The four key components of Strategy Analysis are principles, practices, techniques, and skills. They play an essential role in identifying and validating the organization’s strategic needs, defining suitable solution approach(es) and solution(s), and planning, monitoring, and engaging stakeholders to achieve the organization’s strategic objectives. Techniques describe a step-by-step approach to conducting Strategic Analysis activities.
Do you want to compare your company’s business processes and performance metrics to the industry’s best practices from other companies?
Here is a Strategy Analysis technique to achieve that. This blog will look at a technique called Benchmarking with examples.
Benchmarking as a strategy analysis technique has been used since the early 1980s. Xerox Corporation first developed it as a way to measure and compare the performance of their products against competitors. The technique was then adopted by other companies and organizations to measure and compare their own performance against industry standards.
Benchmarking has since become an important tool for organizations to measure their performance against competitors and industry standards. It is used to identify improvement areas and develop strategies to improve performance. Benchmarking can also be used to identify best practices and develop new strategies.
Benchmarking has become increasingly popular in recent years as organizations strive to stay competitive in a rapidly changing business environment. It is used to measure and compare performance across a variety of areas, including customer service, product quality, cost efficiency, and innovation. Benchmarking is also used to identify improvement areas and develop strategies to improve performance. Benchmarking is an important tool for organizations to measure their performance against competitors and industry standards. It is used to identify improvement areas and develop strategies to improve performance. Benchmarking can also be used to identify best practices and develop new strategies.
Benchmarking compares organizational practices against best-in-class practices from competitors, government, industry associations, or standards. The purpose of benchmarking is to identify internal opportunities for improvement. By understanding and learning how certain companies deliver superior performance and comparing it with how your company performs, you can understand what your company is lacking and come up with improvements that will yield significant results.
Figure 8: Steps for Benchmarking
- Identify areas to study.
- Identify benchmarking sources – For e.g., which other companies will you compare your company with
- Conduct surveys / visit enterprises and gather information on how they perform
- Determine gaps between best and current practices.
- Develop proposals to implement gaps.
Benchmarking helps enhance organizational operations and increase customer satisfaction and value to stakeholders.
It provides organizations with new ideas and ways to improve their performance of the organization.
However, benchmarking is time-consuming and may not necessarily result in coming up with innovative solutions as it is mostly based on reproducing what has worked well for other organizations.
Advantages of benchmarking as a strategy analysis technique
- Identifies Best Practices: Benchmarking helps organizations identify best practices and processes that are being used by other organizations in their industry. This helps organizations identify areas where they can improve their own processes and operations.
- Improves Performance: Benchmarking helps organizations identify areas where they can improve their performance. By comparing their performance to that of other organizations, they can identify areas where they can make changes to improve their performance.
- Increases Efficiency: Benchmarking helps organizations identify areas where they can increase their efficiency. By comparing their processes and operations to those of other organizations, they can identify areas where they can make changes to increase their efficiency.
- Enhances Competitiveness: Benchmarking helps organizations to identify areas where they can enhance their competitiveness. By comparing their performance to that of other organizations, they can identify areas where they can make changes to enhance their competitiveness.
- Identifies Opportunities: Benchmarking helps organizations identify opportunities for improvement. By comparing their performance to that of other organizations, they can identify areas where they can make changes to take advantage of new opportunities.
Weakness of benchmarking as a strategy analysis technique
- Benchmarking can be time-consuming and expensive: Benchmarking requires a significant amount of time and resources to be effective. It can be difficult to find the right companies to compare against, and the process of collecting and analyzing data can be costly.
- Benchmarking can be difficult to implement: Benchmarking requires a great deal of coordination and communication between different departments and stakeholders. As a result, it can be difficult to get everyone on the same page and ensure that the benchmarking process is being followed correctly.
- Benchmarking can be biased: Benchmarking relies on the data that is collected and analyzed. If the data is incomplete or inaccurate, the results of the benchmarking process can be skewed.
- Benchmarking can lead to complacency: Benchmarking can lead to a false sense of security, as companies may become complacent with their current performance levels. Companies should always strive to improve, even if they are performing better than their peers.
Relationship of benchmarking with other strategy analysis techniques
Benchmarking is a strategy analysis technique that compares a company’s performance to that of its competitors or to industry standards. It is often used in conjunction with other strategy analysis techniques such as SWOT analysis, Porter’s Five Forces, and PEST analysis. Benchmarking can help identify areas of improvement and provide insights into how a company can improve its performance.
It can also be used to identify best practices and potential areas of collaboration with other companies. By combining benchmarking with other strategy analysis techniques, companies can gain a more comprehensive understanding of their competitive position and develop strategies to improve their performance.
The future of benchmarking as a strategy analysis technique is bright. As organizations become increasingly complex and competitive, benchmarking will become an even more important tool for understanding and improving performance. Benchmarking will continue to be used to identify best practices, measure performance, and identify areas for improvement. Additionally, benchmarking will become more sophisticated as technology advances, allowing for more detailed and accurate comparisons. Finally, as organizations become more data-driven, benchmarking will become an even more powerful tool for understanding and improving performance.
About Adaptive US
This blog is written by Adaptive US. It is among the world’s Most Trusted IIBA Business Analyst Training and Certifications organization. We have helped 1500+ students complete IIBA certifications. We are one the leading IIBA certifications training providers in the last 3 years in a row, 2020, 2021, and 2022. Adaptive US provides success-guaranteed CBAP, CCBA, ECBA, BA Bootcamp, AAC, CBDA, CCA, CPOA online, virtual and on-premise training, question banks, study guides, simulators, flashcards, audio-books, digital learning packs and many more across the globe. For more information, kindly visit our website: https://www.adaptiveus.com