Strategic Management
Major Bhargava R D
Executive Director
XHire HR Consulting LLP
Bangalore
Strategic Management
Module 2
COMPETITIVE ADVANTAGE (12 HOURS)
External Environment
PESTEL Analysis,
SWOT Analysis,
Porter’s Five Forces Model,
The Competitive Profile Matrix (CPM),
Globalization and Industry Structure – Resources,
Capabilities and Competencies
Value Chain Analysis – Core Competencies, Generic
Building Blocks of Competitive Advantage
Distinctive Competencies - Avoiding Failures and
Sustaining Competitive Advantage
Classification of
External Environment
A firm’s External Environment can be divided into
Three parts: Operational
Environment
– Operating Environment Industry
Environment
(Competitive Position) Global/Remote
Environment
– Industry Environment
(Competitive Forces)
– Global/Local Environment
(Remote)
A firm’s strategic actions are influenced by the
changes taking place in all the three environments.
Strategic Management
Module 2
COMPETITIVE ADVANTAGE
Part III
Competitive Profile Matrix (CPM)
Globalisation & Industry Structure
Resources, Capabilities and
Competences
The Competitive Profile Matrix
(CPM)
Operating Environment
– Factors in the immediate Competitive Situation that
affect a firm's success in acquiring needed
resources or in profitability marketing its goods and
services
Most Important factors are:
– The Firm’s Competitive Position
– Its Customer Profile
– Reputation among Suppliers and Creditors
– Ability to Attract Capable Employees
Competitive Profile Matrix
(CPM)
Competitive Profile Matrix
– is an essential strategic management
tool used to compare one firm with
other major players in the industry.
– identifies a firm’s major competitors
and its particular strengths and
weaknesses.
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Components of CPM
Critical Success Factors
– are extracted after deep analysis of external
and internal environment of the firm.
– can vary from industry to industry.
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Components of CPM contd…
Ratings
– represent the response of firm towards the
critical success factors.
– higher the rating, better is the response of the
firm towards the critical success factor.
– ratings range from 1 to 4 and can be applied
to any factor.
– 4 = major strength 3 = minor strength
2 = minor weakness 1 = major weakness
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Components of CPM contd…
Weight
– indicates the relative importance of a factor
to being successful in the firm’s industry.
– 0 carries the least importance while 1 carries
the maximum.
– sum of all assigned weight to factors must
be equal to 1.
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Components of CPM contd…
Weighted Score
– is the result achieved after multiplying each
factor rating with the weight.
Total Weighted Score
– the sum of all weighted score is equal to the
total weighted score.
– final value of total weighted score should be
between range 1.0 (low) to 4.0(high).
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Competitive Profile Matrix
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Key findings
Overall, Company 1 is strongest, as
indicated by the total weighted score of
3.15, followed by Company 3.
CPM shows how strong or weak a
company is compared to its competitors
on the basis of common factors.
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References
[Link]
[Link]
Strategic Management – Concepts and
Cases (11th edition)
– Fred David
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Competitive Position
Globalization and Industry Structure
Resources, Capabilities and Competencies
END OF PART III
?
Next Session
Value Chain Analysis
Core Competencies
End of Session
Thank You!
18-11-2018 20
Strategic Management
Module 2
COMPETITIVE ADVANTAGE
Part IV
Value Chain Analysis (VCA)
Core Competencies
Value Chain Analysis
Core Competencies
END OF PART IV
?
Next Session
Generic Building Blocks of Competitive
Advantage
Distinctive Competencies
Avoiding Failures & Sustaining Competitive
Advantage
End of Session
Thank You!
18-11-2018 26
Strategic Management
Module 2
COMPETITIVE ADVANTAGE
Part V
Generic Building Blocks of Competitive
Advantage
Distinctive Competencies
Avoiding Failures & Sustaining
Competitive Advantage
Generic Building Blocks of
Competitive Advantage
Distinctive Competencies –
Avoiding Failures and Sustaining
Competitive Advantage
29
END OF PART V
?
End of Session
Thank You!
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