CA Intermediate · Financial Management and Strategic Management · Strategic Analysis: Internal Environment
Kaveri Foods compares its cost structure with that of its best-performing rival, Sagar Snacks, by studying the rival's procurement, packaging and distribution practices and then adopting the superior practices to close the gap. Which tool of internal analysis is Kaveri Foods mainly using?
Kaveri Foods is using benchmarking. It studies the best-performing rival's processes in procurement, packaging and distribution and adopts better practices to narrow the performance gap. Portfolio matrices and scenario planning serve different purposes, and an internal-only value chain review involves no comparison with an external best practice.
- ABenchmarkingCorrect
- BValue chain analysis of its own activities only
- CBCG growth-share matrix
- DScenario planning
Explanation
Benchmarking means comparing one's processes and performance with the best in the industry and adopting superior practices to improve. The BCG matrix classifies business portfolios by growth and market share. Scenario planning deals with future uncertainties. Value chain analysis of own activities alone does not involve comparison with a rival's practices.
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