The importance of benchmarking in Strategic Management

Running Head : Benchmarking

The Importance of Benchmarking in Strategic Management

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The Importance of Benchmarking in Strategic Management

Introduction

Organizations and businesses are continuously rummaging new techniques and approaches to enhance their functioning and operations , and gain a competitive advantage . As many organizations look for advancement and progress in their own business processes , they identify and understand the importance of learning from best practices that the other organizations and businesses have accomplished . As the `Business Performance Improvement Resource (BPIR ) states : Why spend time

br re-inventing the wheel , when you can learn from the experience of others ' Thus , following this , if the need to `re-invent the wheel ' is removed , and the potential to adopt proven practices is facilitated benchmarking appears on the stage as a vital technique for the development of the organization

In today 's businesses , it has been seen that a lot of significance is given to the importance of benchmarking as a sure-fire means for improving business and gaining excellence . Benchmarking enables a business to recognize the best practices and adopt a medium for breakthrough thinking . All organizations are pursuing to improve to identify , comprehend and adapt best practices . For them the assumption and implementation of a structured and balanced process serves as a vehicle , helping them to adapt those best practices from suitable other organizations . Through this they can achieve radically improved levels of performance

Defining Benchmarking

Benchmarking is a methodical and organized process for recognizing and employing `best or better practices (BPIR , n .d ) It is a methodology that is all about these three actions , i .e . recognizing , capturing , and carrying out best practices (Welch , n .d ) Although benchmarking can be broken into several types , there mainly exists two types of benchmarking

Best Practice Benchmarking : Under this type of benchmarking , the organizations rummage around for and analyze organizations that are leaders in certain areas of interest . Besides studying the associated performance levels of organizations , their processes are also carefully scrutinized , usually through some mutually favorable `agreement that follows the benchmarking code of conduct (BPIR ) The data and information acquired through the study is brought back to the organization and wherever practicable and suitable , these high performing or best practices are assumed for incorporation within the organization 's own business processes . Hence , best practice benchmarking comprises of the whole process of recognizing , scrutinizing , capturing and implementing best practices

Performance Benchmarking : This type of benchmarking involves weighing the performance levels of other organizations against each other for a specific process . The information acquired can further be made use of for identifying prospects for improvement and /or fixing performance targets . Normally , the performance levels of other organizations are known as benchmarks , while the ultimate benchmark is one that stems from an organization identified as being high performers in the related area `Often , benchmarks are used in the form of indexes such as the American and European Customer Satisfaction Indexes (BPIR , 2007

However , comparing the two , the performance benchmarking only helps in identifying who are the...