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The following appeared as part ofan annual report sent to stockholders by Olympic Foods, a processor of frozenfoods. “Over time, the costs of processing go down because as organizations learnhow 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-dayservice in 1970 to 20 cents for one-day service in 1984. The same principleapplies to the processing of food. And since Olympic Foods will soon celebrateits twenty-fifth birthday, we can expect that our long experience will enableus to minimize costs and thus maximize profits.”
The author asserts that with longexperience of 25 years, Olympic food will be able to minimize costs andmaximize profit because the processing food cost has gone down. Also the authorattributes the decrease of cost to the fact that the organizations learn how todo things better. In order to support the reasoning the writer cites the colorfilms for instance, and point out that what is true in color film would be alsotrue in food industry. The whole reasoning procedure sounds plausible in thesurface, but it may not after a further scrutiny.
For the first place, the author provides noevidence to prove that the cost decrease is due to the organizations learn howto do thing better. In fact there exists varieties of causes may havesignificant impact on the decrease of costs. For example, the costs of ruralmaterials changed, used to be 10 dollars and now are 5 dollars, then even thereis the processing food cost hasn’t gone down or even increase few dollars, theproduct costs as whole remains decrease or even. What more human resourcescost, advertising costs and market demanding and so on all have the samefunctions. If any of the factors happened the author’s conclusion will beweakened. In order to make the conclusion more convincing, the author shouldconsidered and ruled out the other possible reasons that may have impact onproducts costs.
The argument is unconvincing also becauseit is based on a false analogy. Falling to takes into accounts the possibledifferences between color film industry and food industry, the arguer makes ahasty analogy. It is entirely possible that corporations in color films areaare not similar enough to justify this analogical deduction. Perhaps, OlympicFoods is a processor of frozen foods, which require fast transportation andspecial equipments in order to keep fresh. On the other hand, color films is aconsumer products…Therefore without providing sufficient information showingthat more or even all the conditions in color film is efficient Olympic Food issimilar or the same, the author cannot persuade that more the fact, longer businessexperience, that is efficient in color film can also be efficient in OlympicFood.
On top of the mention reasons, the author’sconclusion is also suffering a principle flaw about the relationship betweenprofits and costs. The profit is the revenue subtracts cost; the three elementsare interrelated with each other. The cost decrease is not equal to profitincrease, because the revenue might decrease at the same time. As a result,even long-term experience may help the Olympic Food minimize costs, it does notmean that the company’s profits would be maximize, since we have no idea whatwill happen to the revenue. It is possible that minimize the cost result inlower quality and at last the company lessen or even been at the edge ofbankrupt. Hence, it is not wise to only consider about cost relating to theprofits fair.
In sum, the assumption is not well groundedsince the author omits many other possible factors that must be addressed inorder to make proper conclusion. The argument is fallacious unless more comparisonsmade between color films and other possible effects such as product quality,market demand, rural materials and workforce price etc are take into consideration.
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发表于 2012-6-1 10:27:34
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