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Advantages and limitations of Inter-firm comparison

The main advantages of inter-firm comparison are :–
1.  Such a comparison gives an overall view of the industry as a whole to its members– the present position of the industry, progress made during the past and the future of the industry. 
2.  It helps a concern in knowing its strengths or weaknesses in relation to others so that remedial measures may be taken.
3.  It ensures an unbiased specialized reporting on particular problems of the concern.
4.  It develops cost consciousness among members of the industry.
5.  It helps Government in effecting price regulation.
6.  It helps to improve the quality of products manufactured and to reduce the cost of production. It is thus advantageous to the industry as well as to the society.
 
Limitations of inter-firm comparison
The following are the limitations in the implementation of a scheme of inter-firm comparison :
1.  Top management feels that secrecy will be lost.
2.  Middle management is usually not convinced with the utility of such a comparison.
3.  In the absence of a suitable Cost Accounting System, the figures supplied may not be reliable for the purpose of comparison.
4.  Suitable basis for comparison may not be available.
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