Reucing Price to Increase Sales

Davis Technologies, a computer-chip maker, could solve its problem of declining sales by dropping its prices. This would make Davis better able to compete in the highly competitive computer chip market. The sales of chips would increase and this would substantially boost Davis' market share.

Describe how well reasoned etc.

Even though the above position may appear reasonable on the first look, it has some loopholes that will become more evident as we discuss them.

The major flaw in the reasoning is that it assumes that the only reason behind the company's declining sales of computer chips is a high product price. On this basis, it asserts that Davis Technologies will be able to solve its problem of declining sales and boost its market share by dropping its prices.  This is not necessarily true as sales can be driven down by many factors. It is possible that the chip manufacturing quality controls of the company have been lax, leading to production of sub-standard computer chips. This, in turn, may be the reason behind the drop in sales. In that case dropping prices would not help the company in any way. Similarly, there can be other factors like a general recession, sub-standard  marketing effort or technically inferior chips (compared to those produced by competitors). There is no way to know for sure if high price is indeed the only problem. Hence,  until the statement clearly establishes in some way that it has taken into consideration all factors before establishing high costs as the real reason, this statement cannot be taken as accurate.

Moreover, reducing prices is not the only way to compete in a highly competitive market. The same can be achieved by strong achievements in manufacturing technology, commitment towards research and development, well-thought marketing planning and an excellent customer service. The statement offers no reason why slashing prices is the only way to become competitive.

Concluding, the presented statement is unconvincing and hence appears inaccurate. There is no way that just reducing prices would arrest declining sales, make the company competitive and win a substantial market share. The real action would have to be much more well-thought. Nevertheless, the argument can be made a bit plausible if it establishes that it found high price the only reason behind all the company's problems after considering all the concerned factors .