A competitive profile matrix (CPM) categorizes a firm’s main rivals and its particular strengths and weaknesses in relation to a design firm’s strategic position. In Competitive Profile Matrix an organization assess itself as well its rivals by giving rating and weights to the critical/key success factors. It then recognizes its strategic competitive place with its major rivals. A firm which obtains superior weighted points would have the strong competitive place than its rivals. The construction of competitive profile matrix for the Coca-Coal company is given below:
Steps in the construction of CPM
Here we will be using weighted rating system for the construction of competitive profile matrix. Some of the important steps involved in the construction of 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.
Competitive Profile Matrix for the Coca-Coal Company
The competitiveness of a company can be assessed on the basis of its general strength rating. If the dissimilarity among firm’s overall rating and the points of lower-rated rivals is greater then the firm has greater net competitive advantage. Alternatively, if the dissimilarity among a firm’s overall rating and the points of higher-rated rivals is larger then the company has net competitive disadvantage. In the above example, CPM Matrix demonstrates that Coca-Cola is the market leader and dominates its rivals with highest points of 3.74. Pepsi is the runner up with 3.42 points and Cadbury Schweppes is the weakest rival among these three with the score of 2.80. This Matrix also shows that Coca-Cola is strong in all the aspects of rivalry and has strong position in the market place.