Uses the monetary value of initial and ongoing expenses vs. expected return. Costs and future returns are estimated using present value discounting. This is done to put relevant costs and benefits on equal “monetary footing.” The company chooses a discount rate, which is then used to compute all relevant future costs and benefits in present-value terms.
Evaluates the Strengths, Weaknesses, Opportunities, and Threats a company faces in the marketplace.
- Strengths: characteristics of the business or team that give it an advantage over others in the industry.
- Weaknesses: are characteristics that place the firm at a disadvantage relative to others.
- Opportunities: external chances to make greater sales or profits in the environment.
- Threats: external elements in the environment that could cause trouble for the business.
Analyzes the characteristics of new technologies in order to determine the likelihood of their being adopted. Research has illustrated that the higher the innovation’s score on each of these characteristics, the more successful the implementation was likely to be. According to research, “relative advantage, compatibility, and complexity have the most significant relationships with the adoption and implementation of technological innovations.
- Relative Advantage (Is it better?)
- Compatibility (Does it fit?)
- Complexity (Can it be understood?)
- Trialability (Can it be tried?)
- Observability (Can the operations and results be seen?)
- Re-invention (Can it be modified?)