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03 Aug 2014, 12:10
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Davis Technologies , a computer chip maker , could solve its problem of declining sales by dropping its prices. This would make Davis a better contender in the highly competitive computer chip market. The Sales of the chips would increase and this would substantially boost Davis’ market share.
How would you..blah blah
The author concludes that Davis Tech. can solve its problem of declining sales by dropping the prices of its computer. The author cites that decreasing the prices would increase the sales which would help Davis Tech. capture a substantial market share. The author line of reasoning is that the company would fare better than its competitior and that would lead to have the customer go for chips manufactured by Davis Tech. The arguement is weak, unconvincing and flawed for a numerous reasons.
First the conclusion that decreasing sales price would lead to an increase in sales is based on the questionable assumption that in a competitive chip market the consumer will prefer price over other factors like quality, durability and performance. It is entirely possible that the customer would not mind shell out a few extra dollars for better performance. For Example the top two chip makers in the market right now are Intel and AMD. But Intel still has captured a sizeable market share despite the fact that its almost twice as expensive as AMD. The reason is that it offers a good performance over AMD. So price reductio not always results in increase sales. Therefor the authors conclusion is not reliable.
Second, the author makes a leap of faith in concluding that decrease in price will always result in increase sales. In his claim the author assumes that there is no other factor , other than decrease in price, that can cause increase in the sales. A proper study of the consumers feedback about company's chip set would have revealed tens of other factor which would have resulted in increase sales due to increase in customer satisfaction. On the other hand , the cheap products are not always considered as reliable. For example chinese products are cheap but they are not reliable. So decrease in price could cause an erosion of the exisiting customer base.
Finally , even if all the above assumptions are considered to be true, the arguement fails to take in to account the reaction of competitors to this decrease in prices by Davis Tech. The competior could have capitalised on the substantial market share it enjoys currently , making the Davis Tech. strategy a total flop. Thus the conclusion is totally destryoed when we consider this fact.
In closing , the arguement possess some serious flaws in reasoning adressed above. The author could have strenghened by considering the above facts. In order to assess the merits of a claim/conclusion it is important to have full knowledge of all the contributing factors. Without this information , the arguement remains unsubstantiated and open to debate.
How would you..blah blah
The author concludes that Davis Tech. can solve its problem of declining sales by dropping the prices of its computer. The author cites that decreasing the prices would increase the sales which would help Davis Tech. capture a substantial market share. The author line of reasoning is that the company would fare better than its competitior and that would lead to have the customer go for chips manufactured by Davis Tech. The arguement is weak, unconvincing and flawed for a numerous reasons.
First the conclusion that decreasing sales price would lead to an increase in sales is based on the questionable assumption that in a competitive chip market the consumer will prefer price over other factors like quality, durability and performance. It is entirely possible that the customer would not mind shell out a few extra dollars for better performance. For Example the top two chip makers in the market right now are Intel and AMD. But Intel still has captured a sizeable market share despite the fact that its almost twice as expensive as AMD. The reason is that it offers a good performance over AMD. So price reductio not always results in increase sales. Therefor the authors conclusion is not reliable.
Second, the author makes a leap of faith in concluding that decrease in price will always result in increase sales. In his claim the author assumes that there is no other factor , other than decrease in price, that can cause increase in the sales. A proper study of the consumers feedback about company's chip set would have revealed tens of other factor which would have resulted in increase sales due to increase in customer satisfaction. On the other hand , the cheap products are not always considered as reliable. For example chinese products are cheap but they are not reliable. So decrease in price could cause an erosion of the exisiting customer base.
Finally , even if all the above assumptions are considered to be true, the arguement fails to take in to account the reaction of competitors to this decrease in prices by Davis Tech. The competior could have capitalised on the substantial market share it enjoys currently , making the Davis Tech. strategy a total flop. Thus the conclusion is totally destryoed when we consider this fact.
In closing , the arguement possess some serious flaws in reasoning adressed above. The author could have strenghened by considering the above facts. In order to assess the merits of a claim/conclusion it is important to have full knowledge of all the contributing factors. Without this information , the arguement remains unsubstantiated and open to debate.
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