Decisions_in_Paradise_Ii

Decisions in Paradise II Alicia Joseph MGT 350 Steve Boylan March 13, 2011 Running head: Decisions in Paradise 1 Business partners Alex and Nik has decided to create a plan to the develop The Wyndham Resort on the small island of Kava. In the paper I will attempt to create and critique the decision making technique of the business plan of Alex and Nik. Both parties have decided to use the analysis of cost-benefit of the Resort in Kava. Cost-benefit analyses “adds up the value of the benefits of a course of action and subtract the costs that are associated with the change” (Mind tools, Para 4, 2010). This is one of the most effective tools for explaining the expenditures for the project. Cost-Benefit Analysis By utilizing this technique, Alex and Nik will be able to determine if the plan will make a profit. The analysis will help add the positives, add the benefits, and also be able to identify the quantities and look at and take away the negatives and cost. The difference of the two can usually be determined if the action planned is advisable. One of the first steps that should be created is to make a list of the possible costs that would be associated with the project. The costs may include but are not limited to such things as personnel, equipment, maintenance, environmental impact, and implementation time. Alex and Nik should be able to provide a detailed outline of all the projected costs. In the cost benefit analysis report it will include a breakdown of the projected cost. The chart below would be an example of how the projected cost outline will appear as: Running head: Decisions in Paradise II 2 Projected Cost Analysis Report Construction $65 Million Salaries $5 Million Advertising $15,000 Maintenance $12,000 Utilities $50,000 Purchase of Land $45,000 Insurance $45,000 Total Estimation of Costs $66 Million (rounded) Step two involves identifying and listing the positive returns that are tied in with the costs of the investment. To ensure that Alex and Nik have the correct calculations they should make sure that all of the benefits and monetary returns will show an increase that is conducive with the conditions economically in the Kava project. The concern that is associated with the social prosperity plays a major role in the value of the Kava project (Wyndham Resort). There may be a few benefits that are indirectly associated with the project such as the revenue that is generated by tourism, jobs, improved government relations, and possible refuge that may be associated with any natural disaster. Running head: Decisions in Paradise II 3 Decision Making Model The main goal of the analysis is to weigh in the total cost as opposed to the benefits that are expected. By comparing the benefits with the costs, Alex and Nik will have ensured the most effective options for the success of Wyndham Resort in Kava. The main key in conducting the cost benefit analysis is to ensure the accuracy of the benefit and costs. To establish a period that is specific to the payback is how Alex and Nik can ensure the overall success. To be successful I the cost benefit analysis the following steps must be taken: 1. Define and identify the selected project. 2. Identify the consequences, effects, and how they have an impact. 3. Pin point the setbacks and constraints that may arise. 4. Create reports and records that reflect all possible costs. 5. Create backup scenarios and solutions. 6. Show the economic and social returns as well as the monetary returns. 7. Compare all costs and benefits. 8. Provide an analysis of the cost and benefits. 9. Create a contingency plan. 10. Suggest the most effective option that is associated with the cost benefit analysis. Alex and Nik will have outlined the project effectively by ensuring that all of the pertinent information is completed and the assumptions that are connected with the success of the Wyndham Resort project. By ensuring that the goals are defined and the Running head: Decisions in Paradise II 4 potential outcome of the project is also defined. Alex and Nik will ensure the success in the decision making process. Conclusion The “cost-benefit analysis can be used to justify technology and equipment investments; meet the cost that are hidden; measure the life cycle costs; and the costs and intangible benefits” (DEAT, 2005). To cut the conflict in the decision making process, establishing a cost benefit analysis is most effective. Alex and Nik made the right decision in choosing the most beneficial vision in the Wyndham Resort. Also by using the cost-benefit analysis, it gives a wider view at the possible negative and positive factors that may be associated with the project. Reference DEAT (2005) Department of Environmental Affairs and Tourism (DEAT), Pretoria. Retrieved March 11, 2011 from http://www.environment.gov.za/documents/publications/2005Jan7/Book3.pdf Mindtools.com (1995-2010). Cost/Benefit Analysis Evaluating Quantitatively Whether to Follow a Course of Action. Retrieved March 11, 2011 from http://www.mindtools.com/pages/article/newTED_08.htm