Cost Benefit Of Investment Analysis

Remember not every case requires every step Identified in the Case Analysis tool kit we discussed on September 22

What is my role?

• outside consultant, marketing manager, etc.
• Who am I reporting to? e.g. Board of Directors, CEO, etc.

What is the Issue ?

• What is the problem you are tasked with solving?
  • Sometimes it is given, sometimes you have to discern it
• Are there minor operational issues that need to be addressed?

Examine the Facts

• Filter through the data presented in the case – watch for extraneous data
• External Analysis
• Internal Analysis
  • What strengths or weaknesses does the organization appear to have?
  • Who are the major stakeholders?
  • Do stakeholders have preferences?

Analyze Alternatives

• For the key decisions, identify all of the alternative courses of action
• For each alternative provide the costs and benefits/pros and cons
• include both quantitative as well as qualitative analysis. Choose what tools are most appropriate given the situation and the decision.
  • choose the relevant facts and figures to analyse.
• Remember, this is analysis and not just a restatement of facts.
• Uncertainty will always be difficult to deal with. Use sensitivity or probability analysis where appropriate.

Make a decision/recommendation

• What are your decision criteria?
• Clearly identify what the main question was that you intended to answer.
• Clearly identify what your main recommendation is – usually which alternative is best.
• Keep in mind that there likely were some disadvantages for even your recommended alternative. Be sure to indicate how you plan to mitigate these.
• Address any of the other issues or problems that need to be solved in conjunction with the main problem.

In many cases there may be more than one good solution. The best reports provide thorough analysis and logical conclusions.