EFE matrix

EFE matrix or External Factor Evaluation matrix was created by Fred R. David and is strategic management and analysis tool closely related to SWOT analysis, TOWS analysis and STEEPLE analysis. It involves identification of key external factors affecting business from external environment. It involves five steps:

  • factor identification and selection (opportunities and threats from environment)
  • assigning weight to each factor according to its perceived importance
  • assigning ratings (1 to 4) for each key factor
  • multiplying rating and weight
  • determining total weighted score for the company

Overall scores are used for further analysis, setting priorities for business plans and strategic goals. EFE matrix are also used to visualize impact of external factors on organization. Tool is closely related to IFE matrix


References

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