Answered: What is the incremental analysis…

Business

Operations Management

What is the incremental analysis approach?

Principles of Management

OER 2019th Edition

ISBN:9780998625768

Author:OpenStax

Publisher:OpenStax

Chapter9: The Strategic Management Process: Achieving And Sustaining Competitive Advantage

Section9.6: Measuring And Evaluating Strategic Performance

Problem 1CC: Why is performance evaluation critical in strategic planning?

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Question

What is the incremental analysis approach?

Expert Solution

Incremental analysis:

Incremental analysis is a decision-making method used in businesses to identify the actual cost difference between the various alternatives. It is also known as marginal analysis, differential analysis, or the relevant cost approach. The core of the incremental analysis is that it disregards any past post or sunk cost. An incremental approach is a good method for a business strategy that includes making decisions such as self-producing or outsourcing a function.

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