The Competitive Profile Matrix (CPM) identifies a firm’s major competitors and their particular strengths and weaknesses in relation to a sample firm’s strategic position. The Competitive Profile Matrix resembles an External Factor Evaluation (EFE) Matrix with a comparison to other organizations and/or companies. The weights and total weighted scores in both a CPM and EFE have the same meaning. However, the 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. There are some important differences between the EFE and CPM. First of all, the critical success factors in a CPM are broader; they do not include specific or factual data and even may focus on internal issues. The critical success factors in a CPM also are not grouped into opportunities and threats such as they are in an EFE. In a CPM the ratings and total weighted scores for rival firms can be compared to the sample firm. This comparative analysis provides important internal strategic information.
Some of the important steps involved in the construction of a Competitive Profile Matrix are given below.
- In the first column, lists down all the key success factors of Industry (usually from 6 to 10).
- In the second column, assign weights to each factor ranging from 0.0 (not important to 1 (most important). Greater weights should be given to those factors which have grater influence on the organizational performance. The sum of all weights must equal 1.
- Now rate each factor ranging from 1 to 4 for all the firms in analysis. Here, rating 1 represents major weakness, rating 2 shows minor weakness. Similarly, rating 3 indicates minor strength whereas rating 4 shows major strength. It means that weakness must receive 1 or 2 rating while strength must get 3 or 4 rating.
- Calculate weighted score by multiplying each factor’s score by its rating.
- Find the total weighted score of all the firms by adding the weighted scores for each variable.
Related Strategic Management Tools:
- Internal Factor Evaluation (IFE) Matrix
- External Factor Evaluation (EFE) Matrix
- Internal-External (IE) Matrix
- Quantitative Strategic Planning Matrix (QSPM)
- SWOT Analysis – A Strategic Planning Tool
- Boston Consulting Group(BCG) Growth-Share Matrix
- The Strategic Position and Action Evaluation Matrix (SPACE)