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What are the steps in constructing an External Factor Evaluation (EFE) Matrix?
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Assign weight values to external factors, rate company performance on each factor, multiply ratings by weight values for weighted scores, then sum for the overall score.
What does the Harvest and Divest region of the IE Matrix indicate for a company?
The company is in decline and may need to liquidate assets or cut costs to reduce losses.
What is indicated by a company falling into Cell 5 of the IE Matrix?
The company is in the Hold and Maintain Region, suggesting steady performance but not outstanding.
Why is understanding the IE Matrix crucial for strategic planning?
It helps in formulating strategies based on competitive position and industry environment.
How can the total weighted scores be used to determine a company's market strategies?
By placing the scores on the IE matrix to decide whether to adopt aggressive, conservative, defensive, or competitive strategies.
What does a total weighted score of 2.46 on the EFE Matrix signify for a company's strategic options?
It suggests average external positioning, guiding the company to strategies that maintain or modestly enhance current operations.
What is the purpose of the IE Matrix in business strategy?
To combine the results of the EFE and IFE matrices to visualize a company's competitive position and the industry conditions.
How are strategies like liquidation or cost reduction linked to the IE Matrix?
They are recommended for companies in the Harvest and Divest region, indicating a need to minimize losses.
What types of strategic recommendations can be derived from the EFE and IFE matrices?
Strategies may include market development, product development, market penetration, diversification, cost reduction, or liquidation depending on matrix scores.
Explain how a company in the Grow and Build region can capitalize on its strategic position.
By exploring new markets or developing current products through strategies like market penetration and diversification.
How can the weighted scores of the EFE and IFE matrices affect a company's strategic decisions?
They determine the company's placement in the IE Matrix, guiding strategic decisions like market penetration or cost reduction.
How does the Internal Factor Evaluation (IFE) Matrix differ from the EFE Matrix?
The IFE Matrix focuses on internal strengths and weaknesses that can be controlled, while the EFE Matrix evaluates external factors.
What strategies are recommended for companies positioned in the Hold and Maintain Region of the IE Matrix?
Market penetration and product development; focus on maintaining performance.
What role do weight values play in the EFE Matrix?
They indicate the relative importance of each external factor in influencing a company's competitiveness.
Which region in the IE Matrix suggests a strategy of market penetration or product development?
Grow and Build Region (Cells 1, 2, 4).
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