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

Lakshmi Pharma, a Hyderabad generics maker, compares its own manufacturing cost, delivery time and regulatory approval rate with those of the best performer in its industry, and then redesigns its processes to close the gaps. This practice is best called:

This practice is benchmarking. The firm measures its cost, delivery time and approval rate against the best performer in the industry and uses the gaps to improve its processes. Outsourcing, portfolio analysis and strategic alliances do not involve comparing performance against a best-in-class standard.

  1. ABenchmarkingCorrect
  2. BOutsourcing
  3. CPortfolio analysis
  4. DStrategic alliance

Explanation

Benchmarking compares a firm's performance and practices on measures such as cost, time and quality against the best in the industry, and uses the gaps to drive improvement. Outsourcing means contracting activities to outside parties. Portfolio analysis assesses the mix of business units. A strategic alliance is a cooperative arrangement between firms.

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