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    External Factor Evaluation

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    asad
    The EFE matrix is a strategic management tool used to assess current business conditions by visualizing and prioritizing opportunities and threats from external factors. It is similar to the IFE matrix but focuses solely on external factors from the social, economic, political, legal and environmental environment. To create an EFE matrix, external factors are weighted and rated based on their importance and the company's response, with scores multiplied and totaled to assess the company's overall ability to respond to external conditions.

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    External Factor Evaluation

    Uploaded by

    asad
    159 views2 pages
    The EFE matrix is a strategic management tool used to assess current business conditions by visualizing and prioritizing opportunities and threats from external factors. It is similar to the IFE matrix but focuses solely on external factors from the social, economic, political, legal and environmental environment. To create an EFE matrix, external factors are weighted and rated based on their importance and the company's response, with scores multiplied and totaled to assess the company's overall ability to respond to external conditions.

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    Analysis of 3 Companies

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    The EFE matrix is a strategic management tool used to assess current business conditions by visualizing and prioritizing opportunities and threats from external factors. It is similar to the IFE matrix but focuses solely on external factors from the social, economic, political, legal and environmental environment. To create an EFE matrix, external factors are weighted and rated based on their importance and the company's response, with scores multiplied and totaled to assess the company's overall ability to respond to external conditions.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    159 views2 pages

    External Factor Evaluation

    Uploaded by

    asad
    The EFE matrix is a strategic management tool used to assess current business conditions by visualizing and prioritizing opportunities and threats from external factors. It is similar to the IFE matrix but focuses solely on external factors from the social, economic, political, legal and environmental environment. To create an EFE matrix, external factors are weighted and rated based on their importance and the company's response, with scores multiplied and totaled to assess the company's overall ability to respond to external conditions.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
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    External Factor Evaluation (EFE) matrix method is a strategicmanagement tool often used for assessment of current business

    conditions. The EFE matrix is a good tool to visualize and prioritize


    the opportunities and threats that a business is facing.
    The EFE matrix is very similar to the IFE matrix. The major
    difference between the EFE matrix and the IFE matrix is the type
    of factors that are included in the model. While the IFE matrix
    deals with internal factors, the EFE matrix is concerned solely
    with external factors.
    External factors assessed in the EFE matrix are the ones that are
    subjected to the will of social, economic, political, legal, and other
    external forces.
    How do I create the EFE matrix?
    Developing an EFE matrix is an intuitive process which works
    conceptually very much the same way like creating the IFE
    matrix. The EFE matrix process uses the same five steps as the
    IFE matrix.

    List factors: The first step is to gather a list of external factors.


    Divide factors into two groups: opportunities and threats.

    Assign weights: Assign a weight to each factor. The value of


    each weight should be between 0 and 1 (or alternatively between
    10 and 100 if you use the 10 to 100 scale). Zero means the factor
    is not important. One or hundred means that the factor is the
    most influential and critical one. The total value of all weights
    together should equal 1 or 100.

    Rate factors: Assign a rating to each factor. Rating should be


    between 1 and 4. Rating indicates how effective the firms current
    strategies respond to the factor. 1 = the response is poor. 2 = the
    response is below average. 3 = above average. 4 = superior.
    Weights are industry-specific. Ratings are company-specific.

    Multiply weights by ratings: Multiply each factor weight


    with its rating. This will calculate the weighted score for each
    factor.

    Total all weighted scores: Add all weighted scores for each
    factor. This
    company.

    will

    calculate

    the total

    weighted

    score for

    the

    You can find more details about this approach as well as about
    possible values that the EFE matrix can take on the IFE
    matrixpage.
    EFE matrix example

    Total weighted score of 2.46 indicates that the business has


    slightly less than average ability to respond to external factors.
    (See the page on IFE matrix for an explanation of what category
    the 2.46 figure falls to.)
    What should I include in the EFE matrix?
    Now that we know how to construct or create the EFE matrix, let's focus on factors.
    External factors can be grouped into the following groups:

    Social, cultural, demographic, and environmental variables:


    Economic variables
    Political, government, business trends, and legal variables

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