Rate My Essay Over time the costs of processing
Hi, Please rate my essay. This is first serious attempt. I used this essay as a reference but I did try not to copy the sentences.
The annual report of the Olympic Foods states that the company will maximize the profits by minimizing the cost. It argues, the cost of processing will go down over time, because the organizations learn how to do things better. But the argument is flawed for 3 key reasons. The parallel example, price fall of color film processing, cited in the argument is not convincing enough for the Olympic Foodâ€™s situation. Moreover, the company has failed to consider other costs involved like logistics, marketing etc. Finally, since the report has not discussed on how Olympic Foods is going to implement the plan, companyâ€™s ability to implement the plan is questionable.
Firstly, the author comparison of the food processing with color file processing is illogical. Color film processing was under evolution phase during 1970â€™s and 1980â€™s. Every new innovation evolves successively until a state of maturity is reached. Color film processing was a new innovation during that era and hence it underwent a successive evolution, which caused the fall in price. Whereas, food processing is not a new invention and it has reached a mature state already. Hence, the comparison is illogical.
Secondly, the company plans to maximise the profits by minimizing the cost of processing. Though this sounds convincing initially, a closer analysis reveals a serious flaw. The report has failed to consider other factors involved like competition from other players, cost of logistics, money spent on marketing etc. For example, if the competition is very stiff from other players Olympic Foods would be left with no choice other than compromising its profits. Similarly, if the price of fuel rises next year, the company will have to spend a lot on logistics unexpectedly. Therefore, minimizing the food processing cost alone is not sufficient to maximize the profits.
Finally, the report does not share any information about how the company is going to cut the food processing cost. Does the company has any strategy? As said earlier, food processing is relatively not a new industry. Hence, the space for the company to play must be very minimal. Therefore, the companyâ€™s ability to implement the idea is doubtful.
In conclusion, Olympic Foodâ€™s report on maximising the profit is less likely to be successful as it is flawed fundamentally. In order to maximise the profits the company has to perform a detailed analysis on cost reduction and spend a significant effort on market research. And then, it has to come up with a strategy on how it is going to implement the plan.
The following appeared as part of an annual report sent to stockholders by Olympic Foods, a processor of frozen foods. â€œOver 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.