Competitive Profile Matrix

1. Competitive Profile Matrix
F11011 – F11020

2. Contents
 Need for an external comparison
 The competitive profile matrix
 Building the matrix
 Understanding a CPM for a company
 Conclusion

3. Need for External
Comparison
 Understand key opportunities and
threats
 Develop appropriate strategies to
maximize opportunities and counter
threats
 Requires competitive intelligence in the
following spheres
◦ Economic
◦ Social
◦ Political
◦ Legal
◦ Technological

4. External Information Sources
 Indexes – Wall Street Index, Business
Periodicals Index
 Internet Sources – New York Stock
Exchange, Investor
Guide, BigBook.com
 Magazines –
Barrons, Forbes, Washington Post
 Government – Department of
Commerce, Science and Technology
 Consultants – Boston Consulting
Group, Deloitte

5. Tools for an External Audit
 Porter’s Five  External Factor
Forces Model Evaluation (EFE)
◦ Rivalry among Matrix
competitors ◦ Key factors
◦ Potential entry of ◦ Importance of
new competitors factors
◦ Potential ◦ Ranking for factors
development of ◦ Sum of weighted
substitute products score
◦ Bargaining power of
suppliers
 Competitive Profile
◦ Bargaining power of
Matrix
consumers

6. The Competitive Profile Matrix
Steps
Step 1
• Identify key factors
• Assign factors to each factor ranging from 0 to 1
Step2
• Rate each factor from 1 to 4 for each firm. (1 – Greatest
Step 3 weakness 4 – Biggest Strength)
• Calculate weighted score for each factor
Step 4
• Find total weighted score for each firm
Step 5

7. CPM Matrix Example
College Comparisons
A B C D E
Critical Success Factors Weight Rating Wt. Score Rating Wt. Score Rating Wt. Score Rating Wt. Score Rating Wt. Score
Faculty 0.15 3 0.45 3 0.45 3 0.45 3 0.45 3 0.45
Infrastructure 0.15 1 0.15 4 0.6 3 0.45 3 0.45 4 0.6
Placements 0.15 2 0.3 4 0.6 4 0.6 2 0.3 3 0.45
ROI 0.1 3 0.3 2 0.2 4 0.4 2 0.2 3 0.3
College Brand 0.2 2 0.4 4 0.8 4 0.8 2 0.4 3 0.6
Campus Life 0.05 1 0.05 4 0.2 3 0.15 3 0.15 3 0.15
Location 0.1 4 0.4 4 0.4 4 0.4 2 0.2 3 0.3
Student Diversity 0.1 2 0.2 3 0.3 3 0.3 3 0.3 2 0.2
TOTAL 1 2.25 3.55 3.55 2.45 3.05

8. Comparison Of Key Factors Of Different Colleges
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0

9. Advantages
 Critical success factors identified
 Strong and weak points of firm with
respect to competitors found out
 Includes both internal and external
factors as parameters
 Comparative analysis made easier

10. Limitations
 Differences in overall scores of two
firms do not reveal by how much a
firm is better than the other
 Possible errors in factor weightage
 Gives relative strength of firm, not an
exact number
 Not a substitute for intuitive judgement

11. References
 Strategic Management by Fred R. David
 http://mba-lectures.com/management/strategic-
management/974/competitive-profile-matrix-for-
mcdonalds.html
 www.shiksha.com