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Benchmarking is the process of comparing a company’s products, services or processes with those of industry leaders or companies recognized for excellence. The idea is to identify areas for improvement and set goals based on what the best in the industry or “benchmark” is achieving. In the business world, benchmarking can be a crucial tool for maintaining competitiveness and innovation.

For example, if a software company discovers that its product takes significantly longer to perform certain tasks than a major competitor’s software, it could use this information to improve its own software. Similarly, a company that produces consumer goods could compare the quality or features of its products with those of industry leaders to identify areas for improvement.