Benchmarking: Assessing Cost-Effectiveness Within an Organization

What strategic management tool allows a department to assess its cost-effectiveness within an organization?

a. crime analysis
b. risk assessments
c. benchmarking

Answer:

The word "benchmarking" in the question pertains to assessing cost-effectiveness within an organization. Therefore, the correct option is c) benchmarking.

Benchmarking is a strategic management tool that allows a department or organization to evaluate its cost-effectiveness by comparing its performance, processes, and costs to those of industry leaders or best practices. This involves identifying key performance metrics, collecting data, analyzing the findings, and implementing improvements to align with or surpass industry benchmarks. Through benchmarking, a department can identify areas where it may be lagging behind or excelling, ultimately helping in making informed decisions to optimize cost-effectiveness and efficiency.

For instance, if a department in an organization conducts benchmarking and finds that its procurement costs are significantly higher compared to industry benchmarks, it can strategize to reduce procurement expenses, negotiate better contracts, or streamline its procurement processes. This leads to cost savings and increased cost-effectiveness within the organization. Therefore, the correct option is c) benchmarking.