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Competitive Profile Matrix (CPM)

The Competitive Profile Matrix (CPM) is a strategic tool that compares a company to its main competitors by assessing critical success factors relevant to the industry. Unlike the External Factor Evaluation (EFE) and Internal Factor Evaluation (IFE) matrices, the CPM combines both internal and external factors, rating them based on their strengths and weaknesses for each competitor.

Key Components of the CPM

  1. Critical Success Factors (CSFs): These are factors that contribute significantly to success in the industry. They may include aspects like market share, financial position, customer loyalty, product quality, and more. The selection of CSFs is crucial as they reflect areas where companies compete.

  2. Weight Assignment: Each CSF is assigned a weight ranging from 0.0 to 1.0, representing its relative importance in the industry. The total weight across all factors must sum to 1.0. Higher weights are given to factors deemed more critical for competitive success.

  3. Rating Each Factor: Each company is assigned a rating for each factor based on its performance relative to competitors:

  4. 1 = Major Weakness
  5. 2 = Minor Weakness
  6. 3 = Minor Strength

  7. 4 = Major Strength

  8. Weighted Score Calculation: The weight of each factor is multiplied by the rating given to each company, resulting in a weighted score. This score reflects how well the company performs on that factor, relative to its importance.

  9. Total Weighted Score: By summing the weighted scores across all CSFs, a total weighted score is obtained for each company. This score provides an overall comparison of competitive strength.

Interpreting the CPM

  • Total Weighted Scores: The total score for each company helps determine the overall competitive position. A higher total score suggests a stronger competitive position.
  • Comparative Analysis: By comparing scores across companies, firms can identify areas of competitive advantage or disadvantage.Certainly! Here are the CPM tables presented in a markdown format, replicating the information from the images.

Table 1: Competitive Profile Matrix Example

Critical Success Factors Weight Company 1 Rating Company 1 Score Company 2 Rating Company 2 Score Company 3 Rating Company 3 Score
Advertising 0.20 1 0.20 4 0.80 3 0.60
Product Quality 0.10 4 0.40 3 0.30 2 0.20
Price Competitiveness 0.10 3 0.30 2 0.20 4 0.40
Management 0.10 4 0.40 2 0.20 3 0.30
Financial Position 0.15 4 0.60 2 0.30 3 0.45
Customer Loyalty 0.10 4 0.40 3 0.30 2 0.20
Global Expansion 0.20 4 0.80 1 0.20 2 0.40
Market Share 0.05 1 0.05 4 0.20 3 0.15
Total 1.00 3.15 2.50 2.70

Analysis

  • Company 1 has the highest total weighted score (3.15), showing strong competitive positioning, especially in management and global expansion.
  • Company 2 has the lowest total score (2.50), indicating weaknesses, particularly in financial position and global expansion.
  • Company 3 has a moderate score (2.70), with strengths in financial position but lags in global expansion and customer loyalty.

Table 2: Another Competitive Profile Matrix Example

Critical Success Factors Weight Company 1 Rating Company 1 Score Company 2 Rating Company 2 Score Company 3 Rating Company 3 Score
Market Share 0.15 3 0.45 2 0.30 4 0.60
Inventory System 0.08 2 0.16 2 0.16 4 0.32
Financial Position 0.10 2 0.20 3 0.30 4 0.40
Product Quality 0.08 3 0.24 4 0.32 3 0.24
Consumer Loyalty 0.02 3 0.06 3 0.06 4 0.08
Sales Distribution 0.10 3 0.30 2 0.20 3 0.30
Global Expansion 0.15 3 0.45 2 0.30 4 0.60
Organization Structure 0.05 3 0.15 4 0.20 2 0.10
Production Capacity 0.04 3 0.12 2 0.08 4 0.16
E-commerce 0.10 3 0.30 1 0.10 4 0.40
Customer Service 0.10 3 0.30 2 0.20 4 0.40
Price Competitiveness 0.02 4 0.08 1 0.02 3 0.06
Management Experience 0.01 2 0.02 4 0.04 2 0.02
Total 1.00 2.83 2.28 3.68

Analysis

  • Company 3 has the highest total weighted score (3.68), showing strong competitive positioning, especially in market share, inventory system, and e-commerce.
  • Company 1 has a moderate score (2.83), with strengths in global expansion and price competitiveness.
  • Company 2 has the lowest score (2.28), indicating weaknesses, especially in e-commerce and customer service.

These tables provide a clear comparative analysis, highlighting each company's competitive strengths and weaknesses based on critical success factors. This analysis can guide strategic decision-making by identifying areas where each company excels or lags.

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