GMAT Essay Topic 411 - 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 twenty-fifth birthday, we can expect that our long experience will enable us to minimize costs and thus maximize profits." Discuss how well reasoned you find this argument. In your discussion be sure to analyze the line of reasoning and the use of evidence in the argument. For example, you may need to consider what questionable assumptions underlie the thinking and what alternative explanations or counterexamples might weaken the conclusion. You can also discuss what sort of evidence would strengthen or refute the argument, what changes in the argument would make it more logically sound, and what, if anything, would help you better evaluate its conclusion
The argument claims that Olympic Foods will minimize costs and thus maximize profits. To prove the argument, the company states that its long experience of 25 years will enable it to become efficient and thus decrease the costs. In addition, the argument cites the example of a color film industry, in which the costs fell in the period between 1970 and 1984. However, to substantiate the argument, some important evidences are omitted.
Firstly, Olympic Foods assumes that its long experience will enable it to be more efficient. However, no evidence is provided to prove this relationship. It is possible that the company did not make any progress to improve its efficiency during it 25 years of history. Secondly, even if the company’s efficiency is enhanced, it is not guaranteed that the costs of processing will decrease, because the company may increase its efficiency in other areas of its operation, such as promotion and research, in which processing is not included. Thirdly, the argument cites the decrease of costs in the color film processing industry from 1970 to 1984, in order to provide evidence for the decrease of costs in its own company. However, Olympic Food is in the food industry, which is different from the color film processing industry. No evidence is provided to show the relationships between these two industries, and thus the analogy is not substantiated. Even if the analogy is correctly drawn, the decline of costs in color film processing industry incurred during the years between 1970 and 1984, while the facts in the annual report of Olympic Foods do not incur in that period.
The economic environment and policies are not the same during these two periods, and thus the decrease of costs in the color film processing industry does not necessarily apply to Olympic Food. Even if the the difference of industries and periods are ignored, there are actually no decrease of costs in the color film industry. The cost actually arose from 10 cents a day to 20 cents a day from 1970 to 1984. Lastly, even if the cost of Olympic Foods is decreased, it is not guaranteed that the profits will increase. It is possible that the revenue will decrease and results in decreased profits.
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