Question

What is meant by "A Competitive Profile Matrix (CPM)"?

How does it relate to a company's strategy?

Answer 1

A competitive profile matrix helps a company to understand the competitor environment . It enables a company to understand the relative strength and weakness of each competitor with respect to itself. In brief competitor profile matrix is nothing but carrying out internal SWOT i.e. evaluating the strengths and weaknesses of each competitor.

Once the company carries out this activity it can gain insights which will help in its strategic decision making . Understanding competitor behavior helps in unearthing potential untapped opportunities which the company may tap. It helps in using a value chain analysis of the competitors as well .

A typical competitor matrix would constitute of the following which are known as the critical success factors and these are critical to different industries .

Some of the common one would be

• Innovation
• Marketing Prowess
• Brand Reputation
• Product Quality
• Customer Service
• Price Competitiveness
• Technological Competency
• Cost Leadership
• Product Range
• Geographic Reach
• Customer Loyalty
• Management Competency

We need to evaluate each competitor on these critical parameters and give different weights to each . The sum total of the weights would help us to arrive at a composite score.