Benchmarking for major producers of limestone in the Czech Republic

Abstract

The validity of information available to managers influences the quality of the decision-making processes controlled by those managers. Benchmarking is a method which can yield quality information. The importance of benchmarking is strengthened by the fact that many authors consider benchmarking to be an integral part of strategic management. In commercial practice, benchmarking data and conclusions usually become commercial secrets for internal use only. The wider professional public lacks this valuable information. This paper tries to fill the gap regarding the operation of certain limestone extraction companies. It presents information and conclusions drawn from an independent benchmarking investigation.

This study focused on major limestone producers in the Czech Republic which export their product abroad. These producers' domestic market share is almost 66%. Specifically, the following companies were subjects of this benchmarking analysis: Ceskomoravsky cement, a.s.; Cement Hranice, a.s.; LOMY MORINA, s.r.o.; Holcim (Cesko) a.s.; and Velkolom Certovy schody, a.s.

The financial (ROE, profit margin) and production (return-on-investment, LTA, and labour productivity) ratios were the benchmarking's starting point. These ratios were from company performance during the period 2008-2010. The mathematical and statistical methods of financial analyses provided for the data assessments namely, the standard variable method. The application of this method yielded results rating limestone producers in a best-to-worst sequence.

The benchmarking information's value can be increased if the ratios are weighted, which expresses the significance of individual ratios. This study applied the Fuller's triangle method.

Concerning the producers investigated, Cement Hranice, a.s. has been the best performer, and Velkolom Certovy schody, a.s. the worst.