The EFE matrix allows strategies to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information.
Steps in developing the EFE matrix:
- Identify a list of KEY external factors (critical success factors).
- Assign a weight to each factor, ranging from 0 (not important) to 1.0 (very important).
- Assign a 1-4 rating to each critical success factor to indicate how effectively the firm’s current strategies respond to the factor. (1 = response is poor, 4 = response is extremely good)
- Multiply each factor’s weight by its rating to determine a weighted score.
- Sum the weighted scores.
- Average total weighted score is 2.5.