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.
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To begin with, the report is based on vague and biased arguments. For example, when it says: “costs of processing go down” or when it explains that this is because “organizations learn how to do things better”. Even at the end, the argument ensures that the company will “minimize costs and thus maximize profits”. In none of these examples does the argument provide clarity of what it means by doing things better, costs going down, etc. it’s quite subjective to the reader’s free interpretation and lacks tangible explanations of what it entails.
The argument also leaves many unanswered questions, such as why a color film process from more than 30 years ago, in other words a completely different world, environment and also a quite different industry, would relate to the Olympic Food’s process and it doesn’t explain why they are the same in terms of principles.
This has great significance, due to the fact that the costs in the color film processing might have changed due to external factors or other reasons, not just simply because they improved the processing and this directly caused a reduction of costs. And even if that would have been the case, they are different companies, at different times in history with quite different products, so there’s no clear nor direct correlation between them that would explain why what happened in the film color processing is going to happen to the Olympic Food’s company process now.
Finally, the argument claims without a warrant that the fact that the company is turning 25 years old implies that there has been learning, the process has improved and the profits will be maximized. These are two different topics to be addressed separately, as it cannot be assumed that because of the years of the company, the process will enable them to maximize profits, which also doesn’t clarify what’s the profit expected and in which timeline is this expected as well.
To conclude, the argument would be considerably stronger if it would specify and clarify all the ambitious and biased assumptions and provide relatable evidence or a concrete plan on how and why they expect the reduction of costs and maximization of profits in a certain period of time.