Competition Profile Matrix - Explained
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What is the Competition Profile Matrix?
The competition profile matrix is used to better understand the external environment and the competition in a particular industry.
The CPM compares a firms key competitors based upon critical success factors in the industry.
A critical success factor is anything that is necessary or imperative for a company to exist and grow within an identified industry.
The critical success factors include both internal and external factors.
- Weight - Each factor is given a weight based upon importance - ranging from 0 to 1.
- Rating - The company is rated based upon each factor. The sale is from weak (0) to Strong (4).
- Score - The company’s score is the weight multiplied by the rating for each factor.
- Total Score - The total score is the sum of all scores. A higher total score means the company is stronger than a competitor with a lower score.
The rating is subjective and based upon benchmarks set for the company.
This analysis also uncovers how the company compares to competitors with regard to strengths and weaknesses.
The primary benefits of this approach are that comparisons are more accurate as the companies are compared on the same critical factors.
There is a broken down and individual score representing the companies strength and competitiveness.