Benchmarking
DEFINITION
Benchmarking
is a systematic and continuous measurement process
in which the organization's business processes
are compared with business processes of industry
leaders anywhere in the world to gain information
which will help the organization take action
to improve its performance.
THE BENCHMARKING
PROCESS
The benchmarking
process consists of the following four steps
:
STEP 1:
PLANNING THE BENCHMARKING STUDY
· Select
the process to be studied (what should be
benchmarked ?)
· Determine which companies should
be studied (who should be benchmarked ?)
STEP 2
: CONDUCTING THE RESEARCH
·
Study public disclosures about the particular
process at target companies
· Communicate directly with companies
by phone surveys, written questionnaires,
site visits
STEP 3
: ANALYZING THE DATA
·
Determine the magnitude of performance gaps
between companies
· Identify what enables the performance
improvements at the leading companies
STEP 4
: IMPLEMENTING FINDINGS
·
Adapt, improve, and implement appropriate
benchmark enablers
Source: Watson,
G. H. (1993). "Strategic Benchmarking".
NY : John Wiley & Sons
THE BENCHMARKING
STUDY
INVOLVES
FOUR STEPS
· Development
of a preliminary questionnaire to survey the
culture, structure, financial performance,
and management Style of other companies, and
to provide a basis for selecting companies
to benchmark
·
Internal data collection regarding company's
own processes, to answer the question: "How
do we do it ?"
·
Indirect research for information regarding
potential benchmarking partners' background,
and public disclosures of process knowledge
·
External research and data collection to answer
the question "How do they do it?"
using phone surveys, mail surveys, face-to-face
interviews and site visits
LINKING
STRATEGY WITH BENCHMARKING
BENCHMARKING
PROVIDES INFORMATION THAT SERVES AS THE BASIS
FOR
· Developing
a vision for the changed organization
· Building core competencies that help
sustain competitive advantage
· targeting a specific shift in strategy,
such as entering new markets
· Developing a new line of business
or making an acquisition
Benchmarking
facilitates the creation of an organization
that has increased its acceptance of change
and is more capable of learning how to respond
in an uncertain future.
MANAGEMENT
ISSUES IN BENCHMARKING
· The
strategic choice of benchmarking topics and
potential partners for benchmarking studies
· Integration
of benchmarking information with other competitive
information in strategic planning
· Control
over the potential disclosure of intellectual
property to other companies through the benchmarking
process
· Establishing
goals for development based on benchmarking,
and determination of implementation strategies
to achieve those goals
Sources
:
Strategic Benchmarking, G. H. Watson, 1993, John Wiley & Sons, NY, 1993
Strategic Management, Raphael Amit, Professor at Wharton University of Pennsylvania, US
Gaining and Soustaining Competitive Advantage, Jay. B. Barney, Addison-Wesley, 1997
Contemporary Strategic Analysis, Robert M. Grant, 3th edition, Blackwell, 1998
(c) ECOFINE, Bernard Jaquier, Professor in Economics and Finance, Switzerland, 2020