The following appeared as part of an article in the business section of a daily newspaper:
“Company A has a large share of the international market in video-game hardware and software. Company B, the pioneer in these products, was once a $12 billion-a-year giant but collapsed when children became bored with its line of products. Thus Company A can also be expected to fail, especially given the fact that its games are now in so many American homes that the demand for them is nearly exhausted.” Discuss how well reasoned . . . etc.
The above paragraph is flawed for numerous reasons. The argument that Company A is doomed to fail only based on the previous experience of Company B lacks important substantial proof. The author also mentions that sales should be expected to decrease, given that Company A’s products have been so popular, that the demand for them would be nearly exhausted. This alone does not constitute a logical cause and effect scenario.
The argument fails to provide any justification that Company A is similar to Company B, other than them being competitors in the video-game hardware and software market. There is no real analysis of what led to the collapse of Company B and therefore no reason to assume both companies should follow the same path. Had the author provided information regarding the long term business plans of both companies, there could possibly be a more reasonable line of comparison, which could lead us to believe Company A is heading towards the same path as its competitor did. Even then, there would likely not be any concrete evidence to make us reach the author’s strong conclusion.
Another possible solution for the author to justify its assumption would be to better explain the economical scenario which lead Company B to collapse, together with what the author considers a “collapse”. There is no base to understand whether this was caused by Company issues or by a major economic crises. In the mean time there is no further development on what the dimensions of such “collapse” might have been. All that can be inferred is that Company B is no longer a $12 billion a year giant, and that, by itself, hardly classifies a business as a failure.
Furthermore, the assumption that Company A’s product demand would be reaching an end does not take into considerations any possibilities of new product developments the company might have. There is no reason to believe that a well established business would intend to live out of one non-updated product forever. From a strategic point of view, Company A likely has in its plans to further develop their key product or to introduce fresh products to its line.
In conclusion, the argument has failed to build a logical link between one event that happened with one specific company and the overall success of another competitor in the sector. While there could be relevant similarities and useful insights from analyzing the path that Company B took, there is no evident reason to believe Company A will follow down the same road.