A Structured Approach To Developing Corporate Strategy
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Strategic Analysis and Planning with MATRIX V5
Tutorial Step 7 - The Customer's Value Chain and Critical Success Factors

Careful analysis of the customer's Value Chain (below) will result in a list of Critical Success Factors - issues that customers will take into consideration when weighing up alternatives from competing suppliers.

The Value ChainCritical Success Factors should be based around what prospective customers need, and above all, what they value! For example a more efficient (supplier) service may have a direct impact upon both the reliability of the customer's operations, and upon its costs. Other examples might include:

  • clear evidence of the skills required to fulfil a complex project (security)
  • the quality of materials used in production (lower servicing costs)
  • the responsiveness of back-office staff when handling customer queries (post-sales support)

By weighting the factors, applying scores for each competitor, and processing the data according to the Simple Multiattribute rating technique it then becomes possible to determine the competitive position of each supplier. More Information.

If you would like to know how Critical Success Factors and other concepts of strategy can be applied to your business, then please contact Market Modelling Limited. We promise a quick response, and look forward to hearing from you!

 MATRIX V5 ...
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Critical Success Factors And MATRIX V5

Data is input into MATRIX V5, the software tool for business strategists, using the the Competitive Strength and Criteria Scorecards.

To display the 'Competitive Strength' scorecard exactly as shown below, select the Europe / Metallic Assemblies / Industrial Niche on the Segmentation Matrix, and click the ‘Competitive Strength (Data)’ button (right) which is located on the toolbar. Click the 'Competitive Strength (Data)' button.
The 'Competitive Strength (Data)' Scorecard in MATRIX V5.
Three Critical Success Factors have been defined for the selected Niche. Clearly 'Product Design' and ‘Service & Support Capability’ (both weighted at 100) are the most important Critical Success Factors, whilst 'Price' (weighted at 20) is the least important Critical Success Factor.

The scorecard can accommodate an unlimited number of Critical Success Factors, though in practice a typical Niche will support perhaps 4 or 5 at most. Note, Critical Success Factors may vary from Niche to Niche as different Niches will be driven by different needs and wants.

Now consider the relative importance of each different Critical Success Factor. For the selected Niche, 'Product Design' and 'Service & Support Capability' may be much more important than 'Price'. Apply high 'Swing weights' to those Critical Success Factors that are most important, and lower swing weights to those Critical Success Factors that are less important.



Each Critical Success Factor can be expanded into underlying Criteria.

To display the 'Criteria' scorecard exactly as shown below, having selected the 'Product Design' Critical Success Factor, click the 'Criteria' button (right) which is located on the toolbar. Click the 'Criteria' button.
'Product Design' has been broken down into four Criteria, namely 'MTBF Benchmarks', 'Precision Engineering', 'Quality of Materials ', and 'Documentation'. Note that each Criterion has been explicitly qualified with the 'scale' against which it is to be measured. For example 'MTBF Benchmarks' is a Value Function to be measured in months, whereas ‘Precision Engineering’ is a Direct Rating estimated on a ‘0 - 100 Scale’. Clearly 'MTBF Benchmarks' and ‘Precision Engineering’, both weighted at 100, are the most important Criteria. The strongest supplier against MTBF Benchmarks is EngineerIT Ltd who achieves a Value Function of 18 months. Budget Assemblies Ltd, which is the weakest supplier against this Criterion, achieves a Value Function of 10 months. The host company (HandyMan PLC) achieves an intermediate Value Function of 15 months. 'Documentation' (weighted at just 30) is the least important Criterion.

Note that Scores are applied to each Competitor within a Niche against a specific Criterion. MATRIX V5 supports both Direct Rating (e.g. 0 - 100), and Value Function (i.e. 'raw') scoring techniques. A Criterion may be defined as:

  • 'Conventional', where a higher score corresponds to a 'more competitive' proposition. An example is 'Efficacy' where the more efficacious a product, the more competitive is the supplier, or
  • 'Inverse', where a higher score corresponds to a 'less attractive' proposition. An example is 'Price', where the higher the Price, the less competitive is the supplier.

Remember, the Competitive Strength exercise represents the market's view of what it wants from an ideal supplier, and how each of the competitors acting within the market 'measures up' against the ideal!

The information provided via this data editor is used within Competitive Strengths & Weaknesses Analysis, the Directional Policy Matrix (Position on 'Relative Competitive Strength' Axis), Perceptual Maps, and Risk Analysis (Position on 'Risk' axis).

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