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CA Intermediate · Financial Management and Strategic Management · Strategic Analysis: Internal Environment

Hindustan Fabrics Ltd compares its costs with the industry's best performer on each activity such as procurement, weaving and distribution, to find where it lags. It then plans to adopt the leader's practices. Which tool of internal analysis is being used?

The tool is benchmarking. It involves comparing the firm's activities and performance against the best performer in the industry, finding gaps, and adopting leading practices to close them. SWOT and the BCG matrix do not involve activity-by-activity comparison with a leader.

  1. ABenchmarkingCorrect
  2. BSWOT analysis
  3. CBCG matrix
  4. DPortfolio rationalisation

Explanation

Benchmarking compares a firm's processes and performance with those of the best in the industry, activity by activity, to identify gaps and adopt superior practices. SWOT summarises strengths and weaknesses and does not itself compare against a leader. BCG matrix evaluates business units by growth and share.

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