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Wednesday, October 8, 2014

DECISION MAKING PROCESS | What is cost-benefit analysis? How does it help in decision making?

What is cost-benefit analysis? How does it help in decision making?

1 comment:

  1. Answer:

    A cost-benefit analysis is a useful approach for evaluating alternatives. It compares what an alternative will cost in relation to the expected benefits. The benefits of an alternative should also be greater than its costs, and it should also be ethically sound. The following list includes costs, benefits, and other useful criteria for evaluating alternatives:

    • Costs: What are the “costs” of implementing the alternative, including resource investments as well as potential negative side effects?

    • Benefits: What are the “benefits” of using the alternative to solve a performance deficiency or take advantage of an opportunity?

    • Timeliness: How fast can the alternative be implemented and a positive impact be achieved?

    • Acceptability: To what extent will the alternative be accepted and supported by those who must work with it?

    • Ethical soundness: How well does the alternative meet acceptable ethical criteria in the eyes of the various stakeholders?

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