Benchmark, guideline for comparing performance. In banking and stock exchange business, a neutral reference point for assessing the investment performance of a special fund or asset manager, usually determined in accordance with the client's investment objectives. The benchmark defines a comparative or reference portfolio against which the performance of the actual portfolio can be assessed.
Benchmarking is an instrument of strategic controlling and competitive analysis developed in the USA in which value creation processes, management practices and products or services are compared with competitor companies (competitive benchmarking), companies in other sectors (sector benchmarking) or between business units of the same company (internal benchmarking). The aim is to uncover performance deficits relative to the benchmark (market leader that serves as a standard of comparison) and to gain ideas for improvements.