3.

3 CPM MATRIX
TABLE 3.3: CPM between Nestle and Competitors

NESTLE DUCTH LADY YEOS

CRITICAL
SUCCESS
FACTORS

WEIGHT

RATING

SCORE

RATING

SCORE

RATING

SCORE
Advertising 0.1 4 0.4 3 0.3 3 0.3
Product Quality 0.1 4 0.4 4 0.4 4 0.4
Price
competitiveness
0.1 4 0.4 4 0.4 4 0.4
Management 0.1 3 0.3 3 0.3 3 0.3
Financial
Position
0.2 4 0.8 3 0.6 2 0.4
Customer
Loyalty
0.2 4 0.8 3 0.6 3 0.6
Global
Expansion
0.1 4 0.4 3 0.3 3 0.3
Market Share 0.1 4 0.4 3 0.3 3 0.3
TOTAL 1 3.9 3.2 3.0
Competitive profile matrix is a vital strategic management tool to compare the firm with the
major companies of the industry. Competitive profile matrix displays the well-defined picture to the firm
about their strong points and weak points relative to their competitors. The primary competitors to Nestle
are Dutch Lady and Yeos, so we used those two companies in this matrix. After an in depth analysis of
the external and internal environment we came up with these critical success factors: Advertising, Product
Quality, Price Competitive, Management, Financial Position, Customer Loyalty, Global Expansion and
Market Share. After we came up with that factor, we must rate each field. The rating in the CPM
represents the response that the firm has towards the critical success factors. The response scale is from 1
4. The ratings refer to strengths and weaknesses, where 4 represent major strength, 3 stand for minor
strength, 2 shows minor weakness and lastly 1 indicate major weakness.
In this industry we found Nestle has the highest effort in their advertising field. Nestle had done
various type of advertisement whether its newspaper ads or commercials or online advertisement. Also
their advertising is more eyes catching and appealing to the public eye compare to Dutch Lady and Yeos.
According to Nestle managing director, Alois Hofbauer, to The Edge Financial Daily, Nestle is one of the
top three advertisers in Malaysia. They also planning to double their advertising and promotion on digital
media.
Product quality is rapidly becoming an important competitive issue. There are five major
approaches to the definition of quality can be identified. First is the transcendent approach of philosophy,
second is the product-based approach of economics, followed by the user-based approach of economics.
Next is the manufacturing-based and lastly is value-based approaches of operations management. Overall
all three companies shows good performance in product quality where each of them do consider seriously
in manufacturing their product start from the raw material, food packaging material, method development,
get certification of packaging materials for food products and certification of materials used for serving
product.
A next critical success factor is price competitive. Competitive pricing stand for setting the price
of a product or service based on what the competition is charging. Competitive pricing is used more often
by business selling similar products, since services can vary from business to business while the attributes
of a product remain similar. Businesses have three options when setting the price for a good. They can set
it below the competition, at the competition or above the competition. As a leader in food industry, Nestle
tend to set the price of food product in the market and the other businesses tend to follow it or either they
choose to sell their product lower or above the market price. Yeos score 0.3 for price competitive as they
still maintain their price product while Nestle and Dutch Lady has decided to increase their product price
from 4% to 8% starting year 2013, citing rising global dairy prices as the cause of the increase. Even they
decided to increase their product, still consumer buy their product.
Meanwhile, all the three companies score the same result as 3 in management sector. A business
cannot survive without management because management is its means of support. Management is
concerned with acquiring maximum prosperity with minimum efforts. Management is essential wherever
group efforts are required to be directed towards achievements of common goals. All the companies
deserve to get 3 as their scores as they use their available resources to the fullest to generate profit and at
the same time take care of their workers.
Further to this, financial position also plays important role in determine the success of the
company. Financial position will shows the status of the assets, liabilities, and owners equity of an
organization and their interrelationship as reflected in financial statement. They serve as financial
scorecard and a tool for future planning. We rated financial position based on their net sale. Nestle is the
leader in the food diversified industry so it is obvious that their response is a 4 because they are leading
the pack. Dutch Lady wasnt too far behind so they are above average because they are ahead majority of
everyone else in this industry. Yeos is lower in this field for the fact they dont offer as much as there
other two companies.
The next factor is customer loyalty, which tell the chances of previous customers to continue to
buy from a specific organization. Great attention is given to marketing and customer service to retain
current customers by increasing their customer loyalty. The Nestle win over Dutch Lady and Yeos by
scoring 0.8. From the survey done Readers Digest Trusted Brand 2014 (Malaysia), Nestle product had
win over their competitors in Food and Beverage category. Plus, they has a very diverse product line and
already exist in the market more than 100 years that show they have loyal customer around the world not
only in Malaysia.
Equally important critical success factor we found is global expansion. Again Nestle leading in
this factor where their Nestle headquarter in Switzerland; they are based off international and global
expansion. Many of their product in undeveloped countries.
The last factor that we focus is market share. We found this important because companies need
to be able convert sales targets into market share because this will exhibit whether forecasts are to be
attained by growing with the market or by capturing share from competitors. As Nestle share are the blue
chip stock, it show how strong they stand in the market.
The weight attribute in CPM indicates the relative importance of each of the factors to being
successful in the firms industry. The sum of all weighted score is equal to the total weighted score; final
value of total weighted score should be between ranges 1.0 (low) to 4.0(high). The average weighted
score for CPM matrix is 2.5 any company total weighted score fall below 2.5 consider as weak. The
companys total weighted score higher than 2.5 is considered as strong in position. In this case Nestle
received a total weight of 3.9, Dutch Lady weight 3.6 and Yeos weight of 3.2. This indicates that Nestle is
the premier company in this matrix, and the other two still strong competitors in the industry.