In the business world, companies use benchmarking as a point of reference. Benchmarking occurs across all types of companies and industries. Many companies have positions or offices that are in charge of benchmarking.
Required:
i) Explain the term benchmarking. (2 marks)
View Solution
Benchmarking is the process of gathering data about targets and comparators that permit current levels of performance to be identified and evaluated against best practice. Adoption of identified best practices should improve performance.
ii) Explain FOUR advantages companies gain from benchmarking. (8 marks)
View Solution
- Position audit. Benchmarking can assess a firm’s existing position, and provide a basis for establishing standards of performance.
- The comparisons are carried out by the managers who have the live with any changes implemented as a result of the exercise.
- Benchmarking focuses on improvement of key areas and sets targets which are challenging but evidently achievable.
- The sharing of information can be a spur to innovation.
- The result should be improved performance, particularly in cost control and delivering value.