below:

Explanation:

Competitive benchmarking involves XYZ Ltd comparing its performance with a rival retailer. Below

are the advantages and disadvantages, explained step-by-step:

Advantages

Identifies Competitive Gaps

Step 1: Comparison

XYZ assesses metrics like pricing, delivery speed, or customer service against a competitor.

Step 2: Outcome

Highlights areas where XYZ lags (e.g., slower delivery), driving targeted improvements.

Benefit:

Enhances market positioning.

Drives Performance Improvement

Step 1: Learning

Adopting best practices from competitors (e.g., efficient inventory management).

Step 2: Outcome

Boosts operational efficiency and customer satisfaction.

Benefit:

Strengthens competitiveness in retail.

Market Insight

Step 1: Analysis

Provides data on industry standards and trends.

Step 2: Outcome

Informs strategic decisions (e.g., pricing adjustments).

Benefit:

Keeps XYZ aligned with market expectations.

Disadvantages

Data Access Challenges

Step 1: Limitation

Competitors may not share detailed performance data.

Step 2: Outcome

Relies on estimates or public info, reducing accuracy.

Drawback:

Limits depth of comparison.

Risk of Imitation Over Innovation

Step 1: Focus

Copying rivals may overshadow unique strategies.

Step 2: Outcome

XYZ might lose differentiation (e.g., unique branding).

Drawback:

Stifles originality.

Resource Intensive

Step 1: Effort

Requires time, staff, and costs to gather and analyze data.

Step 2: Outcome

Diverts resources from other priorities.

Drawback:

May strain operational capacity.

Exact Extract Explanation:

The CIPS L5M4 Study Guide discusses competitive benchmarking:

Advantages: "It identifies gaps, improves performance, and provides market insights" (CIPS L5M4

Study Guide, Chapter 2, Section 2.6).

Disadvantages: "Challenges include limited data access, potential over-reliance on imitation, and

high resource demands" (CIPS L5M4 Study Guide, Chapter 2, Section 2.6).

This is key for retail procurement and financial strategy. Reference: CIPS L5M4 Study Guide, Chapter

2: Supply Chain Performance Management.