ABSTRACT. This paper examines a very important management tool: benchmarking, and focuses on a company which is being examined for the suitability of benchmarking with another, XYZ. The basic assumption is that XYZ has a defect rate that is slightly better than that of the company in question. The paper tries to reach a conclusion as to whether XYZ is better than the company or not. The overall aim is to portray how the concept of benchmarking works in practice.

JEL: D21, L10, M51