Magazine article International Trade Forum

Benchmarking for Small Enterprises: The International Competitiveness Gauge

Magazine article International Trade Forum

Benchmarking for Small Enterprises: The International Competitiveness Gauge

Article excerpt

A new ITC tool brings benchmarking within the reach of small exporting firms and helps improve their competitiveness in international markets.

The following is adapted from an audio-visual presentation delivered at the Joint Advisory Group Meeting in April 1998.

At this year's Joint Advisory Group Meeting, ITC launched an affordable, confidential business improvement service based on benchmarking software, the International Competitiveness Gauge. Its goal is to help small and mediumsized firms (SMEs) measure their own performance against that of other national and international competitors. Each individual company can measure their performance relative to others in the same sector, in the key areas of management, finance, marketing and production, set specific targets and adjust business development plans accordingly.

The Gauge, as it exists today, has been tailor-made for the automotive component industry. It is capable of being adapted to other industry sectors. Food processing, leather and leather products, and electronic components are examples.

Four national automotive component industry associations have commercially launched the Gauge after pilot testing carried out in 1997 in Argentina, India, South Africa and Zimbabwe. A fifth country, Turkey, launched the Gauge in September. Brazil and Chile have joined the Gauge process in September months. In addition, the Gauge also contains baseline data of the auto component sector of Germany. Data from Italy and Spain will also be incorporated soon.

The Gauge has been a successful experience for ITC in participative development. This means that partner countries are involved in every stage of the development of the product right from the initial stage. The autocomponent industry associations in the pilot countries, for instances have helped design, develop and apply the present version of the International Competitiveness Gauge.

Benchmarking, road map to competitiveness

Why has the Gauge become necessary? Anyone who has travelled to a new city knows the importance of getting hold of a city map before walking around. All of us are familiar with billboards giving the town map which always indicates the point saying "you are here". It is the same in the world of competitiveness: the first thing an enterprise wants to know is where it stands among the competitors.

The second question the Gauge tackles is: what is my target, where do I want to go? Of course, this first part of the diagnosis would be pointless without the third question: having decided where I want to go, somebody should tell me how I can reach there. These three elements constitute the business improvement service of the Gauge.

In an unplanned effort to improve competitiveness, often enterprises take ad hoc measures. The most obvious things many enterprises do is to part on the sale price, expecting this will improve their competitiveness. Such a short-term view for very ad hoc economies brings satisfaction but doesn't really improve competitiveness.

The next step in tackling competitiveness is to know exactly where the problem lies. Where am I losing out? Is it in the area of marketing? Is it in the area of management? Is the financial control badly done in the company? Are our production processes or technology not the best as they can be?

Further, knowing that production is a problem is not sufficient. One needs to know within the area of production which particular segment - inventory control, input management, technology, quality management, labour, training or working conditions - which of these factors is affecting competitiveness? To know this in final detail is necessary to make an actual business improvement.

Benchmarking barriers for SMEs

What prevents enterprises from doing this?

Little access. To know where you are, you have to know where others are. Data about competitors and others in the same export activity is not easy to come by. …

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