This document discusses the competitive profile matrix tool. It explains that the matrix allows companies to compare themselves to competitors across critical success factors. The document outlines the steps to build a competitive profile matrix, including identifying key factors, rating companies on each factor, calculating weighted scores, and comparing total scores. An example matrix compares several colleges based on factors like faculty, infrastructure, placements, brand, and location. The matrix is useful for understanding strengths and weaknesses relative to peers but still requires intuitive judgment.

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