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http://mba-lectures.com/management/strategic-management/935/competitive-profile-matrix-

cpm.html

Competitive Profile Matrix (CPM) is a strategic management tool which is used to identify the major

strengths and weaknesses of a firm in relation to the rivals firm strategic position. On the basis of this

comparison, the firm can design wise offensive or defensive strategies. Two types of systems can beused for the construction of competitive profile matrix i.e. weighted rating system (each measure of

critical success factor is assigned a weight based on its perceived importance) and unweighted (each

critical success factor measured is assumed to be equally important) rating system. It is important to

note that the meaning of weights and total weighted scores is same in both EFE (external factor

evaluation) and CPM (competitive profile matrix).

Differences between EFE and CPM

Following are some of the important differences between EFE (external factor evaluation) and CPM(competitive profile matrix).

1.In competitive profile matrix, critical success factors include both internal and external issues.2.In external factor evaluation, critical success factors are grouped into opportunities and threats

whereas such grouping does not exist in competitive profile matrix.

3.In external factor evaluation, total weighted scores of a firm can not be compared to the totalweighted scores of rival firms whereas such comparison is possible in competitive profile matrix.

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.

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 theorganizational 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 representsmajor 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.

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