Tools for Market Strategy, Part 2
The Competitive Profile Matrix (CPM) identifies a firm’s major competitors, and their particular strengths and weaknesses in relation to the competition’s strategic position.1 The weights and total weighted scores in the CPM, IFE and EFE have the same meaning (the weights still must add up to 1.0); however, the factors are much broader. The specific factors for comparison between clubs are your choice, but should be widely used within the fitness industry (Table 3).
The weighted scores for rival firms are compared to the sample firm, which provides important strategic information on where the sample business excels and where it is lacking, compared to the competition. Be wary of the total scores. Just because one firm receives a 3.2 rating and another receives a 2.8 rating does not mean that the first business is 10 percent better than the second. It simply means that the former is relatively stronger than the latter based on the critical success factors utilized in the CPM.
By matching a club’s strengths and weaknesses with the external opportunities and threats it faces, strategies are generated that build on the company’s strengths, improve upon the weaknesses, capitalize on opportunities and minimize threats.1 A matrix is made with the strengths and weaknesses generated in the IFE placed on the left side, and opportunities and threats generated in the EFE placed along the top (Table 4). Strategies are then brainstormed, without evaluation, for each of the four quadrants, keeping in mind the critical factors listed.
The first strategies should use internal strengths to take advantage of external trends and opportunities. For example, Smith should target new classes to the senior population. Second, strategies generated by a facility should not always meet threats head-on, but should use the club’s strengths to avoid or reduce the potential impact. For example, stay ahead of the new competitor across the street by maintaining a wide class variety. Third, sometimes external opportunities exist, but a club has internal weaknesses that prevent it from exploiting these opportunities. To change this, hire more seniors to teach new classes to the senior population. Lastly, a fitness facility faced with numerous threats and weaknesses may be in a precarious position. Strategies need to be generated to rectify this situation quickly: Train all staff members to teach classes to differentiate yourself from the new competitor.
You may be able to list the same strategy in all four quadrants. This is great because it should emphasize the importance of following up on this new (or old) strategy. Also, some quadrants may have more strategies generated in them than others. This is fine, but try to make sure you have at least four strategies in each quadrant. Current strategies may be included in this total, but try to think of some new ideas as well.
Now that you have several solutions to your dilemma, the next step is to pick those that are the most cost-effective, and meet the most urgent needs of your facility (look at the weighted scores from the IFE and EFE). Set (and stick to) a deadline for your analysis. Your competitor across the street may be doing the same SWOT analysis this very moment! The next step is to assign the new strategy(ies) to staff members. If you have solicited your staff’s input in the entire SWOT process, they should be able to quickly step in and get the job done.
Every facility should be wary of sticking to one strategy for too long, especially if growth has started to slow. Regular evaluation of strategic plans will help management avoid complacency and keeps staff on the right track. The strategic plan and resulting goals and strategies should be diligently developed and coordinated, and should not simply evolve out of day-to-day operations.