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ACCA Strategic Professional · Strategic Business Leader · The internal resources, capabilities and competences of an organisation

Ostrava Components compares its machine downtime, defect rate and cost per unit across its four factories to identify which plant has the best practice and then transfers that practice to the others. What is a key limitation of this form of benchmarking?

This is internal benchmarking, and its key limitation is that the best internal plant may still lag external best practice, so the group may not learn what is truly achievable. It is easy to carry out and needs no competitor data, but its scope for insight is narrow.

  1. AIt cannot be used to measure performance
  2. BIt may reveal only internal best practice, so the group may not discover what is achievable externallyCorrect
  3. CIt requires sharing confidential data with competitors
  4. DIt is only possible for service organisations

Explanation

Comparing its own factories is internal benchmarking. It is easy to carry out and data are readily available, but the best internal plant may still be well behind the best external performers, so it limits the view of what is possible. No competitor data are shared, and it applies to manufacturers as well as service firms.

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