Question

Discuss in 5 - 6 paragraphs what is Benchmarking and how can you use it to run a business.

Answer 1

Benchmarking shows a business whether or not its performance is stronger or weaker than its competitors. it provides the company with a transparent image of wherever enhancements are required and the way to improve profits. Simply put it says that if someone does something better than us then it makes more sense to do the task in a better way.

For example, financial benchmarking can help a business to understand where it is spending more money as compared to its competitors and thus correct it to get a better return on the investment.

Apart from benchmarking with just one competitor, it is also important to benchmark with the industry standards being followed in a particular industry from example safety in the iron and steel industry is benchmarked by measuring the LTIFR(Loss Time Injury Frequency Rate) so it is a good indicator to compare how a business is doing in its own industry vis a vis the industry benchmark.

Striving to achieve the best possible performance in various parameters can make a business truly successful by being the best in everything it does, that being said, benchmarking is a continuous process as even competitors are constantly revamping their strategies in response to competition and the business environment. So, benchmarking must be done on a regular basis to obtain the best possible outcomes.

Benchmarking helps a business in the following ways:

• Identify avenues to reduce cost and improve efficiency
• assess the employee productivity
• identify areas for improvement and develop new ideas
• chalk a path for accelerated growth by adopting best practices from across the industries