I n d u s t r y A n a l y s i s : T h e E x t e r n a l F a c t o r E v a l u a t i o n ( E F E ) Matrix An External Factor Evaluation (EFE) Matrix allows strategists to summarizea n d e v a l u a t e e c o n o m i c , s o c i a l , c u l t u r a l , d e m o g r a p h i c , e n v i r o n m e n t a l , p olitical, governmental, legal, technological, and competitive

information. The EFE matrix consists of five steps process. Five-Step process: List key external factors (10-20)Opportunities & threats. You have to prepare a list of all external factorswhich will affect the EFE matrix. These factors should be two points to be kept in mind these are opportunities and threats Assign weight to each (0 to 1.0)Sum of all weights = 1.0Now you have to arrange them according to their weight age that whichfactor is most important. It should be weight age in % ages. The sum of thetotal of all the factors should always be one. Assign 1-4 rating to each factor Firms current strategies response to the factor: how well firms response tothese factors. Multiply each factors weight by its rating Produces a weighted scoreHow the firm will respond to these factors external factors. Such criteria areknown as rating Sum the weighted scores for each Determines the total weighted score for the organization.Highest possible weighted score for the organization is 4.0; the lowest, 1.0.Average = 2.5