Examination of benchmarking practices in South Africa firms
Date
2014-04-03
Authors
Smart, Daniel Arthur John
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Abstract
Whilst contemporary managements tore concerned with the measurement of the
performance of their businesses, they now recognise that “new strategies and
competitive realities demand new measurement systems” (Eccles, 1991). There is a
need for management techniques to provide strategic management information as well
as operational performance measures. This requires a balance between measuring
actions already taken and drivers of future performance (Kaplan & Norton, 1992).
In response to the pressures placed on management by market and consumer trends,
locally and globally, numerous management techniques have been introduced in an
attempt to improve the competitive performance of business in the delivery of
products and services to customers (Watson, 1993). Many of these have been oversold
as being universally applicable to business whereas they have a limited business
application. The net result of this onslaught of techniques is that senior management
has become sceptical of those claiming to revolutionise the way to do business. The
consequence is that management is reluctant to apply current techniques, but continues
to use historical management tools that have been found reliable.
One management approach, which continues to be extensively used, is competitive
analysis. In the past, this has provided a powerful tool for strategy formulation
(Walleck et al, 1991). It has enabled management to determine differences in key
quantitative and qualitative measures between the firm and its competitors. The
process, however, has only enabled a quantification of th ese competitive gaps in
performance. As no analysis of the underlying reasons for the gaps was performed, the
result was a management tool that was useful for performance measurement but had
limited applications for strategic management. Hence, pure competitive analysis has
restricted application as a contemporary management tool. Any management
information derived from a competitive analysis would be ascertainable from the
application o f a benchmarking process. This is possibly due to benchmarking
including, but not being limited to competitor firms as a source of comparisons.
Benchmarking is a relatively modem management process that has captured the
interest o f business, both as a performance measure and for strategic management.
Benchmarking principles are however, not entirely new to business, but are rather a
refinement of pure competitive analysis (Mooney, 1995). This view appears to suggest
that benchmarking is a natural progression from traditional competitive analysis; an
evolution into a superior management tool.
Due to benchmarking being a natural progression from competitive analysis, it has
comparable conceptual methodologies. These similarities have influenced the
acceptance o f benchmarking as a new management tool. The fact that benchmarking at
first appears to resemble pure competitive analysis (which most managers are familiar
with) has enabled management to identify with benchmarking. The effect is that
management is not opposed to implementation of benchmarking programmes
(Watson, 1993). It is contended that this is the most important factor responsible for
extent of use of benchmarking internationally and the continued growth of
benchmarking applications in firms. This link between competitive analysis and
benchmarking is further discussed in the next chapter.