Functional benchmarking is best described as:

Functional benchmarking is accurately described as comparing practices with those of other companies operating within the same industry. This method allows organizations to identify best practices that are specifically relevant to their industry. By engaging in this type of benchmarking, companies can gain insights into how peers address similar challenges and opportunities, ultimately leading to improved operational efficiency and effectiveness.

This process often involves looking at performance metrics, management practices, and operational processes that are common within the industry. By understanding how other companies have approached similar functions, organizations can adopt new strategies and refine their own processes to achieve better outcomes.

The other options present different forms of benchmarking or assessments that do not align with the specific characteristic of functional benchmarking. For instance, analyzing unrelated business processes in different sectors pertains more to general benchmarking, while evaluating identical practices across diverse organizations relates more closely to competitive benchmarking. Internal assessments based on past performance focus on a company’s own historical data rather than comparative analysis with external entities. Thus, the primary strength of functional benchmarking lies in its focus on direct comparisons within the same field, facilitating relevant and actionable insights.