COMPETITIVE PROFILE MATRIX (CPM):

Steps in developing a competitive profile matrix

Through the competitive profile matrix, companies can find out – which are the areas where they
need to be strong in, and which are the ones where they need to improve. They can do this by
analyzing their main competitors in the market and asses them based on several success specific
factors. These factors, on which the analysis is made, depend greatly on the industry in which the
company is operating. Such factors could be: market share, range of products, brand reputation,
etc.

Steps in developing a competitive profile matrix

The first step is to define competitors. Once finalized the competitors we are going to focus on,
our need to decide the most important factors which are needed to be successful in the respective
industry. Once these factors are identified, we need to identify the factors in which our
competitors are strong or weak.

Once we have decided a factor for making the matrix, than for each factor, a weight and a rank is
going to be assigned. The weight can range from 0.0(low importance) to 1.0 (high importance)
and indicates how important the factor is for succeeding in the industry. The ratings present how
well are companies doing in each area and it ranges from 4 to 1, from the highest strength to the
highest weakness. Afterwards, the weight is multiplied by the rank, resulting the score. The
company with the highest score proves to be stronger than its competitors.

This identification and the subsequent classification of the factors will give us a fair reading of
our competitive profile in the market as well as the competitive profile of other competitors. This
will help us to define our exact competitive advantages and tailor strategy accordingly. Thus, the
competitive profile matrix paves the way for us to overtake our competition.

The competitive profile matrix or CPM matrix is used as a tool in decision making. However, as
many other business models of strategy, the competitive profile matrix it has its own drawbacks.
The main drawback consists in the subjectivity of the person conducting the analysis, as the
weights and ranks differ on personal interpretation, assumptions values and beliefs.

The lack of quantified data is another major disadvantage of this tool, as the disadvantage in one
factor can be paid off by an advantage in another one. Lack of information can also create
difficulties in this analysis, as gaining access to this kind of private information can prove to be
rather difficult. Therefore, the CPM should be used as an orientation tool for getting a bird’s eye
view on the point where company is standing as compared to competitors.
NIKE COMPETITIVE PROFILE MATRIX (CPM) 2018
FINDINGS:
Critical success Nike Adidas Puma
factors
Market share 33.20% 25% 8%
Global expansion 170 countries 200 countries 120 countries
Revenues 34.35 *BN USD 24.19 *BN USD 4.67 *BN USD
Marketing 3.34 *BN USD 3.11 *BN USD 0.23 *BN USD
No. Of Employees 74400 56888 11787
R&D (No disclosure) 0.21 *BN USD 0.11 *BN USD
Financial strength 4.24*BN USD (net 0.82*BN USD (net 0.15*BN USD (net
income) income) income)
Brand Value 28.03 *BN USD 14.03 *BN USD 3.00 *BN USD
Customer loyalty To be taken on revenues
Product diversity

CPM – Competitive Profile Matrix NIKE ADIDAS PUMA

Critical Success Factors Weight Rating Weighted Rating Weighted Rating Weighte
Score Score d Score
Market Share 0.15 4 0.6 3 0.45 2 0.3
Global expansion 0.1 3 0.3 4 0.4 2 0.2
Revenues 0.1 4 0.4 3 0.3 2 0.2
Product diversity 0.1 4 0.4 4 0.4 3 0.3
Marketing/ Advertising 0.1 4 0.4 3 0.3 2 0.2
No. Of Employees 0.05 4 0.2 3 0.15 2 0.1
Research & 0.1 4 0.4 4 0.4 2 0.2
Development/ Innovation
Financial strength 0.1 4 0.4 3 0.3 2 0.2
Brand Value 0.1 4 0.4 3 0.3 2 0.2
Customer Loyalty 0.1 4 0.4 3 0.3 2 0.2
Total 1 3.9 3.3 2.1

MARKET SHARE The global market share of a company is a rather critical factor for success
and is therefore weighted with 0.15. Nike (33.2%) has been the market leader in athletic apparel
over many years, closely followed by Adidas (25%) and Puma, with 8% market share. Adidas
have gained its market marginally by apx4% from last year mainly over Nike, Nike have to look
over it.
GLOBAL EXPANSION Nike, Adidas and Puma are available across the world. Although the
latter, Puma, is less widely spread than the two competitors. Adidas is winner marginally over
Nike

PRODUCT DIVERSITY: The three companies offer equipment and apparel for numerous
sports. While Puma focuses only on athletic and leisure apparel/ shoes, Nike and Adidas
expanded their product range with digital products.

MARKETING/ ADVERTISING Nike and Adidas invest a lot in their marketing campaigns.
They both use famous athletes to promote their products and often create viral commercials.

NO. OF EMPLOYEES: Nike has largest no of manpower worldwide, shows its presence &
strength.

PRODUCT R&D / INNOVATION Nike and Adidas recognized the potential in the
combination of technology and athletic apparel fairly soon. They both offer products, which
contain computer chips to measure the athlete’s performance. Nike also invests a lot in
innovation concerning new performance-enhancing materials.

FINANCIAL STRENGTH: Financial strength is key indicator point of any organization health,
Nike is doing very good in it compare to other two.

BRAND VALUE: Higher the Brand value more globally accepted , Nike has been rated 1st In
terms of Global Brand value 28.03 *BN USD .

CUSTOMER LOYALTY Every brand displays a different lifestyle even though they are very
similar. These lifestyles create followers, respectively fans, who stay with their brand of choice.
This results in a rather high customer loyalty for all the tree companies.