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Role of Benchmarking in Strategy Formulation

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Role of Benchmarking in Strategy Formulation

The processes of benchmarking and best practices of operational procedures can be an invaluable tool in strategy formulation and may even be detrimental to the success of an organization's international expansion. While our reading, Benchmarking for entrepreneurial survival: Pursuing a cohesive and imperfectly imitable culture, McKay & Chung (2005), focuses on the implementation of benchmarking methodologies in entrepreneurial businesses, one can say that venturing into an international market is indeed entrepreneurial in nature and that the concepts presented are applicable in providing techniques useful in developing strategies to achieve competitive advantage in the international marketplace.

The benchmarking model presented by McKay & Chung is separated into two distinct areas: benchmarking of metrics, and benchmarking of practices. Benchmarking of metrics are quantifiable in nature and are concentrated on statistical data. While benchmarking of practices, on the other hand, are focused on operational procedures. Although benchmarking of practices are more abstract in nature and difficult to define, their usefulness are potentially of greater significance than metrics as they lead to the identification of predictable and quantifiable operational procedures that are central to a successful business strategy. Furthermore, the foundation of McKay & Chung's paper is the presentation of four fundamental processes - cooperation, sharing founder's vision, time management, and developing organizational competencies - as being ideal processes for benchmarking. Additionally, McKay & Chung also identify "organizational culture as being the imperfectly imitable element which will contribute to the entrepreneurial firm's success"(p. 1).

In some international markets, the foreign government may require partnerships with local or regional companies as a condition of doing business in the foreign marketplace. If such conditions exist, an organization may find itself forced to partner with an organization that is not capable of meeting the international business venture objectives. Assuming that it was determined early on in the research process that the partner is not able to meet the established standards of quality, there are options before moving forward with the international venture. The first would be to seek out other potential partners who are able to fulfill the partnership requirements. Another option would be to help the partner achieve greater levels of quality through education and collaboration. Another option is to withdraw from the venture early in the process after establishing that it is not possible to undertake a profitable venture in the international marketplace.


Ruth B McKay, &



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