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 ...view middle of the document...
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
Below you can find examples of some factors that capture aspects external to your business. These factors may not all apply to your business, but you can use this listing as a starting point.
Social, cultural, demographic, and environmental factors...
- Aging population
- Percentage or one race to other races
- Per-capita income
- Number and type of special interest groups
- Widening gap between rich & poor
- Number of marriages and/or divorces
- Ethnic or racial minorities
- Trends in housing, shopping, careers, business
- Number of births and/or deaths
- Immigration & emigration rates
- Growth of the economy
- Level of savings, investments, and capital spending
- Foreign exchange rates
- Stock market trends
- Level of disposable income
- Import and export factors and barriers
- Product life cycle (see the Product life cycle page)
- Government spending
- Industry properties
- Economies of scale
- Barriers to market entry
- Product differentiation
- Level of competitiveness (see the Michael Porter's Five Forces model)
Political, government, business trends & legal factors...
- Globalization trends
- Government regulations and policies
- Worldwide trend toward similar consumption patterns
- Internet and communication technologies (e-commerce)
- Protection of rights (patents, trade marks, antitrust legislation)
- Level of government subsidies
- International trade regulations
- Elections and political situation home and abroad
Internal Factor Evaluation (IFE) matrix is a strategic management tool for auditing or evaluating major strengths and weaknesses in functional areas of a business.
IFE matrix also provides a basis for identifying and evaluating relationships among those areas. The Internal Factor Evaluation matrix or short IFE matrix is used in strategy formulation.
The IFE Matrix together with the EFE matrix is a strategy-formulation tool that can be utilized to evaluate how a company is performing in regards to identified internal strengths and weaknesses of a company. The IFE matrix method conceptually relates to the Balanced Scorecard method in some aspects.
How can I create the IFE matrix?
The IFE matrix can be created using the following five steps:
Key internal factors...
Conduct internal audit and identify both strengths and weaknesses in all your business areas. It is suggested you...