Final answer:
While new companies, including Sarah's, face higher failure risks, it is not an absolute that they will fail. Business success depends on a range of variables beyond just being new in the market. Therefore, the conclusion that Sarah's company will necessarily fail does not follow from the premise provided.
Step-by-step explanation:
Considering the premise that Sarah owns a new company and acknowledging the fact that new companies are more likely to fail than established ones, it seems logical to deduce that Sarah's company is at a higher risk of failure. However, the conclusion that Sarah's company will fail just because it is new does not necessarily follow. There are multiple factors affecting business success or failure, including management efficiency, market demand, competition, and economic conditions. Using data from the U.S. Small Business Administration, we can see that a significant number of businesses do fail, but it is not predestined based on the company's age alone.
Businesses may exit the market for various reasons: poor management decisions, unproductive labor, shifts in market demand and supply, or rigorous competition, both domestic and international. Market fluctuations can suddenly alter the costs or profits, heavily impacting a firm's viability. With myriad businesses in play across the U.S. economy, even a minimal failure rate can have wide-reaching implications. However, in a functioning market economy, such exits, while difficult for those involved, are part of a self-correcting mechanism that ideally drives innovation, consumer satisfaction, and cost reduction.