Question

Why is benchmarking difficult for diversified firms?

Answer 1

Yes, it is true that benchmarking difficult for diversified firms due to following reasons;

1. As we know that due to different accounting process we can not set a single benchmark for comparison of the financial performance.

2. Accounting & fiscal years can be different due to which benchmarking becomes difficult.

3. In case of diversified firms, there are other various practical differences that is why how it is possible to set single permissible benchmark.

4. Due to globalization and due to difference business & economic parameter in the world business environment, benchmarking is difficult.

5. In modern time, diversified firms use contingence approach to earn more profits that is why benchmarking becomes more difficult.

6. Some extraordinary events also make benchmarking more difficult for diversified firms.