Business Strategy and

Policy
Lecture-15

1

Recap • Industry Analysis – External Factor Evaluation (EFE) Matrix 2 .

Today’s Lecture Competitive Profile Matrix (CPM) • Identifies firm’s major competitors and their strengths & weaknesses in relation to a sample firm’s strategic position 3 .

• The CPM score is measured on basis of critical success factors. each factor is measured in same scale mean the weight remain same for every firm only rating varies.Industry Analysis (CPM) • Competitive profile matrix show the clear picture to the firm about their strong points and weak points relative to their competitors. 4 . • The best thing about CPM that it include your firm and also facilitate to add other competitors make easier the comparative analysis.

Industry Analysis (CPM) Critical success factors • Critical success factors  are extracted after deep analysis of external and internal environment of the firm. 5 . • The higher rating show that firm strategy is doing well to support this critical success factors and lower rating means firm strategy is lacking to support the factor. • Obviously there are some good and some bad for the company in the external environment and internal environment.

– The response is poor represented by 1.rating range from 1.0 – The response is above average represented by 3.0 6 .0 – The response is superior represented by 4.0 and can be applied to any factor. Highest the rating better the response of the firm towards the critical success factor . – There are some important point related to rating in CPM.Industry Analysis (CPM) Rating Rating in CPM represent the response of firm toward the critical success factors.0 to 4.0 – The response is average is represented by 2. – Rating is applied to each factor.

0 otherwise the calculation would not be consider correct.0 means important.Industry Analysis (CPM) Weight • Weight attribute in CPM indicates the relative importance of factor to being successful in the firm’s industry. 7 . sum of all assigned weight to factors must be equal to 1. • The weight range from 0.0 means not important and 1.

Industry Analysis (CPM) Weighted Score • Weighted score value is the result achieved after multiplying each factor rating with the weight. 8 .

• The other dimension of CPM is the firm with higher total weighted score considered as the winner among the competitors.0 (low) to 4. final value of total weighted score should be between range 1. • The company total weighted score higher then 2.5 consider as weak.Industry Analysis (CPM) • The sum of all weighted score is equal to the total weighted score.0(high).5 is consider as strong in position. • The average weighted score for CPM matrix is 2.5 any company total weighted score fall below 2. 9 .

3 0 0.2 0 0.45 2 0.4 0 0.40 3 0.00 Telenor Scor e Ratin g Scor e Ratin g Score 0.10 4 Price Competition 0.20 4 Market Share 0.4 5 0.8 0 0.1 5 4 3 3 3 4 2 4 0 3.40 3 0.20 0 0.10 4 Global Expansion 0.30 0 0.4 4 0.15 4 Customer Loyalty 0.20 1 Product Quality 0.(CPM) Ufone Zong Critical Success Factor Weigh Ratin t g Advertising 0.80 Ch.60 3 0.3 4 0.10 4 Financial Position 0.2 5 2.8 0 0.10 3 Management 0.4 0 0.4 3 0.30 0 0.2 2 0.6 0 0.0 5 3.3 0 0.3-10 .4 0 0.4 3 0.15 0 0.05 1 Total 1.

11 . but rather to assimilate and evaluate information in a meaningful way that aids in decision making.Industry Analysis (CPM) • Numbers reveal the relative strengths of firms. The aim is not to arrive at a single number.

Example 12 .

• Coca Cola has highest score in the industry in terms of industry key success factors.Industry Analysis (CPM) • Competitiveness of the firm can be measured on the basis of industry key success factors and firms strengths.88 respectively. • The final scores showed that the Coca Cola is a strong company in respect of its competitors. • If variation between the final score is found among the rivals. 13 . than with the higher score getter has the greater net competitive advantage and vice versa for lower score getter.48 and 2. The Pepsi and Cadbury Schweppes stayed on the second and third position with scores 3.

Competitive Analysis: Porter’s FiveForces Model Potential development of substitute products Bargaining power of suppliers Rivalry among competing firms Bargaining power of consumers Potential entry of new competitors 14 .

Industry Analysis (EFE) External Factor Evaluation Matrix Summarize & evaluate: Demographic Governmental Social Environmental Technological Cultural Political Competitive Economic 15 .

Industry Analysis (CPM) Competitive Profile Matrix • Identifies firm’s major competitors and their strengths & weaknesses in relation to a sample firm’s strategic position 16 .

Summary Competitive Profile Matrix (CPM) • Identifies firm’s major competitors and their strengths & weaknesses in relation to a sample firm’s strategic position 17 .

Next Lecture • The Internal Assessment – Nature of an Internal Audit – Resource Based View (RBV) – Integrating Strategy & Culture 18 .