BENCHMARKING AND THE STRATEGIC PLANNING PROCESS

ACCA P3考試：BENCHMARKING

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.

Note that a benchmarking exercise can also highlight where a competitor’s performance is weaker and so point out the areas where that competitor is vulnerable and might be fruitfully attacked. For example, if it is found that the quality and reliability of a competitor’s products are inferior to one’s own products, then an advertising campaign emphasising quality of our products could be effective.

In all cases, the SWOT analysis should be based as far as possible on facts; data that has been collected and transformed into benchmark standards.

Consider strategies and make choices Chosen strategies are those that should lead to competitive advantage.

According to Michael Porter, competitive advantage can be obtained through either cost leadership or differentiation (each with or without focus). If cost leadership is to be attained, then an organisation must know what costs it needs to beat. What are competitors’ costs? What are the benchmarks for cost leadership? If the organisation has little hope of equalling or bettering those costs, then cost leadership is not a sensible strategy to attempt.

Similarly with differentiation. This strategy is always more complex than cost leadership, where the main criterion is simply to lower unit costs while maintaining average quality. Differentiation, however, can be attained in a multitude of ways: quality, brand, style, innovation. Whatever the secret of differentiation is, it must be something that beats the competition – better quality, stronger brand attributes, better style or more radical innovation. Once again, measuring how competitors perform in these metrics is essential.