Incremental vs. Comprehensive
A limited time offer! Get a custom sample essay written according to your requirements urgent 3h delivery guaranteedOrder Now
In a business setting, managers make decisions on cost effectiveness based on what information is provided to them. This day-to-day decision can lead to the success or failure of the business. Two types of analysis that a manager can use are incremental and/or comprehensive analysis. Incremental Analysis
Incremental analysis technique can be used to calculate specific cost related to a particular decision. An example of incremental analysis is a business decides to replace the old copy machine. Some of the costs that are related to the purchase of a newer model would be the toner, the electricity it consumes, and most important the time it will save employees by using more unique models(Investopedia, 2014). Comprehensive Analysis
Comprehensive analysis, “Refers to the complete analysis of every relevant aspect the company’s financial operations” (B., J., 2014). When using comprehensive analysis it requires gathering more information. The information must be accurate for the results to be accurate. This type of analysis is most likely to predict the financial state of the company in the future. Characteristic of Incremental and Comprehensive Analysis
Five characteristics define incremental and comprehensive analysis. In the table below, we see the main features and differences between Incremental and Comprehensive Analysis: Characteristic
Integration with Business Strategy
They are loosely integrated with the overall business goals
They are tightly integrated with the overall business goals
Review of the Plans
The plans are reviewed continuously and are adapted to change depending on the circumstances. The plans are reviewed periodically and are adapted to change depending on the circumstances. Representation Basis
There are a few experienced representative to make a decision This requires many groups from the organization to make a decision Simplicity vs. Complexity
This is a more simple plan
This is a more complex plan
(Newkirk & Lederer, 2006).
Many businesses may use both types of analysis to make financial decisions based on the circumstance. Incremental would be the best choice to make immediate decisions because they will require less effort and time. As Team C, we have concluded the best choice to use is Incremental analysis. This type of analysis gives management the benefit of make quick decisions that will help in business growth. Even though comprehensive analysis is an excellent tool, the process is lengthy and involves too many groups to make decisions.
B., J. (2014, June 01). Wise Geek. Retrieved from What Is Comprehensive Analysis?: http://www.wisegeek.com/what-is-comprehensive-analysis.htm# Investopedia. (2014). Retrieved from Incremental Analysis: http://www.investopedia.com/terms/i/incremental-analysis.asp Newkirk, H. E., & Lederer, A. L. (2006). IncrementalandComprehensiveStrategicInformation Systems Planning in an Uncertain Environment. IEEE TRANSACTIONS ON ENGINEERING MANAGEMENT, 380-394.