Strategic Management

Competitive Profile Matrix

Date of submission: 26th November, 2014

Submitted To:
Dr. Sanjeev S. Malage

Submitted By:
Sugandha Gupta
Ben13MM08
MFM Sem III

Introduction
Competitive profile matrix is an essential strategic management tool to compare the firm with
the major players of the industry. Competitive profile matrix shows the clear picture to the
firm about their strong points and weak points relative to their competitors. The CPM score is
measured on basis of critical success factors; each factor is measured in same scale, meaning
the weights remain same for every firm only rating varies. The best thing about CPM is that it
includes your own firm and also facilitates to add other competitors making the comparative
analysis much easier.
IFE matrix only evaluates internal factors and in EFE matrix external factors are evaluated
but CPM includes both internal and external factors to evaluate overall position of the firm
with respect to their major competitors.

Strengths of CPM as a competitors analysis tool

As a strategic analysis tool, CPM provides several benefits to the company. CPM includes
companys Key Success Factors (KSFs) which help the company identify strengths and
deficiencies in those significant areas. Analyzing organizations in this manner is an effective
way to evaluate many competitors in one framework to support an effective strategic plan.
CPM enables a company to evaluate the strengths and weaknesses of its major competitors
which is matter to develop an effective competitive strategy. In competitor analysis, detail
attention is given to each competitors apparent objectives, resources and competitive moves
which lead a company to readily identify the area of strengths and weaknesses of the
competitors and this can be used in the process of developing effective strategy. One of the
key elements of a strategic plan is to analyze the capabilities of an organization which should
include a clear identification of the key strength and weaknesses of the organization relative
to its competitors. Through a comparative analysis of KSFs between a company and its major
competitors CPM provides important internal strategic information to managers and help
them develop effective strategy for the company. In addition, to construct CPM, a company
needs to identify the KSFs of the industry where it operates. Identifying these KSFs are also
crucial for developing effective strategy. Because KSFs can be used to direct a companys
effort for developing strategies, it can also be used to identify critical issues associated with
implementation of strategy, and it might also assist managers to establish a guideline for
Page | 2

monitoring companys activities. Identifying the KSFs in an industry helps managers decide
where they should focus their companys resources strategically. Moreover, while IFE matrix
for competitors analysis summarizes only companys major strength and weaknesses and
EFE matrix provides a synopsis of companys opportunities and threats from external
environments but CPM includes both internal and external factors that most impact on
organization and provide information about companys potential competitive advantages.

Components of CPM
Critical Success Factors
Critical Success Factors (CSF) are the key areas, which must be performed at the highest
possible level of excellence if organizations want succeed in the particular industry. They
vary between different industries or even strategic groups and include both internal and
external factors. The more critical success factors are included the more robust and accurate
the analysis is. CSFs are extracted after deep analysis of external and internal environment of
the firm. Obviously there are some good and some bad for the company in the external
environment and internal environment.
Weight
Each critical success factor should be assigned a weight ranging from 0.0 (low importance) to
1.0 (high importance). The number indicates how important the factor is in succeeding in the
industry. If there were no weights assigned, all factors would be equally important, which is
an impossible scenario in the real world. The sum of all the weights must equal 1.0. Separate
factors should not be given too much emphasis (assigning a weight of 0.3 or more) because
the success in an industry is rarely determined by one or few factors.
Rating
The ratings in CPM refer to how well companies are doing in each area. They range from 4 to
1, where 4 means a major strength, 3 minor strength, 2 minor weakness and 1 major
weakness. Ratings, as well as weights, are assigned subjectively to each company, but the
process can be done easier through benchmarking. Benchmarking reveals how well
companies are doing compared to each other or industrys average. Firms can be assigned
equal ratings for the same factor. For example, if Company A, Company B and Company C,
Page | 3

have the market share of 25%, 27% & 28% accordingly, they would all receive the rating of 4
rather than receiving ratings 2, 3 & 4.
Score & Total Score
The score is the result of weight multiplied by rating. Each company receives a score on each
factor. Total score is simply the sum of all individual score for the company. The average
weighted score for CPM matrix is 2.5 any company total weighted score fall below 2.5
consider as weak. The company total weighted score higher than 2.5 is consider as strong in
position. The other dimension of CPM is the firm with higher total weighted score considered
as the winner among the competitors.

Steps in developing the CPM

Step I

Step II

Step III

Step IV

Step V

Step VI

Identify key factors

Assign weights to each factor

Rate each factor for each firm

Calculate weighted score for each factor
Find total weighted score for each firm

Compare scores and take action

Page | 4

Example CPM

The CPM analysis reveals that Android is the strongest player in the industry with relative
strengths in market share, distribution channels, customization features, openness and cloud
integration. On the other hand, iOS prevails in frequency updates, marketing capabilities and
the rate of OS crashes. Windows Phone is the weakest of them all and doesnt have any
relative strengths against its rivals. The companies should create their strategies according to
their strengths and weakness and improve their ratings in the most significant industrys
areas.

Page | 5

References

http://ijhpdindia.com/upload%5Carticle%5CPDF000010.pdf
http://www.marketing91.com/competitive-profile-matrix/
http://smallbusiness.chron.com/cpm-matrix-do-67032.html

Page | 6