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 colo

The writer of the annual report avers that experience of 25 years will enable Olympic Foods to minimise costs and maximise profits. He substantiates this reasoning on the basis of the colour film processing price drop seen during the 1980s from that of 1970s. However, this line of thought is substantially unreasonable. The writer has made several questionable assumptions and dubious claims rendering his argument wholly unpersuasive.

To begin with, the writer has directly compared the colour processing industry with the food processing industry to validate his argument. This comparison is not justifiable because the two things compared by him belong to different spheres altogether. The food processing industry needs to deal with the raw foods procurement, food quality and expiration of food whereas in the colour processing industry the raw materials are non- consumables and non -perishable items. Even the process of manufacturing food is totally different from that of colour processing. So, the writer of the report in referring to colour processing industry as the basis of improvement in the food processing industry is flawed completely.

Furthermore, the writer here assumes that Olympics company is now experienced enough to improve its manufacturing processes and learn to do things better. He tries to quantify the years one needs to be able to improve oneself.But, the number of years actually hold of a very little importance here. The company can improve its processes from the beginning itself or can take more than 50 years also, one cannot just pinpoint the number of years exactly. Additionally, the improvement in the process includes several factors like technology advancement or improvement in the procurement methods, business supplier relationships. So, even if the organisation is old enough but lacks in above factors, the manufacturing process is not improved much.

Moreover, the writer of the report has assumed that the reduction in the cost of production is the only way to minimise costs and maximise the profits. There are other ways too in which the cost reduction can be achieved. For instance, procuring of good quality and cheap raw materials, reducing its warehouse costs, transportation costs can also help in reducing costs and maintain competence in the market.

In a nutshell, the argument provided by the author that long experience of 25 years will enable Olympic Foods to minimise costs and maximise profits is not compelling enough. If he had done comparison between similar industries or given some additional details on the prevailing market conditions, technological advancements or business supplier relationships, this argument could have been more cogent and convincing.