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The following requisites should be considered while installing a system of inter-firm comparison :–
1. Centre for Inter-Comparison: For collection and analysing data received from member units, for doing a comparative study and for dissemination of the results of study a Central body is necessary. The functions of such a body may be :–
(a) Collection of data and information from its members;
(b) Dissemination of results to its members;
(c) Undertaking research and development for common and individual benefit of its members;
(d) Organising training programmes and publishing magazines.
(a) Collection of data and information from its members;
(b) Dissemination of results to its members;
(c) Undertaking research and development for common and individual benefit of its members;
(d) Organising training programmes and publishing magazines.
2. Membership: Another requirement for the success of inter-firm comparison is that the firms of different sizes should become members of the Centre entrusted with the task of carrying out inter-firm comparison.
3. Nature of information to be collected: Although there is no limit to information, yet the following information useful to the management is in general collected by the Centre for inter-firm comparison.
a. Information regarding costs and cost structures.
b. Raw material consumption.
c. Stock of raw material, wastage of materials, etc.
d. Labour efficiency and labour utilisation.
e. Machine utilisation and machine efficiency.
f. Capital employed and Return on capital.
g. Liquidity of the organisation.
h. Reserve and appropriation of profit.
i. Creditors and debtors.
j. Methods of production and technical aspects.
4. Method of Collection and presentation of information: The Centre collects information at fixed intervals in a prescribed form from its members. Sometimes a questionnaire is sent to each member ; the replies of the questionnaire received by the Centre constitute the information/data. The information supplied by firms is generally in the form of ratios and not in absolute figures. The information collected as above is stored and presented to its members in the form of a report. Such reports are not made available to non-members.
