create a Competitive Profile Matrix (CPM) on Starbucks.
Please create a Competitive Profile Matrix (CPM) on Starbucks.
Step 1: Refer to Chapter 3 of the David text to learn how to complete an CPM Matrix.
The Competitive Profile Matrix LO 3.7 explains how to develop and use a Competitive Profile Matrix (CPM). The Competitive Profile Matrix (CPM) reveals how a focal firm compares to major competitors across a range of key factors. This comparative analysis provides important strategic information regarding a firm’s competitive advantages or disadvantages in a given industry. In determining what factors to include in a CPM, tailor the factors to the particular industry. For example, in the airline industry, such factors as on-time arrival, leg room in planes, and routes served are far better factors to include than merely including “quality of service” or “financial condition” as factors.
Similar to an EFE, a CPM uses weights and total weighted scores, which quantify the importance of a given factor to the industry, as well as total weighted scores, which quantify how well a given firm is doing relative to the other two firms evaluated in the CPM. The key difference between a CPM and EFE is that a CPM compares firms and an EFE Matrix analyzes how a firm internally is responding to key external issues. Critical success factors include points of competitive advantage within an industry, as well as other factors that are crucial for a firm to succeed within a given industry; critical success factors in a CPM can include both internal and external issues. List critical success factors from highest weight to lowest weight in a CPM.
Weights in a CPM are industry-based and sum to 1.0.
Ratings in a CPM are assigned to quantify how well a firm and its key competitors are performing on each critical success factor; ratings reveal the degree of effectiveness of the firm’s strategies. Assign a rating between 1 and 4 to each key factor to indicate how effectively the firm’s current strategies respond to the factor, where 4 = the response is superior, 3 = the response is above average, 2 = the response is average, and 1 = the response is poor. Ratings are company-based; weights are industry-based.
A sample CPM is provided in Table 3-10. In this example, the two most important factors to being successful in the industry are “advertising” and “global expansion,” as indicated by weights of 0.20. If there were no weight column in this analysis, note that each factor then would be equally important. Thus, including a weight column yields a more robust analysis because it enables the analyst to capture perceived or actual levels of importance. Note in Table 3-10 that Company 1’s strategies are responding in a superior fashion to “product quality,” as indicated by a rating of 4, whereas Company 2’s strategies are superior regarding “advertising.” Overall, Company 1’s strategies are responding best, as indicated by the total weighted score of 3.15 and Company 3 is responding worst. Never duplicate ratings in a row in a CPM; go ahead and make judgments or decisions as to appropriate ratings based on your research and knowledge of the focal firm and rival companies.
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