Competitive Profile Matrix
A competitive profile matrix can be used to analyze competition among rivals in a specific industry. The results from the matrix can then be used to rank the businesses according to the specified market factors. The firm with the highest total weighted score is considered the strongest player in the market, with the lowest total weighted score regarded as the weakest competitor. The competitive profile matrix is also important since it helps identify a firm or company’s strengths and weaknesses in relation to its competition (Kumar, 2021).
Below is a competitive profile matrix for the soft beverage industry. To construct this competitive matrix, we compared the three main players and competitors competing with Coca-Cola, Pepsi, and Dr. Pepper. We listed the several factors that the companies compete against and analyzed individual companies according to these factors using the weighted rating system. All the factors utilized are vital and applicable to the three companies.
| Coca Cola | Pepsi | Dr. Pepper | |||||
| Key success factors | Weight | Rating | Weighted score | Rating | Weighted score | Rating | Weighted score |
| Financial health | 0.2 | 4 | 0.8 | 4 | 0.8 | 4 | 0.8 |
| Customer loyalty | 0.15 | 5 | 0.75 | 4 | 0.6 | 3 | 0.45 |
| Market share | 0.1 | 4 | 0.4 | 3 | 0.3 | 2 | 0.2 |
| Distribution | 0.1 | 4 | 0.4 | 3 | 0.3 | 3 | 0.3 |
| Branding | 0.02 | 4 | 0.08 | 4 | 0.08 | 3 | 0.06 |
| Marketing | 0.08 | 4 | 0.32 | 4 | 0.32 | 4 | 0.32 |
| Products quality | 0.15 | 4 | 0.6 | 4 | 0.6 | 4 | 0.6 |
| Profit margins | 0.1 | 3 | 0.3 | 4 | 0.4 | 4 | 0.4 |
| CSR | 0.05 | 4 | 0.2 | 3 | 0.15 | 3 | 0.15 |
| Market penetration | 0.05 | 4 | 0.2 | 3 | 0.15 | 2 | 0.1 |
| Total | 1 | 4.05 | 3.7 | 3.38 | |||
From the above matrix, Coca-Cola leads its competitors in almost every aspect. With a total weighted score of 4.05, Coca-cola is ahead of its competitors and can be said to be commanding the pace of the industry. Pepsi is the closest competitor with a weighted score of 3.7, while Dr. Pepper is the weak competitor in the industry with a total weighted score of 3.38.
One of the factors where Coca-cola wins over its competition is customer loyalty. On this factor, Coca-Cola has a rating of 5 with a weighted score of 0.75 against weighted scores of 0.6 and 0.45 from Pepsi and Dr. Pepper, respectively. This score shows that the company has created products that attract and hooks customers. This can also be attributed to the wide range of product brands that the company has in the market. It can also be attributed to Coca-Cola being in the industry for more than a century, longer than all its competitors.
Additional factors related to customer loyalty and where Coca-cola wins against its competitors are market share, market penetration, distribution, and CSR. All these factors are related and have contributed significantly to powering Coca-Cola into a giant. Coca Cola possession of the biggest chunk of the market can be attributed to the company’s massive distribution investments and many corporate social responsibilities undertaken by the company. Coca-Cola franchised its distribution operation, making it easier and cheap for the company to have distribution channels worldwide. The company also runs many corporate social responsibilities, which help to boost the brand awareness of the company.
The three companies, however, are equal in terms of financial health, where each company scored 0.8 weighted scores branding, where each company had 0.32 as the weighted score, and product quality, where each had a weighted score of 0.6.
The profit margin factor shows Coca Cola competitive weakness. Using this factor, Pepsi and Dr. Pepper lead with weighted scores of 0.4 each, while Coca-Cola has a score of 0.3. This result can be attributed to the fact that Pepsi and Dr. Pepper rely on only beverages as their source of revenue. These companies have diversified into other food products, such as snacks, which contribute the largest share of their revenue basket.
In conclusion, from this analysis, Coca-Cola is the leader in the soft beverage industry compared to two of its main rivals, Pepsi and Dr. Pepper. Coca Cola strength includes factors such as customer loyalty, huge market share, wide market penetration, successful advertising and marketing activities, huge distribution channels, and massive CSR activities. However, Coca-Cola is weak compared to its competition in terms of the profit margin factor.
Financial ratio analysis
To understand a company’s financial position, looking at its financial ratios is important and easier. Below is an analysis of Coca Cola financial ratios and a summary of what the ratios insinuate.
The first ratios are the company’s current and quick ratios. Coca-cola has a current ratio of 1.52. This ratio indicates that the company currently holds enough assets to meet its obligation. Coca-Cola also has a quick ratio of 0.87. This means that Coca-Cola does not have a challenge in funding its short-term financial obligations (David et al., 2020).
The next ratios are the company profit per share and earnings ratios. Currently, Coca-Cola has a profit per share and earning ratios of 4.37 and 21.34, respectively. This shows that, financially, Coca-Cola is doing well and that the stock is a true representation of the financial position of the company (David et al., 2020).
In terms of inventory, Coca-Cola has an inventory turnover of 8.54 and a receivable turnover of 8.21. since the company turnovers for receivables and inventory are greater than 8, then, Coca-cola is efficient in managing its inventory and its receivables (David et al., 2020).
From the following ratios, it is true to conclude that the company’s financials are healthy and within the recommended range. The analysis also indicates that the company shares are trading closely around the company’s value, hence offering a chance to investors who can buy and enjoy a return from their investments.
References
David, F. R., David, F. R., & David, M. E. (2020). Strategic management: Concepts and cases: A competitive advantage approach. New York: Pearson.
Kumar, K. (2021). Competitive adaptive reweighted sampling assisted partial least square analysis of excitation-emission matrix fluorescence spectroscopic data sets of certain polycyclic aromatic hydrocarbons. Spectrochimica Acta Part A: Molecular and Biomolecular Spectroscopy, p. 244, 118874.
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