COST BENEFIT ANALYSIS.

UNIQUE BUSINESS IDEAS

UNOQUE BUSINESS IDEAS

WHAT IS COST BENIFIT ANALYSIS?

UNOQUE BUSINESS IDEAS

A quantitative approach to determine the gain out of cost of input and value of output. It can be monetary or opportunity.

Why it is important in business?

It is a decision-making tool, which helps to determine whether the action/transaction/project is worth pursuing.

UNOQUE BUSINESS IDEAS

Example.

When company deploy additional manpower does a cost benefit analysis whether that additional manpower will result in additional business or add value to business.

UNOQUE BUSINESS IDEAS

THE COSTs

Direct Cost Indirect Cost Intangible Cost Opportunity Cost Cost of Potential risk

UNOQUE BUSINESS IDEAS

UNOQUE BUSINESS IDEAS

THE benefits

Direct Indirect Total Benefits Net Benefits

Mostly used in

Developing a new strategy. Resource allocation. Whether to pursue a project. Investment opportunities Change management. Policy framing.

UNOQUE BUSINESS IDEAS

HOW TO DO A COST BENEFIT ANALYSIS?

Understand the status quo and its cost.

1

UNOQUE BUSINESS IDEAS

HOW TO DO A COST BENEFIT ANALYSIS?

Identify the area of costs

2

UNOQUE BUSINESS IDEAS

HOW TO DO A COST BENEFIT ANALYSIS?

Identify the benefits

3

UNOQUE BUSINESS IDEAS

HOW TO DO A COST BENEFIT ANALYSIS?

Assign monetary value to the identified cost and benefits

4

UNOQUE BUSINESS IDEAS

HOW TO DO A COST BENEFIT ANALYSIS?

Allocate feasible timeline

5

UNOQUE BUSINESS IDEAS

HOW TO DO A COST BENEFIT ANALYSIS?

Compare total cost and benefits

6

UNOQUE BUSINESS IDEAS

The Author: PALLAB ROY

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