The
process of economic evaluation
Most
progressive approaches to the economic evaluation of
new technology begin with the study of (or the development
of) the business plan. This is often overlooked by
small businesses. The strategic role of the technology
with respect to the competitive environment must be
considered. Technology strategy must be coordinated
with manufacturing, business, human resource, and marketing
strategy.
The next step is to carefully choose the benchmark against which the new technology proposal is to be compared. The benchmark is a realistic scenario against which investment alternatives can be compared. Only after all of these activities have been completed, can the actual cost justification of the new technology begin.
An examination of the specific steps, equations, and calculations involved in the cost justification process is beyond the scope of the Innovation Implementer. Once again, however, it is important to point out that thinking of the cost justification of new technology as an isolated task, misses several critical elements that need to be considered in the process of the economic evaluation of new technology.
The Process of Economic Evaluation
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