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30 Dec 2013, 00:49
Kudos
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"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."
In first instance the argument seems very logical that over time the organizations reduce their processing costs, these premises, however, are neither well reasoned nor sufficient to support the conclusion that Olympic foods will be able to further minimize costs and maximize profits after completion of 25 years in business. The author has based his arguments on faulty reasoning and thus it is invalid.
It is true that over time, the cost of processing reduces as the organizations reach economies of scale, but to reach economies of scale there are lot of other factor which play important role apart from time. Usually, with time companies expand and their sales increases, thus when they operate at full capacity then they are able to minimize their costs and hence, maximizing their profits to a great extent. Time is not the only factor in achieving economies of scale.
The author has tried to provide evidence for his argument by giving an example of color film processing, though it might seem logical at first instance, a closer examination of the arguments presented reveals numerous examples of poor reasoning and ill defined terminology. The author mentions that the cost of 3 by 5 inch print fell from 50 cents for five day service to 20 cents one day service over a period of 14 years, but he fails to mention the other factors involved. He fails to mention about the organization who was able to achieve this cost reduction or is it reduction is only based on single parameter called time. There could have been numerous reasons for this reduction in price, for example deflation, new technological development, availability of resources etc. Most commodities are expensive because of their niche nature, but when their availability is in abundance the price fells. One common example of such cases is the mobile phones, the price of same model reduces because of the availability of new models.
Most conspicuously, the author is comparing apples with oranges by comparing color film industry with food industry. The internal and external factors impacting these two industries are completely different. On one hand there is color film industry where technology plays a very important role on other hand there is food industry for which there are number of factor like raw material, availability of fresh produce etc apart from technology.
Another question arises by next evidence provided by author is that when the organization is about to complete its 25 years in business, then weren't they able to minimize their cost and maximize by profits by reaching economies of scale by now. Instead of supporting , this argument raises question about the performance of the company and thus weakens the argument presented by the author.
In conclusion, the author has failed to provide enough evidence to prove his argument that time is the main factor in achieving economies of scale and thus reducing the costs while maximizing the profits, along with his conclusion of applying the same in case of Olympic foods. Mere mentioning of one example of unrelated industry is not a sufficient evidence to support the argument. Also, the author has failed to consider other factors while reaching at conclusion about Olympic foods apart from other fatal mistakes in providing the evidences and thus fails to be persuasive.
In first instance the argument seems very logical that over time the organizations reduce their processing costs, these premises, however, are neither well reasoned nor sufficient to support the conclusion that Olympic foods will be able to further minimize costs and maximize profits after completion of 25 years in business. The author has based his arguments on faulty reasoning and thus it is invalid.
It is true that over time, the cost of processing reduces as the organizations reach economies of scale, but to reach economies of scale there are lot of other factor which play important role apart from time. Usually, with time companies expand and their sales increases, thus when they operate at full capacity then they are able to minimize their costs and hence, maximizing their profits to a great extent. Time is not the only factor in achieving economies of scale.
The author has tried to provide evidence for his argument by giving an example of color film processing, though it might seem logical at first instance, a closer examination of the arguments presented reveals numerous examples of poor reasoning and ill defined terminology. The author mentions that the cost of 3 by 5 inch print fell from 50 cents for five day service to 20 cents one day service over a period of 14 years, but he fails to mention the other factors involved. He fails to mention about the organization who was able to achieve this cost reduction or is it reduction is only based on single parameter called time. There could have been numerous reasons for this reduction in price, for example deflation, new technological development, availability of resources etc. Most commodities are expensive because of their niche nature, but when their availability is in abundance the price fells. One common example of such cases is the mobile phones, the price of same model reduces because of the availability of new models.
Most conspicuously, the author is comparing apples with oranges by comparing color film industry with food industry. The internal and external factors impacting these two industries are completely different. On one hand there is color film industry where technology plays a very important role on other hand there is food industry for which there are number of factor like raw material, availability of fresh produce etc apart from technology.
Another question arises by next evidence provided by author is that when the organization is about to complete its 25 years in business, then weren't they able to minimize their cost and maximize by profits by reaching economies of scale by now. Instead of supporting , this argument raises question about the performance of the company and thus weakens the argument presented by the author.
In conclusion, the author has failed to provide enough evidence to prove his argument that time is the main factor in achieving economies of scale and thus reducing the costs while maximizing the profits, along with his conclusion of applying the same in case of Olympic foods. Mere mentioning of one example of unrelated industry is not a sufficient evidence to support the argument. Also, the author has failed to consider other factors while reaching at conclusion about Olympic foods apart from other fatal mistakes in providing the evidences and thus fails to be persuasive.
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