Fallacies in the Business World Case Study

Fallacies in the business world can be fatal when making a decision. Fallacies can impede the critical thinking process, causing the decision maker to focus on solutions that are not the most appropriate, or confuse the issue at hand. For these reasons, it is important to understand what fallacies are out there and how they affect the critical thinking process. Only by being aware of them is a person able to circumvent their effects. This paper explores: equivocation, far-fetched hypotheses, and hasty generalizations.

Fallacies in the Business World

Fallacies in the business world can be fatal when making a decision. Fallacies can impede the critical thinking process, causing the decision maker to focus on solutions that are not the most appropriate, or confuse the issue at hand. For these reasons, it is important to understand what fallacies are out there and how they affect the critical thinking process. Only by being aware of them is a person able to circumvent their effects.

The Fallacy of Equivocation Definition:

The fallacy of equivocation occurs when someone uses a word’s different meanings in an argument, implying that the word means the same thing in each instance. These definitions are often correct within the immediate context, however, the arguer performs a semantic shift, gradually changing the context of the argument, and thus creating the fallacy (“Equivocation, 2004). Equivocation occurs when the word or phrase is ambiguous in that it as multiple distinct meanings (“Fallacy files,” n.d.).

The Far-Fetched Hypothesis Definition:

The far-fetched hypothesis fallacy often offers an implausible theory as the correct rationalization, rather than first ruling out a more ordinary one (Dowden, 2004). It is a fallacy of inductive reasoning that occurs when a person accepts this unreasonable theory, when there is another more reasonable theory, often based more on facts, available (Messina & Messina, 2004).

The Hasty Generalization Definition:

The hasty generalization fallacy is also known as the fallacy of insufficient statistics. It is also sometimes known as leaping to a conclusion. It is a logical fallacy where the person comes to a generalization about a situation with little evidence to support that conclusion (“Hasty,” 2004).

Examples of These Common Fallacies at General Motors Car Assembly Plants:

Even large companies can fall victim to fallacies. Sometimes, they even utilize fallacious arguments to promote sales. General Motors is a prime example of how fallacies are committed by even the most senior of organizations.

The equivocation fallacy is possibly one of the least found fallacies in General Motors. General Motors’ management makes every effort that their communications are clear and concise. They know that if an employee misinterprets the meaning of a communication, it could be detrimental to the company. Misdirecting the implied meanings of words does little good in the promotion of efficiency and efficacy in the workplace, and for this reason, equivocation is rarely found at a General Motors assembly plant.

The use of the term ‘seniority’ however, may be one exception. It is such an ambiguous term when it comes to working in a large organization like General Motors. Is an employee’s seniority based on tenure with the organization as a whole? Or is it based on their tenure within a certain department? These differences in definition can lead to unanticipated equivocation.

Far-fetched hypotheses have also been found at General Motors. And, regretfully, this fallacy has often been the reason why General Motors has made some poor decisions. As an example, a cost savings initiative included converting the upper portion of the intake manifold on certain V6 engines from metal to plastic. General Motors accepted the irrational theory that the plastic parts would be just as strong as the original metal pieces, despite the fact that testing indicated otherwise. Now the government has had to step in to investigate the matter, as it appears that when a car backfires during ignition, these pieces fail and cause engine compartment fires (“Manifold,” 2003).

The last fallacy discussed in this paper, that General Motors has also fallen victim to, is that of hasty generalization. Most notably, the discontinuance of the General Motors’ Oldsmobile line falls into this category, on several different levels. First, General Motors assumed that lagging sales meant that the Oldsmobile line held little to no value, and therefore should be dismantled. They came to the erroneous decision that the Oldsmobile badge could not be competitive in the marketplace. However, they failed to fully consider the impact of ineffective marketing and product innovativeness. As such, they discontinued the brand, jumping to the conclusion that it could not be salvaged.

Discussion of General Application to Decision Making:

When the definitions of a word or term are not clear or not agreed upon by all parties, it can negatively affect the decision making process. No matter how solid an argument may be, all people must agree upon the meanings of the terms, otherwise it will be worthless. Such is the case with equivocation. You cannot even begin to truly decipher the argument if the terms used are ambiguous or purposely misleading. For this reason, clearly understood and agreed upon terminology must be present for the decision making process to be effective.

Once the terms of the situation are clearly understood, the next step in the decision making process is to begin to formulate theories or hypotheses regarding what has happened. If you fall victim to far-fetched hypotheses, unrealistic theories become accepted and the decision making process is thrown off track. At each step of the decision making process logical thought must prevail. Theories must be critically analyzed, and conclusions cannot be drawn quickly without all information necessary to make a decision.

This is what happens in the case of hasty generalizations. It is easy for someone to think they have all the information needed to make a good decision, however, if even one piece is missing, it could dramatically effect the decision that is made. We can easily succumb to the vanity of ‘knowing everything’, and instead of investigating a situation fully, jump to a wrong conclusion. Again, each step of the decision making process must have clear, accurate and complete information. Without this, we may as well simply flip a coin when it comes to making a decision.


Dowden, B. (2004). Fallacies. Retrieved September 28, 2004, from http://www.iep.utm.edu/f/fallacies.htm#Far-Fetched%20Hypothesis.

Equivocation. (2004, July 5). Retrieved September 28, 2004, from http://en.wikipedia.org/wiki/Equivocation.

Fallacy files: Equivocation. (No date). Retrieved September 28, 2004, from http://www.fallacyfiles.org/equivoqu.html.

Hasty Generalization. (2004, July 5). Retrieved September 28, 2004, from http://en.wikipedia.org/wiki/Hasty_generalization.

Manifold fractures under investigation. (2003, Jan 6). American Metal Market. Retrieved September 28, 2004, from http://www.findarticles.com/p/articles/mi_m3MKT/is_2003_Jan_6/ai_96254321.

Messina, J.J. & Messina, C. (2004). Tools for improving your critical thinking. Retrieved September 28, 2004, from http://www.coping.org/write/percept/fallacies/content.htm.

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