Tools of Competitive

comparison:
CPM & SPACE Matrix

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 Competitive Profile
Matrix (CPM)

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 Identifying CSFs

• “The limited number of areas in which results, if satisfactory, will

ensure successful competitive performance for the individual,
department, or organization”
• CSFs are areas of activity that should receive constant and careful
attention from management
• The critical success factor method looks at the world from a manager’s
current operating viewpoint

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Mahindra & Mahindra Ltd: Racing
towards creative disruptions

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 DIGI Sense Intelligent Bio-CNG
technology tractor plants

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Rojers P Joseph - IIM Ranchi

• The world’s first vehicle to have a

transversely-mounted engine and a front-
wheel-drive layout that is supported by a
ladder-on-frame chassis
Mahindra • Not only was the car’s weight reduced but
its fuel efficiency was also enhanced
Marazzo • A design concept patented by M&M in
India and the United States

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 Monocoque chassis (Unibody frame Chassis)

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 Transverse engine placement in a Monocoque Chassis

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 Ladder on frame chassis (Body on frame)

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 Longitudinal engine placement in a ladder on frame
Chassis

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 CSFs for automobile industry in
India (from the perspective of
M&M)

1) Image (Product quality, reliability, and

brand value)
2) Dealer/distribution network
3) Regulatory compliance/Meeting energy
standards
4) Price
5) After sales service
6) Technological innovations (Frugal, agile,
Speedy)

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 CPM

• Competitive Profile Matrix (CPM) is a

strategic management tool for comparing a
firm with the major players in the industry
• CPM identifies a firm’s key competitors and
compares them based on industry’s critical
success factors
• The analysis helps identify a firm’s relative
strengths and weaknesses against its
competitors
• Thus, a firm can easily identify the areas it
should improve and the areas it should
protect

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 Steps in CPM Analysis
Rojers P Joseph - IIM Ranchi

1) Identify Critical Success Factors (CSFs)

• CSFs are key factors that determine the success or failure of a
firm in the industry
• CSFs vary among industries and even among strategic groups
2) Assign weights
• Assign weights ranging from 0.0 (not important) to 1.0 (all-
important) to each CSF

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 Steps in CPM Analysis
Rojers P Joseph - IIM Ranchi

3) Assign ratings
• The ratings in CPM refer to how well a firm is doing with respect
to each CSF
• The ratings are: 4 - major strength; 3 - minor strength; 2 -minor
weakness; 1 - major weakness
• The process of assigning ratings can be done more easily through
benchmarking

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 Steps in CPM Analysis
Rojers P Joseph - IIM Ranchi

4) Find score
• The score is obtained by multiplying weight by the respective
rating for each CSF
• Total score for the firm is the sum of all individual scores
• The firm that receives the highest total score is relatively stronger
than its competitors

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 CPM Analysis

Critical Success Factors Wt. M&M TM MSIL

Rating Score Rating Score Rating Score
Image (Product quality, reliability, 0.20 3 0.60 3 0.60 4 0.80
and brand value)
Dealer/distribution network 0.20 3 0.60 3 0.60 4 0.80
Regulatory compliance/Meeting 0.10 3 0.30 3 0.30 3 0.30
energy standards
Price 0.20 3 0.60 4 0.80 4 0.80
After sales service 0.20 3 0.60 2 0.40 4 0.80
Technological innovations (frugal, 0.10 4 0.40 3 0.30 3 0.30
agile & Speedy)
Total 3.10 3.00 3.80

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 Advantages of using CPM

• The same factors are used to compare the firms, making the
comparison more accurate (as opposed to using the IFE matrix
which is created individually for each firm based on its
strengths and weaknesses)
• CPM may also consider external factors (in addition to internal
factors) that are critical for success (for e.g., complementary
products) in the analysis
• Companies can easily decide which areas they should
strengthen or protect in relation to competition and what
strategies they should pursue to that effect

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 Internal Factor Evaluation (IFE) Matrix for MEM
Strengths Weight Ratio Rating Ratio Wtd.
nale nale Score
First-mover advantage 0.10 3 0.30
Strong brand 0.10 4 0.40
Large investment in R&D and Manufacturing 0.05 4 0.20
Acquisitions and alliances 0.05 3 0.15
Partnership with Ford and LG Chem 0.10 3 0.30
Diverse product lines (EV cars + 3-wheelers + Vans) 0.10 4 0.40
Strong backing of the parent company 0.10 4 0.40
Leadership Support 0.05 4 0.20
Large orders from EESL 0.05 3 0.15
Weaknesses
Limited success of MEM’s EVs so far 0.10 1 0.10
Lack of home-grown technology 0.10 1 0.10
Dependence on imports (Technology and R/M) 0.10 1 0.10
Total 1.00 2.80
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 IFE Matrix for TM in the EV segment
Strengths Weigh Ration Rating Ratio Weighted
t ale nale Score
Strong brand 0.15 4 0.60
Plan to develop EV architecture 0.10 3 0.30
Strong backing of the parent company 0.10 4 0.40
Large orders from EESL 0.10 4 0.40
Plan for complete turnkey solutions 0.10 3 0.30
Introduced many EV models of passenger 0.15 4 0.60
cars
Weaknesses
Focus on commercial vehicles 0.05 1 0.05
Lack of home-grown technology 0.10 1 0.10
Dependence on imports (Technology and 0.10 1 0.10
R/M)
Range issues with its current EV models 0.05 2 0.10
Total
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Ranchi 2.95 19
The Strategic Position and Action
Evaluation(SPACE) Matrix

A Tool for Calibrating Competition

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 BCG Matrix

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 GE/McKinsey 9 Cell Planning Grid

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 Business Strength factors in GE- McKinsey Matrix
Rojers P Joseph - IIM Ranchi

• Market share
• Growth in market share
• Brand equity
• Profit margins compared to competition
• The strength of distribution channel process
• Level of differentiation
• Firm resources
• Efficiency and effectiveness of internal linkages
• Customer loyalty

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 Industry Attractiveness factors in GE- McKinsey
Rojers P Joseph - IIM Ranchi

Matrix

• Industry size
• Long-run growth rate
• Industry structure
• Industry life cycle
• Macro environment
• Market segmentation

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Rojers P Joseph - IIM Ranchi

• Both BCG and GE/McKinsey

matrices are based on only
two dimensions
• BCG Matrix plots Market
growth rate and the Relative
Limitations of BCG market share of the firm
• In the 9-cell planning grid,
Matrix and one of the axes of the matrix
GE/McKinsey Matrix measures the overall
attractiveness of the industry
in which the organization
operates, and the other axis
represents the business’
strength to compete in its
market(s)

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 SPACE Matrix
Rojers P Joseph - IIM Ranchi

• The SPACE Matrix’ is an attempt to overcome some of the

limitations of tools such as SWOT, BCG matrix, and McKinsey's GE
9-cell Planning Grid
• For instance, in the 9-cell planning grid, one of the axes of the
matrix measures the overall attractiveness of the industry in
which the organization operates, and the other axis represents
the business’ strength to compete in its market(s)
• The SPACE method adds two key dimensions to the matrix, i.e.,
the industry’s stability or turbulence, and the organization’s
financial strength
• Including many factors enables the manager to examine a
strategic alternative from several perspectives, and therefore
s/he is likely to select a better strategy

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 Dimensions
Rojers P Joseph - IIM Ranchi

• Two external dimensions and two internal dimensions

• External dimensions
– Environmental stability
– Industry strength
• They characterize the strategic position of the entire industry
• Internal dimensions
– Competitive advantage
– Financial strength
• These are the two major determinants of an organization’s
strategic position

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 Environmental stability (ES)
Rojers P Joseph - IIM Ranchi

• The key factors which determine environmental

stability (ES) include:
• Technological change
• Rate of inflation
• Demand variability
• Price range of competing products
• Barriers to entry into the market
• Competitive pressure
• Price elasticity of demand

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 Industry strength (IS)
Rojers P Joseph - IIM Ranchi

• Factors determining industry strength (IS) include:

• Growth potential
• Profit potential
• Financial stability
• Technological know-how
• Resource utilization
• Capital intensity
• Ease of entry into the market
• Productivity/Capacity utilization

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 Competitive advantage (CA)
Rojers P Joseph - IIM Ranchi

• Critical factors in this dimension are:

• Market share
• Product quality
• Product life-cycle
• Product replacement cycle
• Customer loyalty
• Competition’s capacity
• Technological know-how
• Vertical integration

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 Financial strength (FS)
Rojers P Joseph - IIM Ranchi

• Factors of financial strength (FS) include:

• Return on investment
• Leverage
• Liquidity
• Capital required/available
• Cash flow
• Ease of exit from the market
• Risks involved in business

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Rojers P Joseph - IIM Ranchi

• The manager now

Scoring the factors assigns appropriate
values between 0 and 6
influencing each to each individual factor
dimension influencing a dimension

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 Factors determining ES

Factors Ratings
Technological changes Many 0 1 2 3 4 5 6 Few
Rate of inflation High 0 1 2 3 4 5 6 Low
Demand variability High 0 1 2 3 4 5 6 Low
Price range of competing Wide 0 1 2 3 4 5 6 Narrow
products
Barriers to entry into the Few 0 1 2 3 4 5 6 Many
market
Competitive pressure High 0 1 2 3 4 5 6 Low
Price elasticity of Elastic 0 1 2 3 4 5 6 Inelastic
demand
Average

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 Factors determining IS

Factors Ratings
Growth potential Low 0 1 2 3 4 5 6 High
Profit potential Low 0 1 2 3 4 5 6 High
Financial stability Low 0 1 2 3 4 5 6 High
Technological know-how Simple 0 1 2 3 4 5 6 Complex
Resource Utilization Inefficient 0 1 2 3 4 5 6 Efficient
Capital intensity High 0 1 2 3 4 5 6 Low
Ease of entry into the Easy 0 1 2 3 4 5 6 Difficult
market
Productivity/Capacity Low 0 1 2 3 4 5 6 High
utilization
Average

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 Factors determining CA

Factors Ratings
Market share Small 0 1 2 3 4 5 6 Large
Product quality Inferior 0 1 2 3 4 5 6 Superior
Product life-cycle Late 0 1 2 3 4 5 6 Early
Product replacement cycle Variable 0 1 2 3 4 5 6 Fixed
Customer loyalty Low 0 1 2 3 4 5 6 High
Competition’s capacity High 0 1 2 3 4 5 6 Low
Technological know-how Low 0 1 2 3 4 5 6 High
Vertical integration Low 0 1 2 3 4 5 6 High
Average

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 Factors determining FS

Factors Ratings
Return on investment Low 0 1 2 3 4 5 6 High
Leverage Imbalance 0 1 2 3 4 5 6 Balanced
Liquidity Imbalance 0 1 2 3 4 5 6 balanced
Capital required/available High 0 1 2 3 4 5 6 Low
Cash flow Low 0 1 2 3 4 5 6 High
Ease of market exit Difficult 0 1 2 3 4 5 6 Easy
Risks involved in business Much 0 1 2 3 4 5 6 Little
Average

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Rojers P Joseph - IIM Ranchi

Qualitative interviews with senior

Methodology management
(Rowe et al,
1994) The manager assigns appropriate
values of between 0 and 6 to each
individual factor

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 SPACE Matrix for M&M

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 Factors determining ES

Factors Ratings M&M

1.Technological Many 0 1 2 3 4 5 6 Few 2
changes
2. Rate of inflation High 0 1 2 3 4 5 6 Low 4
3. Demand variability High 0 1 2 3 4 5 6 Low 3
4. Price range of Wide 0 1 2 3 4 5 6 Narrow 2
competing products
5. Barriers to entry Few 0 1 2 3 4 5 6 Many 5
into the market
6. Competitive High 0 1 2 3 4 5 6 Low 1
pressure
7. Price elasticity of Elastic 0 1 2 3 4 5 6 Inelastic 3
demand
Average 20/7 =
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2.8 39
 Factors determining IS

Factors Ratings M&M

1. Growth potential Low 0 1 2 3 4 5 6 High 3
2. Profit potential Low 0 1 2 3 4 5 6 High 2
3. Financial stability Low 0 1 2 3 4 5 6 High 5
4. Technological know- Simple 0 1 2 3 4 5 6 Complex 4
how
5. Resource Utilization Inefficient 0 1 2 3 4 5 6 Efficient 4
6. Capital intensity High 0 1 2 3 4 5 6 Low 1
7. Ease of entry into the Easy 0 1 2 3 4 5 6 Difficult 5
market
8. Productivity/Capacity Low 0 1 2 3 4 5 6 High 4
utilization
Average 28/8 =
3.5
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 Factors determining CA

Factors Ratings M&M

1. Market share Small 0 1 2 3 4 5 6 Large 3
2. Product quality Inferior 0 1 2 3 4 5 6 Superior 4
3. Product life-cycle Late 0 1 2 3 4 5 6 Early 2
4. Product replacement Variable 0 1 2 3 4 5 6 Fixed 4
cycle
5. Customer loyalty Low 0 1 2 3 4 5 6 High 3
6. Competition’s capacity High 0 1 2 3 4 5 6 Low 2
7. Technological know- Low 0 1 2 3 4 5 6 High 5
how
8. Vertical integration Low 0 1 2 3 4 5 6 High 3
Average 26/8 =
3.2

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 Factors determining FS

Factors Ratings M&M

1. Return on investment Low 0 1 2 3 4 5 6 High 5
2. Leverage Imbalance 0 1 2 3 4 5 6 Balanced 5
3. Liquidity Imbalance 0 1 2 3 4 5 6 balanced 4
4. Capital required (vs. High 0 1 2 3 4 5 6 Low 5
available)
5. Cash flow Low 0 1 2 3 4 5 6 High 4
6. Ease of exit from the Difficult 0 1 2 3 4 5 6 Easy 1
market
7. Risk involved in Much 0 1 2 3 4 5 6 Little 2
business
Average 26/7 =
3.7

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 IS

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Rojers P Joseph - IIM Ranchi

• The different dimensions result in the

following strategic postures for the
organization
Strategic • Aggressive
postures • Competitive
• Conservative
• Defensive

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 Plotting the values

• The averages for each group of factors are then plotted on the
SPACE chart
• By definition, the CA and IS values in the SPACE matrix are
plotted on the X axis
• CA values can range from 0 to -6
• IS values can range from 0 to +6
• The FS and ES dimensions of the model are plotted on the Y
axis
• ES values can be between 0 and -6
• FS values can range from 0 to +6

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 Dimensions scores for M&M

Dimension Score

Environmental Stability (ES) (-) 3.2

Industry Strength (IS) (+) 3.5

Competitive Advantage (CA) (-) 2.8

Financial Strength (FS) (+) 3.7

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• By connecting the average values plotted, a four-sided
polygon displaying the weight and direction of the particular
assessment is constructed

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 3.7

(0.7, 0.5)
-2.8 +3.5

-3.2

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• The strategic position can also be determined by adding the
two scores on the axes opposite to each other to obtain a
directional vector that points to a specific location in the chart

• Thus, M&M should take an aggressive strategic posture

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 SPACE Matrix – Strategic Postures

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 • Three events affected the fate of ATS in
2020:
1) Bhardwaj resigned in early 2020 due
to personal reasons
2) A new leadership team took charge of
the business, bringing structural
rationalization in favour of the
What happened consolidation of end efforts within
each of the business sectors
with ATS
3) COVID-19 struck India by March 2020,
causing a lockdown that resulted in a
partial shutdown of most economic
activities
• These changes led to disbanding of ATS
and the redistribution of its workforce
between the automotive and farm
sectors

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