How to Develop External Factor Evaluation (EFE) Matrix

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.

EFE Matrix

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