A city's public transport authority compares its vehicle maintenance processes against those of a leading commercial airline to identify best practices. What type of benchmarking is this?

Answer options:

Internal benchmarking

Competitive benchmarking

Functional benchmarking

Strategic benchmarking

How to approach this question

Identify the relationship between the two entities. They are in different industries but share a similar function (vehicle maintenance).

Full Answer

C.Functional benchmarking✓ Correct

Functional benchmarking involves comparing a specific business function or process (e.g., maintenance, HR, IT) against an organization that is recognized as a leader in that function, even if they operate in a completely different industry.

Common mistakes

Confusing functional benchmarking with competitive benchmarking.

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Practice the full ACCA MA — Management Accounting Practice Exam 4

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