useful for the companies when digital cameras appeared. These enterprises had to learn about this new technology, and those years of previous experience were useless in that new context. Therefore, the argument is wrong when states that the 25 years of experience will make Olympic Foods more efficient. To conclude that this company will be more competitive in costs, the author would have to mention that the industry does not expect an important change in technology.In conclusion, the argument is based on wrong comparisons and assumptions that are not necessary true in reality. The author of the argument would have to indicate that film processing industry is similar to food industry and demonstrate that the reduction in costs in the industry used as example was consequence of the experience gained. Additionally, the author must indicate that he or she does not expect an important change in technology in the following years.

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Kudos [?]: 1105 [0], given: 109

Director
Status: Impossible is not a fact. It's an opinion. It's a dare. Impossible is nothing.
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Re: Pls rate this Argument essay, then I'll rate YOURS! [#permalink]

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14 Oct 2010, 21:45
Well reasoned but not strong. To make it 6 here are the points

1st point – “weak analogy”

2nd point – “expeience and time” not adequate. Other possible factors of success

3rd point – The industry may not have learnt adequately from previous experience to completely avoid inefficiencies

The argument relies on the weak analogy between food industry and the film processing industry. There are many factors which affect only one industry e.g. the problem of stale food only affects the food industry but is absent in case of film processing. On the other hand, the technology is the bottleneck in case of the film processing. Hence the dissimilarities between the two industries outweigh the similarities.

The argument relies on the weak cause and effect relationship between minimizing cost and maximizing the profits. The relationship is gratuitous since there might be other critical factors for success. For example the motivated staff, competent management, the availability of the supplies, the location of the store, the cost of the raw materials etc. are other primary reasons which can provide a head start for success. It is unreasonable to rely on just one factor for success. Unless the argument provides substantial data to prove this , the conclusion is moot.

The argument relies on the vague evidence that "long experience" of the organization has taught it to do things efficiently. Yet, it does not provide any evidence to substantiate this crucial assumption. Perhaps the processes have not improved over the last 25 years. In that case, Olympus is not better or perhaps mismanaged as compared to its arch rival.

The first flaw – the weak analogy between the two industry types can be fixed by citing studies and adequate evidence to indicate that the food industry and film processing are similar in some respects and hence their profits can be made predictable. The second flaw – the weak cause and effect relationship between maximizing the profits and reducing the production costs can be remedied by providing examples to substantiate that “cost” is the sole and fundamental factor of success. The third assumption that the organization has necessarily learnt from the past is weak. Lacking information to this critical assumption, it is just as likely that the Olympic Foods processes are no better or even worse than those of its competitors. All and all the argument is weak, vague and relies on several questionable assumptions. Hence it has no legs to stand on !

Kudos [?]: 902 [0], given: 36

Retired Moderator
Status: 2000 posts! I don't know whether I should feel great or sad about it! LOL
Joined: 04 Oct 2009
Posts: 1635

Kudos [?]: 1105 [0], given: 109

Location: Peru
Schools: Harvard, Stanford, Wharton, MIT & HKS (Government)
WE 1: Economic research
WE 2: Banking
WE 3: Government: Foreign Trade and SMEs
Re: Pls rate this Argument essay, then I'll rate YOURS! [#permalink]

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15 Oct 2010, 12:10
Thanks nusmavrik!
If you need someone to rate your essay, please let me know.
_________________

"Life’s battle doesn’t always go to stronger or faster men; but sooner or later the man who wins is the one who thinks he can."

My Integrated Reasoning Logbook / Diary: http://gmatclub.com/forum/my-ir-logbook-diary-133264.html

GMAT Club Premium Membership - big benefits and savings

Kudos [?]: 1105 [0], given: 109

Director
Status: Impossible is not a fact. It's an opinion. It's a dare. Impossible is nothing.
Affiliations: University of Chicago Booth School of Business
Joined: 26 Nov 2009
Posts: 956

Kudos [?]: 902 [0], given: 36

Location: Singapore
Concentration: General Management, Finance
Schools: Chicago Booth - Class of 2015
Re: Pls rate this Argument essay, then I'll rate YOURS! [#permalink]

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15 Oct 2010, 16:49
Why not? Thanks Here is the link -

metallicafan wrote:
Thanks nusmavrik!
If you need someone to rate your essay, please let me know.

Kudos [?]: 902 [0], given: 36

Re: Pls rate this Argument essay, then I'll rate YOURS!   [#permalink] 15 Oct 2010, 16:49
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