Critical Reasoning and Problem Solving Skills - Lecture 1

Critical Reasoning and Problem Solving Skills - Lecture 1

• Learning area 3 focuses on critical reasoning and problem-solving skills.
• Critical thinking is the analysis of facts to form a judgment.
• Critical thinking involves rational, skeptical, and unbiased analysis of factual evidence.
• This involves analyzing information based on claims.
• Often, analysis requires evaluating the arguments used and questioning if the arguments are persuasive.
• Critical thinking in business is important for making informed decisions.
• This learning area involves understanding various elements used to infer, make logical assumptions, and reason with support.
• Important elements include: arguments, assumptions, deductions, inferences, and interpretations.

Core Activities of Critical Thinking

• Analysis: Identify and reconstruct key information elements to fully understand meaning.
• Evaluation: Judge the strength and validity of information, especially the argument and its support for the conclusion.
• Further argument: Opportunity to present an opinion further.

Basic Elements of Reasoning

• Claims/assertions are statements presented as truth.
• Claims can be matters of fact (true or false) or subjective opinion (truth is relative).
• An argument is a group of claims used to support a conclusion.
• A valid argument's conclusion is necessarily true if the premises are true.
• A sound argument is a valid argument with all true premises; therefore, its conclusion is always true.

Impact of Interest Rate Changes on Home Loans

• Premise 1: The South African Reserve Bank (SARB) increased the repo rate by 50 basis points.
• Premise 2: Higher repo rates lead to higher interest rates on home loans.
• Conclusion: South African homeowners with variable-rate home loans will experience higher monthly repayments.
• Explanation: The argument is sound as it's based on the well-known relationship between repo rates and interest rates on loans.

Investment in Renewable Energy

• Premise 1: The South African government promotes renewable energy through incentives and favorable policies.
• Premise 2: Companies investing in renewable energy are likely to benefit from these government incentives.
• Conclusion: South African businesses investing in renewable energy will experience long-term financial and operational benefits.
• Explanation: The argument is sound because of the cause-and-effect relationship between government policies and business decisions.

The Influence of Load Shedding on Manufacturing Costs

• Premise 1: Frequent power outages are caused by Eskom's load shedding across South Africa.
• Premise 2: Manufacturing companies rely on consistent power supply to maintain production levels.
• Conclusion: Load shedding increases the operational costs of South African manufacturing companies as they invest in backup power sources.
• Explanation: The argument is sound because interruptions in power increase the cost of doing business.

Investing in Cryptocurrencies to Avoid Inflation

• Premise 1: South Africa is experiencing higher-than-usual inflation.
• Premise 2: Cryptocurrencies (Bitcoin) have seen price increases.
• Conclusion: Investing in cryptocurrencies is a guaranteed way to counter inflation.
• Flawed Connection: The link between cryptocurrency prices increasing and countering inflation is not guaranteed.
• Overgeneralization: The conclusion oversimplifies possible risks and volatility.
• Assumption of Guarantee: The argument has assumed a guaranteed outcome.

Expansion into African Markets Without Market Research

• Premise 1: South African businesses are geographically close to African nations.
• Premise 2: Several African countries are experiencing rapid economic growth.
• Conclusion: South African businesses will automatically succeed in African markets.
• Flaw: The argument omits crucial factors like market research, cultural differences, and competition.
• Correction: A sound argument should support expansion through thorough market research and strategic planning.

Load Shedding and Business Failure

• Premise 1: Eskom's load shedding leads to frequent power outages.
• Premise 2: Power outages create business operation disruptions.
• Conclusion: Any South African business experiencing load shedding will fail.
• Flaw: The argument lacks consideration of businesses mitigating load shedding's challenges through backup power.
• Correction: A sound argument must account for various factors businesses use for managing the disruptions, including their resilience and adaptation strategies.

Assessing the Validity of Claims

• Certainty isn't always possible in validating claims and whether they are true or false.
• Justification of claims is found by ascertain whether a claim is sufficiently justified to be acceptable.
• A claim has strong justification if it is shown beyond reasonable doubt to be true, demonstrates high probability, and has convincing evidence.

Evidence

• Evidence is used to justify claims.
• Evidence can be direct (eye-witness testimony) or indirect (combination of facts).
• In assessing evidence, consider factors like reputation, expertise, neutrality, vested interests, corroboration/confirmation, and consistency.

Assessing Statistical Evidence

• Credibility of the source, representation of data, and the reasonableness of the statistical evidence.

Inferences

• An inference is a conclusion reasoned from evidence.
• Inferences are educated guesses.
• Learning experiences, combined with inferences from prior knowledge, contribute to overall knowledge.