Question

Question: What is it called when a firm looks externally and examines other companies for examples of best practices?

Short answer

Answer

External benchmarking is a method through which a company compared its success to that of other, similar firms.

Step-by-step solution

Benchmarking

Benchmarking is a method of measuring company as well as group productivity by contrasting a procedure or the entire organization to certain other internal procedures and rivals. Benchmarking assists customers in understanding industry standards as well as analyzing how one's organization compares. One may also contrast one department's procedure to the other to assess productivity and overall performance.

When a firm looks externally and examines other companies for examples of best practices is external benchmarking

Examining what great achievers within and without the firm's sector is doing in regards to quality outside the organization. So far, the techniques for quality enhancement discussed have been mostly inward-looking. They attempt to enhance by carefully analyzing the corporation’s present procedures. However,external benchmarkinglooks outside the organization to see what sector rivals, as well as best scorers, are doing.

The techniques of contrasting an internal procedure to that of a rival or even multiple other firms are referred to as external benchmarking. This strategy is a little more difficult since it necessitates access to sector statistics as well as individual business information, which may not be accessible unless the other firm has chosen to provide it with them.

External benchmarking is quite beneficial. One may gain a better understanding of their company's place in the industry as well as discover weak points that need to be rectified.