Analysis of Alternatives – Definition

Cite this article as:"Analysis of Alternatives – Definition," in The Business Professor, updated February 24, 2019, last accessed June 4, 2020, https://thebusinessprofessor.com/lesson/analysis-of-alternatives-definition/.

Back to: Management & Organizational Behavior

Analysis of Alternatives Definition

An analysis of alternatives (AOA) is an assessment of various options present for reaching a goal. This usually involves sensitivity analysis, which is when the evaluation of quantitative estimations and calculations get changed in an orderly way to assess their effect on the end result, life-cycle costing (which is a costing method that considers the expenses at each stage of an asset’s life cycle duration), and cost-benefit analysis (which is the process of measuring the benefits and costs of a choice or project along with the alternatives to have an unbiased scale for assessment). AOA is also known as alternative analysis.

A Little More on What is Analysis of Alternatives

An analysis of alternatives provides a foundation to always assess and compare the advantage of various solutions for providing necessary capability to certain end users. The usually process of an AoA includes:

  • Plan: Define supported decisions and objectives, identifying stakeholders, defining the timing, effort, or funding, creating the study team, setting up the study plan
  • Organize analysis framework: Identify the analysis problem statement, scope, context, and foundation for alternative contrasting. Set up assumptions and ground rules that outline the analysis.
  • Define alternatives: Through extensive research, filtering, and examining, identify several options which focus on the established problem within the scope and context defined.
  • Analyze alternatives: Assess each option against the criteria set up.
  • Compare alternatives: Decide what the relative advantages of the various solutions are as revealed by the analysis
  • Report results: Record the results that are supportive of the needs of the decision-maker or stakeholder.

References for Analysis of Alternatives

Academic Research for Analysis of Alternatives

  • The physics of optimal decision making: a formal analysis of models of performance in two-alternative forced-choice tasks., Bogacz, R., Brown, E., Moehlis, J., Holmes, P., & Cohen, J. D. (2006). Psychological review, 113(4), 700. In TAFC or two-alternative forced-choice tasks, the authors consider excellent decision making by evaluating six TAFC decision-making models and demonstrate how, except for one, all the models can be minimized to the drift-diffusion model by including the statistically optimal algorithm. The authors show evidence of there always being a superior trade-off between accuracy and speed that boost different reward functions. They address experimental data with their findings and make a new prediction about optimal performance.
  • Multi-criteria decision making methods, Triantaphyllou, E. (2000). A comparative study (pp. 5-21). Springer, Boston, MA. Each of the decision methods uses mathematical techniques to assist decision makers in deciding among distinct alternatives. It accomplished by basing the influence of the various options on specific criteria and overall serviceableness of the decision makers. There is a paradox reached when comparing decision methods and it’s deciding what decision-making method should be used to pick the decision-making method?
  • Strategic decision making, Eisenhardt, K. M., & Zbaracki, M. J. (1992). Strategic management journal, 13(S2), 17-37. The authors come to a conclusion that chance matters, battles of choice are won by power, and rationality bounds strategic decision makers based on a review of the literature on decision making and focusing on the overpowering paradigms of bounded rationality and rationality, garbage can, and power and politics. The authors believe the standards are founded on assumptions that are unrealistic and rest on controversies that have ceased to be controversial.
  • Analysis of Alternatives (AoA) Based Decisions, Ast, R., & Ullman, D. (2011). Phalanx, 44(3), 24-24. The authors address an old saying, “budget, schedule, or function, choose two.” They believe reaching goals for any two dimensions for a lot of government, business, and technology projects are difficult. The authors present the question as to why it is challenging to keep plans within a range of application, within cost, and on time. They discuss how analysis of alternatives is being used by some government agencies before providing money for acquisitions in response to the dimension targets missed.
  • Cost as an independent variable: Principles and implementation, Kaye, M. A., Sobota, M. S., Graham, D. R., & Gotwald, A. L. (2000). The Los Angeles Air Force Base has combined cost as an independent variable (CAIV) concepts with elements of the Reduction in Total Ownership Program.
  • Comparative economic organization: The analysis of discrete structural alternatives, Williamson, O. E. (1991). Administrative science quarterly, 269-296. The paper brings together political economics with components of organization theory and contract law to point out and explain the primary differences that separate three general forms of economic hierarchy, hybrid, and organization-market. The paper also joins institutions of government and institutional environment, to show how changes in the limits of latter create shifts in the provisional expense of governance.
  • Exploratory and confirmatory factor analysis: Guidelines, issues, and alternatives, Hurley, A. E., Scandura, T. A., Schriesheim, C. A., Brannick, M. T., Seers, A., Vandenberg, R. J., & Williams, L. J. (1997). Journal of Organizational Behavior: The International Journal of Industrial, Occupational and Organizational Psychology and Behavior, 18(6), 667-683. This article addresses the ongoing debate that the confirmatory factor analysis is increasing firmly while exploratory factor analysis is on the decline.
  • Tools for comparative analysis of alternatives: competing or complementary perspectives?, Hofstetter, P., Bare, J. C., Hammitt, J. K., Murphy, P. A., & Rice, G. E. (2002). Risk Analysis: An International Journal, 22(5), 833-851. The authors believe that an extensive assessment of every risk related to decision options will help decision-makers prioritize the alternatives that will lower risks. The authors use the metaphor of the ripples in the pond after a stone has been thrown in to identify 10 types of risks. The article aims to create a better basis for understanding the tools available to analyze these risks.
  • Defensive marketing strategy by customer complaint management: a theoretical analysis, Fornell, C., & Wernerfelt, B. (1987). Journal of Marketing research, 337-346. The authors believe that although many firms aim to lower the number of customer complaints about products, the goal is questionable. They suggest that complaints should be enlarged within financial limits by using the money saved in advertising obtained by the use of defensive marketing to compensate complaining customers.
  • Managing cultural diversity: Implications for organizational competitiveness, Cox, T. H., & Blake, S. (1991). Academy of Management Perspectives, 5(3), 45-56. This article analyzes the research data and arguments on how diversity management can lead to advantageous competitiveness. The authors deal with six levels of business performance affected by the management of diverse cultures, which are organizational flexibility, cost, problem-solving quality, an attraction of human resources, creativity and innovation, and marketing success.
  • Beneath and beyond organizational change management: Exploring alternatives, Sturdy, A., & Grey, C. (2003). Organization, 10(4), 651-662. This paper identifies why alternative accounts of OCM or organizational change management are needed by looking at the fundamental assumptions of universalism and managerialism, practical and ontological pro-change bias. The OCM alternatives are presented through the lens of constructionism connected with different types of communication analysis.
  • Economic analysis and strategic management, Teece, D. J. (1984). California Management Review (pre-1986), 26(000003), 87. This article investigates why traditional economic theory is disharmonious with the matters of strategic managers and assesses the contributions of industrial organization examples to strategic management.

Was this article helpful?