Question

Identify which standard of comparison, (a) intracompany, (b) competitor, (c) industry, or (d) guidelines, is best described by each of the following.

1. Is often viewed as the best standard of comparison.

2. Rules of thumb developed from past experiences.

3. Provides analysis based on a company’s prior performance.

4. Compares a company against industry statistics.

Short answer

(1) b

(2) d

(3) a

(4) c

Step-by-step solution

Explanation on Competitor

The competitor is one of the standards of comparison, in which the performance of the company is analysed by comparing it with other companies in the same field. For example Profit margin of Honda company can be compared with Hyundai.

Explanation of Guidelines

Guidelines are one of the standards of comparison, which is considered a rule of thumb. As it indicates the information is based on past experience.

Explanation of Intracompany

Intracompany is one of the standards of comparisons, in which the current performance of the company is analysed with the performance related to previous years.

Explanation of Industry

The industry is another standard of comparison, in which the performance of one company is compared with the industry average of that particular company. For Example Profit margin of Honda can be compared with the average profit margin of the automobile sector.