Question

In: Finance

Describe what Benefit-Cost Analysis is (a) and list two characteristics of the service sector that differentiates...

Describe what Benefit-Cost Analysis is (a) and list two characteristics of the service sector that differentiates it from the manufacturing sector (b).

a.Benefit-Cost Analysis

b.Service sector projects characteristics

Solutions

Expert Solution

a) Benefit cost analysis : It is a process businesses use to analyse the decisions. The business or analysts sums the benefits of situation or action & then subtracts the costs associated with taking that action. It takes into account both quantitative & qualitative factors for analysis of the value for money for a particular project or investment opportunity. Benefits to cost ratio and other indicators are used to conduct such analysis.

b) Characteristics of service sector :

i) Intangibility : Service sector generally cannot be seen, felt, tested or heard or smelt before being bought. The potential customer is unable to perceive the service before the service delivery. Example, car repairing services.

ii) Variability : The quality of service may vary depend upon who provides it as well as when & how it is provided.

iii) Lack of ownership : It is basic difference between service industry & product industry because customer may only have access to or use of a facility.


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