Please list, in order, the five steps that are used in differential analysis. Pa
ID: 2471513 • Letter: P
Question
Please list, in order, the five steps that are used in differential analysis.
Part III
Please select two of the following scenarios and answer the question in each. Be sure to label which scenarios you have chosen and explain your answers. Let’s try and see how many relevant answers we can come up with!
1. A diversified food company is considering the closing of its condiment division. What two to three qualitative factors should be considered before discontinuing a division or product line?
2. An automobile manufacturer has decided to allow outside suppliers to bid on all parts necessary to make its vehicles. What two to three qualitative factors should be considered by management in deciding whether or not to turn over the production of a part to an outside supplier?
3. What two to three qualitative factors might you consider when determining whether or not to replace your car?
Explanation / Answer
Differential analysis involves following 5 steps
1) First you need to identify what is your objective or purpose of decision. I.e context in which you need to take decision about. It may changing some production activity or reducing certain work line, simply associated with reducing cost or increasing revenue
2) second w.r.t to your decision, you need to identify alternate courses of action through which you can achieve your objective
3) Third is to gather all information about all alternatives chosen and evaluating them for their pros and cons, Cost to price benefit etc.
4) Finally you need to make decision on alternatives
5) Lastly you will need to review your implemnted alternative, analyse its effect and check its result.