CA Intermediate · Financial Management and Strategic Management · Strategic Analysis: Internal Environment
Vihaan Retail's board compares its performance with the best performer in an unrelated industry, studying how that firm manages order fulfilment so as to adopt superior practices, instead of comparing only against direct rivals. Which benchmarking type is this?
This is generic benchmarking, because the firm compares a specific process such as order fulfilment with best practice in an unrelated industry. Internal benchmarking uses units of the same firm, and competitive benchmarking uses direct rivals, so neither fits the scenario.
- AInternal benchmarking
- BCompetitive benchmarking
- CGeneric benchmarkingCorrect
- DHistorical trend analysis
Explanation
Benchmarking against best practice of firms in other industries for a similar process is generic (functional) benchmarking. Internal compares units within the same firm and competitive compares direct rivals. Historical analysis compares only the firm's own past periods.
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