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

Tavish Retail benchmarks against Corvane, its closest rival. Tavish's staff cost per sale is 12% lower, but its customer satisfaction is 20 points lower and its repeat purchases are falling. The CEO concludes Tavish is more capable. Which criticism of this conclusion is most valid?

The valid criticism is that the CEO judged capability on cost efficiency alone. Falling satisfaction and repeat purchases show Tavish may be failing on what customers value, so capability must be assessed against customer value and sustained performance, not just lower staff cost per sale.

  1. ABenchmarking should only use financial measures
  2. BEfficiency has been compared in isolation; capability must be judged against what customers value and sustained performance, not cost aloneCorrect
  3. CCompetitor benchmarking is unreliable because data about rivals is always unavailable
  4. DLower costs always indicate superior core competences

Explanation

Capability is about delivering value that customers appreciate in ways hard to imitate. Lower cost with falling satisfaction and repeat sales suggests Tavish may be under-investing in service. Cost alone does not prove superior competence, and non-financial measures are essential.

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