Competitive Profile Matrix

What is a Competitive Profile Matrix (CPM)?

• identifies a firm’s major competitors and its particular strengths and weaknesses in relation to a
sample firm’s strategic position.

• The weights and total weighted scores in both a CPM and an EFE have the same meaning.
However, critical success factors in a CPM include both internal and external issues; therefore,
the ratings refer to strengths and weaknesses, where 4 = major strength, 3 = minor strength, 2=
minor weakness, and 1 = major weakness.

What does the Competitive Profile Matrix (CPM) do?

• Inform your strategic decision making.

• Highlight the relative strengths and weaknesses of both your competitors and your organization.

• Uncover potential opportunities in the marketplace.

• Help you articulate your value proposition, as well as highlighting the value proposition of your
competitors.

Competitive Performance Matrix Key Components

Critical Success Factors:

-Innovation - Management Competency

-Marketing - Customer Loyalty

-Brand Reputation - Geographic Research

-Product Quality

-Customer Service

-Price Competitiveness

-Technological Competence

-Cost base

-Product Range
Weighting

• Each critical success factor needs to be assigned a weighting from 0.1 to 1.0, with a lower
weighting, meaning that factor is not particularly important in determining the success of a
business, and a higher rating meaning that factor is critically important in determining the
success of a business.

• We give each critical success factor a weight because different factors affect business success
more than others. If we look at our convenience store example again, you can see that Location
is a much more important factor than Price Competitiveness.

• An important point to note is that the sum of all the individual weights in the CPM must total
1.0.

Score

• You can select any scale you like for scoring, but it is often easiest to stick with something simple
like a score between 1 and 4, defined as follows:

4 – major strength/industry leader

3 – minor strength

2 – minor weakness

1 – major weakness/industry laggard

• Scoring competitors is often subjective. Once you have finished scoring every competitor for
every critical success factor, you need to multiply the weight of each attribute by the score given
to each competitor in the CPM. The result of this calculation will give you the weighted score for
each competitor.

Total Score

• The final step to completing your CPM is to add values of all critical success factors for each
competitor. Doing this will give you a total score for each competitor.

• The company with the highest total score is the company that is strongest in the marketplace
(relative to the other competitors). The bigger the score differential between one company and
another, the bigger the competitive advantage.
In this example, the two most important factors to being successful in the industry are “advertising” and
“global expansion,” as indicated by weights of 0.20.

• having a weight column makes for a more robust analysis, because it enables the analyst to
assign higher and lower numbers to capture perceived or actual levels of importance.

• Note in Table 3-13 that Company 1 is strongest on “product quality,” as indicated by a rating of
4, whereas Company 2 is strongest on “advertising.” Overall, Company 1 is strongest, as
indicated by the total weighted score of 3.15.

REFERENCES:

https://expertprogrammanagement.com/2017/01/competitive-profile-matrix-cpm/

https://mba-tutorials.com/cpm-competitive-profile-matrix/

https://mba-lectures.com/management/strategic-management/935/competitive-profile-matrix-

cpm.html

David, Fred R., Strategic Management: concepts and cases, 13 th edition