The External Factor Evaluation Matrix (EFE Matrix) is a tool for analyzing the external environment.
Methodology
The approach is to identify the key factors affecting the future development of the enterprise from the perspective of opportunities and threats, determine the weights according to the degree of influence of each factor, and then rate each key factor according to the degree of effective response of the enterprise to each key factor, and finally calculate the total weighted score of the enterprise. Through EFE, companies can summarize the opportunities and threats they face to portray the full attractiveness of the company.
Steps to build the EFE
It can be built in five steps:
(1) List the key factors identified during the external analysis process
- Total number of factors is between 10-20
- Factors include opportunities and threats affecting the company and the industry it operates in
- List the opportunities first, and then the threats
- Be as specific as possible. Weights tend to be higher for opportunities than for threats, but can also be high when threats are particularly severe
- Methods of determining weights: comparison of successful and unsuccessful competitors, and collective discussion to reach a consensus
- The sum of the weights of all the factors must be equal to 1
(3) Scoring of key factors according to the degree to which the current strategy of the firm responds to the key factors effectively.
- Score ranges from 1-4
- 4 is a very good response, 3 is an above average response; 2 is an average response; and 1 is a very poor response
- The score reflects the effectiveness of the company's current strategy, and is therefore company-based
- The weights for step 2 are industry-based
(4) Multiply the weight of each factor by the sum of its weights. (4) Multiply each factor's weight by its rating to obtain a weighted score for each factor
(5) Add the weighted scores of all factors to obtain the total weighted score for the firm
Regardless of the number of factors included in the EFE matrix, the total weighted score ranges from a low of 1.0 to a high of 4.0, with an average score of 2.5. A score above 2.5 indicates that the firm is responsive to the external influences. A score above 2.5 indicates that the organization is responsive to external influences. The EFE matrix should contain 10-20 key factors, and the number of factors does not affect the range of total weighted scores, because the sum of weights is always equal to 1.
External Evaluation EFE Matrix for the Development of the Private Book Industry in Jilin Province
Key External Factors (KEF) Weight Score Weighted Score
Opportunities
1. Good policy environment in the province 0.15 4 0.60
2. Provincial government provides financing facilities to the private sector 0.15 4 0.60
3. The market environment is gradually getting better 0.05 2 0.10
4. Private bookstores are increasing 0.10 4 0.40
5. Xinhua Bookstore is large in scale and has difficulties in coping with the situation 0.05 3 0.15
6. Need time 0.05 2 0.10
Threats
1, the consumption level of each region is not the same 0.15 3 0.45
2, the book industry management system is not perfect 0.10 3 0.30
3, the promotion of policy guidance, pulling the promotion effect is not obvious 0.05 2 0.10
4, more alternative products 0.05 1 0.05
5. Lack of related talents 0.05 3 0.15
6. Small scale of enterprises 0.05 2 0.10
Total 1.00 3.10
The total score of the EFE matrix is 3.10, which is higher than the average level of 2.5, which indicates that the current situation of the private book industry in Jilin Province is able to react to external opportunities and threats. Responding to the external opportunities and threats, it can take advantage of the favorable opportunities and avoid the unfavorable threats in an appropriate way
Evaluation of External Factors
Matrix Involved Content
CSP Model ? GE matrix ? QFD method ? ROS/RMS matrix ? V matrix ? Talent model ? Enterprise value correlation analysis model ? Enterprise Competitiveness Nine Forces Analysis Model ? Internal Factor Evaluation Matrix Internal-External Matrix ? Stakeholder Analysis ? Watson Wyatt Human Capital Index ? Five Factors of Change ? Basic Competitive Strategy ? Ansoff Matrix ? Quantitative Strategic Plan Matrix ? Job Value Assessment ? Strategy Consulting ? The Golden Triangle of Service? The Boston Matrix. Porter's Five Forces Model. Porter's Competitive Strategy Roulette Model Environmental Uncertainty Analysis Porter's Competitive Strategy Roulette Model. The competitive situation matrix. McKinsey 7S Model
Matrix Keywords
External Factor Evaluation Matrix, EFE Matrix ,EFE, External Factor Evaluation Model, External Factor Evaluation Matrix, EFE Model, EFE Matrix Model, External Factor Matrix, Efe Matrix.