Competitive Profile Matrix (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.

1. In the first column, lists down all the key success factors of Industry (usually from 6 to 10).
2. 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.
3. 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.
4. Calculate weighted score by multiplying each factor’s score by its rating.
5. Find the total weighted score of all the firms by adding the weighted scores for each variable.

Competitive Profile Matrix for Dell Computer

The overall competitiveness of a firm can be evaluated on the basis of its overall strength rating. If the difference between a firm’s overall rating and the scores of lower-rated rivals is higher then the firm has greater net competitive advantage. On the other hand, if the difference between a firm’s overall rating and the scores of higher-rated rivals is bigger then the firm has greater net competitive disadvantage. In the above example, competitive profile matrix shows that the total weighted score of Dell is higher than Gateway and Apple which means that Dell enjoys the strongest competitive position. On the other hand, Apple has net competitive disadvantage because of its lower total weighted score than Dell and Gateway.