Chapter 6 - The Voice of the Market Flashcards
(46 cards)
A Benchmark is…?
An organization recognized for its excellent operational performance.
Benchmarking is…?
The sharing of information between companies so that both can improve.
What are the 6 types of benchmarking?
- Process
- Financial
- Performance
- Product
- Strategic
- Functional
Process benchmarking
The initiator firm focuses its observation and investigation on the target firms business processes.
(process flow, operating systems, process technology)
Financial benchmarking
To perform financial examination and to compare the results in an effort to assess your overall competitiveness.
Performance benchmarking
Allows initiator firms to assess their competitive position by comparing products and services with those of target firms.
Product benchmarking
A type of benchmarking that firms employ when designing new products or upgrades to current products.
Usually involves reverse engineering, or dismantling competitors’ products to understand the strengths and weaknesses of their design.
Strategic benchmarking
A type of benchmarking that involves observing how others compete.
This type of benchmarking typically involves target firms that have been identified as “world class”.
Used to identify the mix of strategies that makes these firms successful competitors.
Functional benchmarking
Involves the sharing of information among firms the are interested in the same functional areas.
A company focuses its benchmarking efforts on a single function to improve the operation of that function.
The first step a benchmarking firm must do is to…?
Document current performance
What are the two parties to each benchmarking relationship?
Initiator firm and target firm (aka benchmarking partner)
What are the 7 primary purposes for benchmarking?
- Learning from success
- Borrowing ideas
- Best-in-firm
- Beating industry standards
- Best-in-class
- National leadership
- Best-in-world
What are 3 difficulties of monitoring and measuring performance?
- Limitations of accounting systems
- Computing productivity
- Comparisons between US firms with foreign companies
Key business factors
Those measures or indicators the are significantly related to the business success of a particular firm. (i.e. customer satisfaction => market share)
What are the 8 categories of measures gathered in benchmarking studies?
- Financial ratios
- Productivity ratios
- Customer-related results
- Operating results
- Human resources measures
- Quality measures
- Market share data
- Structural measures
Financial ratios
Numerical ratios of firm performance
such as return on equity, return on assets, and earnings per share.
Productivity ratios
Ratios that are used in measuring the extent to which a firm effectively uses its resources.
These include single-factor, multi-factor, and total-factor productivity measures.
Customer-related results
Outcomes that indicate customer satisfaction with a product or service.
These measures may be in the form of retention, gains, losses, customer-perceived value, competitive awards, competitive customer ratings, and independent organization evaluations.
Operating results
Measures that are important to monitoring and tracking the effectiveness of a company’s operations.
These might relate to cycle times, waste-reduction measures, value measures, lead times, time from concept to market, setup times, percent reduction in setup times, and other operating results.
Human resources measures
Measures that provide important insight into how effectively the business is being run.
This includes data from employee satisfaction measures, training expenditures, work system performance, turnover, absenteeism, and safety statistics.
Quality measures
Ratios the are used to measure aa firm’s performance in the area of quality management.
These measures include reject rates, percentage of defects, field repairs, and average response time for phone inquiries.
Market share data
A comparative measure that determines relative positions of firms in the marketplace.
Structural measures
Measures that include objectives, policies, and procedures that are followed by a firm. These include safety, production accounting, financial, and engineering.
Management by fact
A core value of the Baldrige award that focuses on dat-based decision making.
