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CA Intermediate · Financial Management and Strategic Management · Strategy Implementation and Evaluation

Rohan Auto Components Ltd. compares its performance with the best practices of the leading firm in the industry, and also studies a firm in a different industry that is excellent at order fulfilment, to adopt its methods for its own warehouse. The second comparison is best described as which type of benchmarking?

It is functional or generic benchmarking. The firm is comparing a specific process, order fulfilment, with an excellent company outside its own industry. Competitive benchmarking would involve direct rivals, and internal benchmarking would compare units within the same organisation, neither of which applies here.

  1. AInternal benchmarking
  2. BCompetitive benchmarking
  3. CFunctional (generic) benchmarkingCorrect
  4. DStrategic benchmarking only against rivals

Explanation

Comparing a specific function or process with an excellent firm, even from another industry, is functional or generic benchmarking. Competitive benchmarking is against direct competitors, and internal benchmarking is among units of the same firm. The second comparison involves a non-rival from another industry, so it is functional.

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