AWA p.78 (照片&食品)

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 20cents for one-day service in 1984. The same principle applies to the processing of food. And since Olympic Foods will soon celebrate its twenty-fifty birthday, we can expect that our long experience will enable us to minimize costs and thus maximize profits.

In this part of an annual report, the author concludes that organizations become more efficient as they learn how to do things better to make the costs of processing go down. As a result, Olympic Foods will minimize costs and thus maximize profits because of its long experience in the food-processing industry. In support of this conclusion, he refers to color film processing where the cost of a 3-by-5 inch print fell from 50 cents for a five-day service in 1970 to 20 cents for a one-day service in 1984. However, I do not think the argument is logically convincing because some of the assumptions on which its recommendation rests are highly questionable. Here are some reasons why.
First of all, frozen food production and the color-film processing industry are different industries. Different industries have different industry-specific processes. For example, in the processing of frozen foods, the costs of spoilage, contamination, and timely transportation all affect total cost but they are virtually absent in the film-processing industry. Evidently, comparing Olympic foods and the color-film processing industry is a faulty analogy.
In addition, the author presumptuously links long experience to minimal costs and maximum profits. There is no guarantee that this is the case. Some large corporations with long histories are now confronted with low efficiency chiefly because they have developed excessive hierarchy in the organizational structure. For example, the Apogee company, with a history of more than twenty-five years, begins to reduce the layers of management among their structure to improve its efficiency. Furthermore, the author fails to take into account possible alternative explanations for reducing costs. Many other factors such as economic trends, a well-functioning cost control system, a good relationship with suppliers, and well-designed procedures could cause the same result. That is, all factors may cause change to cost and profit. Undoubtedly, it is an oversimplification to reduce all factors affecting company costs to one single factor: long experience.
To sum up, there are several factors in cost saving. Even if Olympic Foods has long experience in the food processing industry, the company cannot reduce its cost unless it can improve other factors relating to the cost of processing. Moreover, the author cannot compare the different cost behaviors. Obviously, faulty analogy and oversimplification make the argument unsound.