always approached different tasks B u s i n e s s F i n a n c e

1. Hello All

After watching the video Problem Solving Techniques #7: Cost-Benefit Analysis, I came up with the following concepts that I learned from the presentation:

• Cost benefit analysis can be used to create a case study to help
  decide if making an organizational change will benefit or harm the
  business. This can be used for implementing new software as shown in the
  video along with a multitude of other scenarios. For example, a
  profitable business wants to expand and setup a new location across
  town. By completing a cost benefit analysis, the organization can
  determine if the expansion is will be beneficial or not. Will they be
  gaining new business or will they maintain the same clients that would
  now be divided between the two locations. Does the new location have the
  same type of clientele that frequents the original business? The
  location they are currently at, could consists of young families that
  use / need their products while the other side of town may consist of
  older adults that do not have any use for their products.
• When completing a cost benefit analysis, the person(s) need to take
  everything into consideration. Not only the costs involved with the new
  “item” but also the costs of removing the existing item that it could be
  replacing. As shown in the video, the most expensive item may not be
  the best choice once the cost benefit ratio is determined.

From past experience, even though the cost benefit ratio shows that
the most expensive solution may not provide the best yield, it could be
the wiser choice. A simple example: Would you go to a pizza parlor and
order Chinese food? The cost benefit ratio may be better when buying the
product from the pizza shop but it is not something that they
specialize in. In the long run, it could prove to be disastrous. In
addition to the completion of a cost benefit analysis, there are several
other factors that need to be taken into consideration before a final
decision is made. Long term support, which source has a longer shelf
life, warranties, issue response time, and other items that may justify
the more expensive option.

2 .I was introduced to the Cost Benefit Analysis (CBA) roughly 2 years ago
and although I never know of this term before then I always approached
different tasks this way. The things I took away form the short video
were that you need to know what is expected to
complete/use a CBA properly. Additionally, how the author pointed out
that there are 4 items that go into make a CBA and what option you
choose. I like that he says its “greatest return for the cost of
implementation, decision making, cost data rationale, and verify the
cost effectiveness”. These are key items that truly have to be reviewed
while completing a CBA. Just because one proposed item is cheaper up
front does not mean it is cheaper in the long run or cause harm in other
departments or areas of the business. Implementing a new software can
be cheap, but training end users how to use it, maintaining the new
software, the lack of features and ability could cost you more in the
long run. Lastly, I liked that If you do not have all of the data you
cannot make a CBA that is valid due to not knowing what could go wrong
or impact the results. This was the most important take away that i had.