Tradeoff Analysis Details

Tradeoff analysis can be as simple as estimating a consumers' preferences for product attributes and what they would give up in exchange for something else, or as complicated as building a sophisticated multi-discipline study of a potential project's pros and cons that a multimillion-dollar corporation is planning.

Likely, you as a consumer, a parent, an employee, or an employer ask yourself every day: "Are the suggested solutions as good as possible?", "Is there something I have overlooked?" And certainly, everyone has different doubts, priorities, and goals. For a business to operate, it needs to evaluate many potential issues, just like the ones you face daily. And though there may be many steps to a complex tradeoff analysis, it essentially combines stakeholder analysis, conflict assessment, and participatory decision-making to make the appraisal transparent and give voice to all involved. What is more, tradeoff analysis is critical because it helps manage potential conflicts between stakeholders.

The great part is that the process and the decision that follows become crystal clear to business stakeholders. The outcome is mutually agreed on as well. The downside is that a tradeoff analysis completion can be time-consuming and might cause additional conflicts when brought together with others. This is why to go ahead with a tradeoff analysis; you'd need someone with excellent mediation skills and understanding of the local context. However, today there's computer software that helps in judging and evaluating. You will come across graphs and charts prepared to answer your concerns as a stakeholder, but don't worry. A tradeoff graph is just a plot of two attributes' values displayed graphically for different options in their simplest form.

Example of Tradeoff Analysis

Consider that you'd like to open a big store in the suburbs of a small town, but you'd need to cut down a few trees to proceed with the architectural plan. You'd be in a controversial situation because the community might oppose your arrangement. The tradeoff here would be between the economic and the environmental or economic and the social indicators.

Before all else, you'd need to put into words your objectives or why of all architectural plans you elected to choose the one you'd be going forward with. Secondly, what are the stakeholders' motives for not cutting the trees down? Thirdly, are there local legislations that support or undermine your decision? Then, you'd want to analyze the context, and you'd come up with some alternatives. After writing down your options, you should mix and match the community objectives and the local laws with your agenda. All of the criteria for going forward with your project will have different weights, and you may need to increase or decrease the importance of different measures.

Public meetings identify the stakeholders and present possible executive strategies. The final stage of the process would be to announce a public meeting aiming to agree on a management scenario.

Significance of Tradeoff Analysis

Tradeoff analysis is a whole group of methods by which stakeholders' values are measured. It's an extensive and thorough tool, and so it is extremely valuable when you strive for excellence in any professional field.

Moreover, there has always been a demand for simulation tools that provide insight into the complex nature and the sustainability of business systems.

Types of Tradeoff Analysis

One of the applications of tradeoff analysis is to help forecast consumer behavior. When measuring the readiness of consumers to buy a product and their evaluations of a product attribute, marketers use the following methods:

  1. Conjoint - Each stakeholder or respondent rates 20-30 product configurations.
  2. Discrete choice - Each stakeholder or respondent is shown a set from which they choose one product they want the most.
  3. Self-explicated - Each stakeholder or respondent completes a questionnaire.
  4. Hybrid - This can be any combination of the above.