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    Competitive Profile Matrix (CPM)

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    The competitive profile matrix (CPM) is a tool that: (1) Identifies a firm's major competitors and compares their relative strengths and weaknesses across key success factors. (2) Weights each success factor by importance and rates competitors on each factor. (3) Calculates weighted scores and total scores to determine where a firm's strengths and weaknesses lie compared to rivals. (3) Helps firms understand how to improve weaknesses and protect strengths to gain competitive advantage.

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    Competitive Profile Matrix (CPM)

    Uploaded by

    Aaaaaa
    527 views17 pages
    The competitive profile matrix (CPM) is a tool that: (1) Identifies a firm's major competitors and compares their relative strengths and weaknesses across key success factors. (2) Weights each success factor by importance and rates competitors on each factor. (3) Calculates weighted scores and total scores to determine where a firm's strengths and weaknesses lie compared to rivals. (3) Helps firms understand how to improve weaknesses and protect strengths to gain competitive advantage.

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    CPM matrix_Fall 19-20

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    The competitive profile matrix (CPM) is a tool that: (1) Identifies a firm's major competitors and compares their relative strengths and weaknesses across key success factors. (2) Weights each success factor by importance and rates competitors on each factor. (3) Calculates weighted scores and total scores to determine where a firm's strengths and weaknesses lie compared to rivals. (3) Helps firms understand how to improve weaknesses and protect strengths to gain competitive advantage.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    527 views17 pages

    Competitive Profile Matrix (CPM)

    Uploaded by

    Aaaaaa
    The competitive profile matrix (CPM) is a tool that: (1) Identifies a firm's major competitors and compares their relative strengths and weaknesses across key success factors. (2) Weights each success factor by importance and rates competitors on each factor. (3) Calculates weighted scores and total scores to determine where a firm's strengths and weaknesses lie compared to rivals. (3) Helps firms understand how to improve weaknesses and protect strengths to gain competitive advantage.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 17

    Competitive profile

    matrix
    (CPM)
    • CPM identifies a firm’s major competitors
    and its particular strengths and weaknesses
    in relation to a sample firm’s strategic
    position.
    • It’s a tool that compares the firm and its
    rivals and reveals their relative strengths
    and weaknesses, so a company would
    Competitive know, which areas it should improve and
    which areas to protect.
    Profile Matrix • In order to better understand the external
    (CPM) environment and the competition in a
    particular industry, firms often use CPM.
    • The matrix identifies a firm’s key
    competitors and compares them using
    industry’s critical success factors (CSF) or
    key success factors (KSF).
    Step 1: Identify immediate
    competitors

    • Figure out who are the immediate competitors you are


    competing with on a day to day bases ?
    • Group firms providing similar products or
    service
    • Group firms with similar strategy

    • Example: In USA, Starbucks competing with Dunkin


    Donuts and McDonalds.

    • You should be looking back into your “Rivalry among


    competing firms” section of Five Force Analysis
    • Pick three/four immediate competitors. (This should be
    the same competitors you selected for your Competitor
    Analysis)
    Step 1: Identify immediate competitors
    Starbucks McDonalds Dunkin Donuts
    • Before you can produce the CPM, you
    Step 2: need to identify KSFs: the attributes
    that matter in the industry. 
    Identify • Key success factors (KSFs) / CSF: factors
    Key that determine the relative success of
    Success market participants.
    Factors • KSFs are the factors every
    (KSF) / companies must focus on to be
    successful in an industry.
    Critical
    • Therefore it applies to everyone.
    success
    • Ex- If you run a fast-food store, for
    factors example, some of the key
    (CSF) attributes might be: Product
    quality, Customer Loyalty,
    Location, Price
    • CSF are the key areas, which must be
    performed at the highest possible level
    Critical Success Factors of excellence if organizations want
    (CSF) / succeed in the particular industry.
    Key Success Factors • Include both internal and external factors
    (KSF) • The more critical success factors are
    included the more robust and accurate
    the analysis is
    Step 2: (KSF) / (CSF)
    Starbucks McDonalds Dunkin Donuts

    Key Success Factors

    Advertising

    Product Quality

    Product Variety

    Cost efficiency

    Financial Position

    Customer Loyalty

    Global Expansion

    Customer Service
    Step 3: Attach Weight to each factor
    • Weight attribute in CPM indicates the relative importance of factor to
    being successful in the firm’s industry.
    • If there were no weights assigned, all factors would be equally
    important, which is not possible in real world.
    • The weight ranges from 0.0 meaning low importance or no
    importance to 1.0 meaning high importance. (Or 0% to 100%)
    • The number indicates how important the factor is in succeeding in
    that industry
    • The more critical an attribute, the higher its weight must be.
    • Separate factors should not be given too much emphasis. Not just
    one or two factors decide success within an industry
    • Sum of all assigned weight to factors must be equal to 1.0 or 100%
    otherwise the calculation would not be consider correct
    Step 3: Attach Weight to each factor
    Starbucks McDonalds Dunkin Donuts

    Key Success Factors Weight

    Advertising 0.05

    Product Quality 0.20

    Product Variety 0.10

    Price Competitiveness 0.20

    Financial Position 0.05

    Customer Loyalty 0.10

    Global Expansion 0.10

    Customer Service 0.20

    Total 1.00
    Step 4: rating
    • Rate each competitors including your own company on each key
    success factors
    • Rating in CPM represent the response of firm toward the critical
    success factors
    •  how well the companies are doing in each oF area.
    • Higher the rating better the response of the firm towards the
    critical success factor.
    • Rating range from 1.0 to 4.0 and can be applied to any factor.
    • 1= Major Weakness ; The company response is the poorest
    among competitors
    • 2= Minor Weakness; the company response is average
    • 3= Minor Strength; The company response is above average 
    • 4= Major Strength; The company response is superior and the
    best among immediate competitors
    Step 4: rating
    Starbucks McDonalds Dunkin Donuts

    Key Success Factors Weight Rating Rating Rating

    Advertising 0.05 4.00 3.0 3.0

    Product Quality 0.20 4.00 2.0 3.0

    Product Variety 0.10 3.00 4.0 3.0

    Price Competitiveness 0.20 2.00 4.0 2.0

    Financial Position 0.05 3.00 4.0 3.0

    Customer Loyalty 0.10 2.00 3.0 4.0

    Global Expansion 0.10 3.00 4.0 4.0

    Customer Service 0.20 4.00 3.0 3.0

    Total 1.00
    • Step 5: Weighted Score
    • Weighted score value is the result
    achieved after multiplying each factor
    rating with the weight

    • Step 6: Total Score / Total Weighted


    Score
    • Adding the weighted score for each
    attribute of a particular competitor
    will give you the total score of that
    company.
    • Final value of total weighted score
    should be between range 1.0 (low) to
    4.0(high). 
    Starbucks McDonalds Dunkin Donuts

    Key Success Factors Weight Rating Score Rating Score Rating Score

    Advertising 0.05 4.00 0.20 3.0 0.15 3.0 0.15

    Product Quality 0.20 4.00 0.80 2.0 0.40 3.0 0.60

    Product Variety 0.10 3.00 0.30 4.0 0.40 3.0 0.30

    Price Competitiveness 0.20 2.00 0.40 4.0 0.80 2.0 0.40

    Financial Position 0.05 3.00 0.15 4.0 0.20 3.0 0.15

    Customer Loyalty 0.10 2.00 0.20 3.0 0.30 4.0 0.40

    Global Expansion 0.10 3.00 0.30 4.0 0.40 4.0 0.40

    Customer Service 0.20 4.00 0.80 3.0 0.60 3.0 0.60

    Total 1.00 3.15 3.25 3.00


    • Compare scores and identify where a
    company’s relative strengths and
    weaknesses are.
    •The competitor with the highest total
    score is the strongest player in the
    Compare competitive landscape.
    scores and •If you are the strongest player, you must
    work hard to retain this competitive
    take action advantage.
    • If you aren't, then CPM will help you
    visualize where you need to improve to
    catch up with the top player(s)
    Starbucks McDonalds Dunkin Donuts

    Key Success Factors Weight Rating Score Rating Score Rating Score

    Advertising 0.05 4.00 0.20 3.0 0.15 3.0 0.15

    Product Quality 0.20 4.00 0.80 2.0 0.40 3.0 0.60

    Product Variety 0.10 3.00 0.30 4.0 0.40 3.0 0.30

    Price Competitiveness 0.20 2.00 0.40 4.0 0.80 2.0 0.40

    Financial Position 0.05 3.00 0.15 4.0 0.20 3.0 0.15

    Customer Loyalty 0.10 2.00 0.20 3.0 0.30 4.0 0.40

    Global Expansion 0.10 3.00 0.30 4.0 0.40 4.0 0.40

    Customer Service 0.20 4.00 0.80 3.0 0.60 3.0 0.60

    Total 1.00 3.15 3.25 3.00


    Starbucks McDonalds Dunkin Donuts

    Key Success Factors Weight Rating Score Rating Score Rating Score

    Advertising 0.05 4.00 0.20 3.0 0.15 3.0 0.15

    Product Quality 0.20 4.00 0.80 2.0 0.40 3.0 0.60

    Product Variety 0.10 3.00 0.30 4.0 0.40 3.0 0.30

    Price Competitiveness 0.20 2.00 0.40 4.0 0.80 2.0 0.40

    Financial Position 0.05 3.00 0.15 4.0 0.20 3.0 0.15

    Customer Loyalty 0.10 2.00 0.20 3.0 0.30 4.0 0.40

    Global Expansion 0.10 3.00 0.30 4.0 0.40 4.0 0.40

    Customer Service 0.20 4.00 0.80 3.0 0.60 3.0 0.60

    Total 1.00 3.15 3.25 3.00


    End

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