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Strategic Implementation and Control

Concept of benchmarking analysis

What is Benchmarking?

  • Benchmarking is a strategy tool of comparison.
  • It is used to compare the performance of business process & products of company with best performance of other companies.
  • Managers used benchmarking to identify best tool practices in other companies.
  • According to Camp, benchmarking is simply “Finding and implementing the best business practices”.

Types of Benchmarking –

(a) Strategic benchmarking: This strategy says compare the winning strategies adopted by competitors or successful companies and thereafter adopt them in their own strategic processes.

(b) Performance benchmarking: This benchmarking strategy says compare your performance with competitor’s performance. l,e What are the price, quality, speed of production and what is our then adopt best practice.

(c) Process benchmarking:  This benchmarking strategy says compare how the competitors manufactured their products & what is the manner of providing services.

Approaches of Benchmarking –

(a) Internal benchmarking: In internal benchmarking management compares the working team, unit, and divisions within the organization.

(b) External or competitive benchmarking: In external or competitive benchmarking company compares itself with competitors inside its industry itself. E.g. TATA & Tanishque.

(c) Functional benchmarking: In functional benchmarking managers compare their functional performance with functional performance of other companies.

(d) Generic benchmarking: In Generic benchmarking company focus on excellent work process of other companies rather than comparing with particular things.

Advantages of Benchmarking Strategy –

  • Easy to understand and use.
  • It’s a low cost activity that offers huge gains.
  • Brings innovative ideas to the company.
  • Provides with insight of how other companies organize their operations and processes.
  • Increases the awareness of costs and level of performance compared to rivals.
  • Facilitates cooperation between teams, units and divisions.

Disadvantages of Benchmarking Strategy –

  • Requires identification of a benchmarking partner.
  • Sometimes impossible to assign a metric to measure a process.
  • Might need to hire a consultant.
  • The initial costs could be huge.
  • Managers often resist the changes.
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