Final answer:
Performance analysis involves examining outcomes against expectations using tools like Cost Benefit Analysis, which compares marginal costs and benefits to aid in decision-making.
Step-by-step explanation:
Performance analysis in the planning and control cycle is related to the examination of how decisions in business, such as investments or operations, have performed against expectations. It involves scrutinizing outcomes to understand the efficacy of strategies and actions. A key method used in performance analysis is a Cost Benefit Analysis, which is an essential tool in decision-making processes.
Cost Benefit Analysis compares the marginal costs, which are the extra costs incurred from adding an additional unit, against marginal benefits, the extra benefits obtained by adding the same unit. In this analysis, a T-shaped chart is often used, with costs on one side juxtaposed with benefits on the other. Costs encompass what is sacrificed including money, effort, and other resources, while benefits represent what is gained, such as financial gain, time savings, experience, and enhancements.
By balancing these two elements, individuals or businesses can make more informed decisions that potentially lead to better outcomes, thus enhancing performance.