Cost-Benefit Analysis (CBA)
Cost-Benefit Analysis (CBA) is a decision-making tool used to evaluate the financial feasibility of a project, investment, or strategy by comparing its costs and benefits. The goal is to determine whether the benefits outweigh the costs and by how much.
Key Components:
- Costs: Expenses like production, labor, marketing, and operational costs.
- Benefits: Revenue growth, efficiency improvements, customer satisfaction, or other measurable gains.
Benefits of CBA:
- Helps in making data-driven decisions.
- Identifies the most cost-effective option.
- Assists in risk assessment and strategic planning.
Use Cases:
- Business Investments: Evaluating new product launches.
- Marketing Campaigns: Analyzing ROI on advertisements.
- Project Management: Deciding on new technology implementation.