10.4.1 Purpose
Benchmarking and market analysis are conducted to improve organizational operations, increase customer satisfaction, and increase value to stakeholders.
10.4.2 Description
Benchmark studies are conducted to compare organizational practices against the best-in-class practices. Best practices may be found in competitor enterprises, in government, or from industry associations. The objective of benchmarking is to evaluate enterprise performance and ensure that the enterprise is operating efficiently. Benchmarking may also be performed against standards for compliance purposes. The results from the benchmark study may initiate change within an organization.
Market analysis involves researching customers in order to determine the products and services that they need or want, the factors that influence their decisions to purchase, and the competitors that exist in the market. The objective of market analysis is to acquire this information in order to support the various decision-making processes within an organization. Market analysis can also help determine when to exit a market. It may be used to determine if partnering, merging, or divesting are viable alternatives for an enterprise.
10.4.3 Elements
.1 Benchmarking
Benchmarking includes:
- identifying the areas to be studied,
- identifying enterprises that are leaders in the sector (including competitors),
- conducting a survey of selected enterprises to understand their practices,
- using a Request for Information (RFI) to gather information about capabilities,
- arranging visits to best-in-class organizations,
- determining gaps between current and best practices, and
- developing a project proposal to implement best practices.
.2 Market Analysis
Market Analysis requires that business analysts:
- identify customers and understand their preferences,
- identify opportunities that may increase value to stakeholders,
- identify competitors and investigate their operations,
- look for trends in the market, anticipate growth rate, and estimate potential profitability,
- define appropriate business strategies,
- gather market data,
- use existing resources such as company records, research studies, and books and apply that information to the questions at hand, and
- review data to determine trends and draw conclusions.
10.4.4 Usage Considerations
.1 Strengths
- Benchmarking provides organizations with information about new and different methods, ideas, and tools to improve organizational performance.
- An organization may use benchmarking to identify best practices by its competitors in order to meet or exceed its competition.
- Benchmarking identifies why similar companies are successful and what processes they used to become successful.
- Market analysis can target specific groups and can be tailored to answer specific questions.
- Market analysis may expose weaknesses within a certain company or industry.
- Market analysis may identify differences in product offerings and services that are available from a competitor.
.2 Limitations
- Benchmarking is time-consuming; organizations may not have the expertise to conduct the analysis and interpret useful information.
- Benchmarking cannot produce innovative solutions or solutions that will produce a sustainable competitive advantage because it involves assessing solutions that have been shown to work elsewhere with the goal of reproducing them.
- Market analysis can be time-consuming and expensive, and the results may not be immediately available.
- Without market segmentation, market analysis may not produce the expected results or may provide incorrect data about a competitor’s products or services.
