Benchmarking And Prioritizing Projects – Coursework Example
Benchmarking and Prioritizing Projects Benchmarking and Prioritizing Projects Financial benchmarking entails financial analysis withthe aim of establishing the productivity and the competitiveness of a firm in the industry. There are many financial benchmarking techniques, including generic, internal, competitive, and functional techniques.
Internal Financial Benchmarking Technique
The technique entails the financial analysis of business units within the organization. The tactic establishes the performance of each business unit to identify the best and worst performing business unit (Frost, 2010). The technique is better than the competitive benchmarking technique because internal business units must perform well for a firm to contest with other businesses in the same industry. However, a firm cannot benefit from the ideas of the best performing firms in the industry. The consideration of the internal processes alone bars a firm from realizing the innovative business ideas of competitive firms.
Competitive Financial Benchmarking Technique
The technique involves the financial analysis of a firm’s processes regarding the competitors’ internal processes. The process involves healthy competition between firms. Additionally, there is the exchange of financial business ideas among many firms. The strategy is beneficial to the firm because there is room for improvement. According to Player (2011), the process of financial analysis is dynamic because firms are dynamic in their operations. The firms, which perform poorly in their financial progression usually, learn good financial strategies from their counterparts in order to improve in performance. What is more, the best performing firms usually set the standards of performance. The other forms emulate the strategies established by the iconic firms. However, the strategy is subjective because different companies apply different modalities in their operations. For that reason, it is counterproductive for a firm to emulate the mode of operation of another firm without considering the underlying variables of the firm.
Internal and competitive financial benchmarking techniques are crucial in the performance of any firm. However, each of the strategies has shortcomings. In this regard, the firm benefits from internal benchmarking when the benchmarking process is objective. Competitive benchmarking also benefits firms, although it compromises innovativeness and creativity in firms.
Frost, W. (2010). Financial and clinical benchmarking: the strategic use of data. New York:
Player, S. (2011). Benchmarking for Competitive Advantage. New York: J. Wiley.