Over time, the expense of digesting go down mainly because as agencies learn how to do things better, they turn to be more efficient. In color film processing, for instance , the cost of a 3-by-5-inch produce fell via 50 pennies for five-day service in 1970 to 20 cents for one-day service in 1984. The same principle relates to the digesting of meals. And since Olympic Foods will eventually celebrate their 25th birthday, we can expect that our long knowledge will enable us to minimize costs and so maximize earnings.
The Olympic Foods tries to convince it is stockholders through its annual report that this can maximize profits mainly because it has long experience. This is supported by contrasting with a color film industry in which, the expense of a 3-by-5-inch print feel from 40 cents intended for five-day service in 1970 to 20 cents to get one-day services in 1984. This argument makes a lot of assumptions that is not supported with evidences.
The Olympic Foods wrongly analyzes itself with a color film processing market. The tactics and environment applicable for the color film processing sector may not be suitable to the food processing industry. What applies to a color film may well not apply to meals. For example , in spite of the company’s knowledge, the time taken for a foodstuff to levain would not transform significantly. Only the 25 years of experience can not be mentioned as being a reason for increased profits.
Other factors such as weather, market competition would likewise affect the profit of a business. With all this kind of factors taken into account, if it can be proved that experience helps in reducing costs and maximizing revenue, the discussion would be heightened. Since the discussion misses a lot of key issues, it is not very sound.
If this included the points reviewed above, the argument could have been thorough and more convincing.