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.”
；1？False Analogy-- food processing---old(innovations have already
happened, costs of food preservation & transport) film---new
competition market？profit margin很少诶。所以价格才便宜。
In the argument, the author concludes that Olympic Foods’ long experience will enable the company to minimize
costs and thus maximize profits.
To support the argument, the author cites a principle saying that the costs of processing go down because a organizations learn how to do things better, they become more efficient over time.
In addition, the author cites an example of the color film processing industry which succeeded in cutting the price over 14 years.
At the first glance, the author’s argument appears somewhat convincing, but further reflection reveals that it suffers from several logical flaws.
In the first place, the author commits the fallacy of “Causal oversimplification”.
The author uses the positive correlation between the decreasing price and the efficiency in the color film industry to establish causality.
However, the fact that these two things coincide with each other does not necessarily mean that the latter causes the former.
The reasoning is fallacious unless other causal explanations have been considered and ruled out. For example, the decreasing cost of the raw material in the color film industry can contribute to the low price of film processing.
In the second place, the author commits the fallacy of “False Analogy”.
The author rests the argument on the assumption that the food processing industry and the color film processing industry are analogous in all aspects.
The assumption is weak since although there are points of comparison between these two industries, there is much dissimilarity as well.
It is known that the color film processing industry is a quite new one in which the innovations didn’t happened
until recently. However, food processing industry is a rather old one in which innovations have already took place and there are other additional costs such as the costs of food preservation and transportation. Thus, it is likely much more difficult for the food processing industry to have the same effect.
In the second place, the author commits the fallacy of “Gratuitous Assumption”.
In the argument, the author unfairly assumes that companies with long experience will absolutely become
thefficient because they know how to do things well and the 25 anniversary indicates that Olympic Foods has long
However, it is not necessarily the case.
It is possible that the Olympic Foods Company didn’t do anything to improve its efficiency during the past 25
years, namely Research and Development.
It is also possible that the company has been doing so well that the cost is at its lowest, thus making the further decline of cost impossible.
Under these circumstances, it is impossible to conclude that the Olympic Foods Company can minimize costs and maximize profits.
In conclusion, the argument is logically flawed for the above reasons.
To substantiate the argument, the author should provide more information and evidence to prove that there is still enough room for OF Company to cut costs.
In addition, we need more information and examples to assess the validity of the general principle. Moreover, possibilities that would undermine the argument should be considered and ruled out.