One way to judge the performance of a company is to compare it with other companies. This technique, commonly called “benchmarking,” permits the manager of a company to discover better industrial practices and can provide a justification for the adoption of good practices.
Any of the following, if true, is a valid reason for benchmarking the performance of a company against companies with which it is not in competition rather than against competitors EXCEPT:
(A) Comparisons with competitors are most likely to focus on practices that the manager making the comparisons already employs.
(B) Getting “inside” information about the unique practices of competitors is particularly difficult.
(C) Since companies that compete with each other are likely to have comparable levels of efficiency, only benchmarking against noncompetitors is likely to reveal practices that would aid in beating competitors.
(D) Managers are generally more receptive to new ideas that they find outside their own industry.
(E) Much of the success of good companies is due to their adoption of practices that take advantage of the special circumstances of their products or markets.
Solution
Passage Analysis
One way to judge the performance of a company is to compare it with other companies.
This statement says that one way to judge the performance of a company is to compare it with other companies. This gives us the opinion that comparing a company with other companies is a possible way to judge a company’s performance.
This technique, commonly called “benchmarking,” permits the manager of a company to discover better industrial practices and can provide a justification for the adoption of good practices.
This statement says that the practice of judging the performance of a company by comparing it with other companies is called benchmarking. The statement gives us two positive facts about benchmarking. First, benchmarking allows the manager of a company to discover better industrial practices. Second, benchmarking can justify the adoption of good practices. This statement supports the opinion given in the first statement.
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Pre-thinking
Any of the following, if true, is a valid reason for benchmarking the performance of a company against companies with which it is not in competition rather than against competitors EXCEPT:
Let’s first understand the question stem. This part gives us some additional aspects of the context that are not mentioned in the argument. It says that there are some valid reasons that the performance of a company should be benchmarked against noncompetitors rather than competitors. This is an ‘except’ question. So, four of the choices will give us reasons to benchmark the performance of companies against noncompetitors. The one that does not is the right answer.
Analysis of Option Statements
(A) Comparisons with competitors are most likely to focus on practices that the manager making the comparisons already employs.
This choice is incorrect. This choice gives us a reason that the performance of companies should not be benchmarked against competitors. So, it strengthens the opinion that the performance of companies should be benchmarked against noncompetitors.
(B) Getting “inside” information about the unique practices of competitors is particularly difficult.
This choice is incorrect. This choice says that it is difficult to get inside information about the practices of competitors. So, this gives us a reason to benchmark against noncompetitors.
(C) Since companies that compete with each other are likely to have comparable levels of efficiency, only benchmarking against noncompetitors is likely to reveal practices that would aid in beating competitors.
This choice is incorrect. This choice also strengthens the author’s opinion by stating that only benchmarking against noncompetitors can help a company to beat its competitors.
(D) Managers are generally more receptive to new ideas that they find outside their own industry.
This choice is incorrect. This choice also strengthens the opinion that the performance of companies should be benchmarked against non-competitors.
(E) Much of the success of good companies is due to their adoption of practices that take advantage of the special circumstances of their products or markets.
If industries have special circumstances, then companies from other industries may not share these special conditions. If so, it would not be beneficial to adopt practices from noncompetitors, since such practices may not allow a company to take advantage of the special circumstances of its industry. So, this choice is the opposite of the other four choices because it supports the opinion that the performance of a company should be benchmarked against competitors. This is the correct answer.
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