RELEVANT TO ACCA QUALIFICATION PAPERS P3 AND P5

RELEVANT TO ACCA QUALIFICATION PAPERS P3 AND P5
© 2012 ACCA
Benchmarking
Benchmarking can be defined as: 'The establishment, by the collection of data,
of comparators that allow relative levels of performance to be identified.’
Benchmarking can be thought of as a scientific way of setting objectives that
will act as targets before and during the operating period, and comparators
during and after the period. The phrase ‘by the collection of data’ is crucial:
anyone can establish objectives without the collection of data, but these will be
of little use because they are likely to be arbitrary and without any validity.
Benchmark data validates objectives.
The sources of data that can be used include internal data (for example,
comparing the results of different branches), data about other companies (for
example, those in the same industry) and government data (for example, data
about employee sick days). We will examine the sources of data in more detail
later.
Benchmarking and the strategic planning process
Benchmarking can be used in all three steps of the classical, rational model of
strategic planning:
• Assess the strategic position (internal and external factors)
Frequently, strategic planning starts by defining the mission or mission
statement. For example, BMW states that its mission is: ‘The BMW
Group is the world’s leading provider of premium products and premium
services for individual mobility.’
So, without comparison through benchmarking, how does BMW know
that it is delivering premium products and services?
Assessment of an organisation’s current strategic position can be
summarised in a SWOT analysis. However, the use of comparators is
inherent in a SWOT analysis: if you can say that something is a
‘weakness’ or a ‘strength’ you must be carrying out some sort of
comparison when making that value judgement. Similarly with
opportunities and threats. A factor is a threat to us only because it is
better or stronger than we are in that area – whether it is an organisation
that is better financed, or one that produces products more cheaply, or a
technological development that promises a better product in terms of
cost-benefit, or an organisation that has a stronger brand name.