What is Cost-Benefit Analysis ?
‘Cost-Benefit Analysis’ is the systematic analysis of a course of action against the cost of performing that action. It is used to decide whether the action being considered is worth the time and resources being spent on it.
Most of the cost-benefit analysis takes into account a variable called opportunity costs. It includes the benefits that the company could have if another opportunity is chosen over the current path under consideration.
It is highly beneficial to the company as it is a corporate version of dipping your toe before entering the water. The company can calculate all the necessary risks and finally proceed with the decision after a thorough cost-benefit analysis to make sure that the chosen path is a success.