One Difference Between a Competitive Profile Matrix (CPM) and an External

question 88

Multiple Choice

One difference between a Competitive Profile Matrix (CPM) and an External Factor Evaluation (EFE) is that

• A) CPM includes both internal and external issues.
• B) the weights and total weighted scores have different meanings.
• C) CPM ratings range from 1 to 10.
• D) CPM is performed only for the company, whereas EFE is performed for both the company and its competitors.
• E) CPM is only used in small firms.

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Definitions:

Profit Maximization

The process by which a firm determines the price and output level that generates the maximum profit.

Entry Barriers

Obstacles that prevent or hinder new competitors from easily entering an industry or area of business.

Competitive Price-Searcher

A market characteristic where firms actively seek to set prices competitively, often through differentiation, to attract customers.

Long-Run Equilibrium

A state in which all firms in a market are making just enough profit to stay in business, with no incentive for new firms to enter or existing firms to exit.