Develop both an external factor evaluation (EFE) matrix and an internal factor evaluation (IFE) matrix for a chosen organization, and write an analysis of the pros and cons and applications for use of each of these analytical tools.
An EFE matrix summarizes the results of an external audit. Using an IFE matrix to identify and prioritize internal factors fosters communication across functions and allows functional employees to articulate their concerns about the organization’s business condition. An EFE matrix, an IFE matrix, and a SWOT analysis, which identifies the internal strengths and weaknesses and the external opportunities and threats to an organization, are often completed together.
By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:
- Competency 1: Evaluate key elements of the strategic planning process.
- Develop an EFE matrix that includes factors, weights, ratings, and total weighted scores.
- Develop an IFE matrix that includes factors, weights, ratings, and total weighted scores.
- Competency 2: Analyze issues associated with stakeholders in the strategic planning process.
- Interpret how the organization can capitalize on strengths.
- Interpret how the organization can improve on weaknesses.
- Illustrate potential issues for stakeholders in the functional areas.
- Competency 3: Apply a sequential process for developing and implementing strategies, goals, objectives, and tactics as part of the strategic plan implementation.
- Discuss the pros and cons and application of each of the analytical tools.
Because of increased turbulence in business markets, an external audit is an important part of strategic management. An external audit includes collecting and evaluating information about competitors, technology, and legal, governmental, political, environmental, demographic, cultural, social, and economic trends in the marketplace. Organizations must empower their employees to identify, monitor, forecast, and evaluate external forces. Failure to do so might mean missed opportunities or ineffective strategies. It is important to use the Internet and information technology to gain information about the competition. Using an external factor evaluation (EFE) matrix and competitive profile matrix can help evaluate markets.
Organizations also audit their internal strengths and weaknesses, including the major functional areas. The core operations of most organizations include management, marketing, finance, operations, research, and information systems. An internal audit helps ensure an organization’s health and may help establish competitive advantage and strengthen bottom-line performance. To do an internal assessment, strategists identify and evaluate internal strengths and weaknesses and formulate strategies for effectiveness. The process of doing an internal audit is an opportunity for employees throughout the organization to participate in choosing the future of the organization. Involvement in the process can energize and mobilize the enterprise.
Select an organization for which to create an external factor evaluation (EFE) matrix and an internal factor evaluation (IFE) matrix. Ideally, the company you choose will be a familiar one and one to which you have easy access, such as your place of employment or a company close to where you live. You may use the same organization for other assessments in this course.
EFE Matrix and IFE Matrix
Complete the following:
- Using the EFE Matrix Template linked in the Resources under the Required Resources heading, record the external factors, weights, ratings, and total weighted scores for your chosen organization. Once you complete the table in the template, discuss the pros and cons and applications for use of this analytical tool. You may record the written portion of the assessment in the template document, or you may create a separate document.
- Using the IFE Matrix Template linked in the Resources under the Required Resources heading, record the internal factors, weights, ratings, and total weighted scores for your chosen organization. Once you complete your IFE matrix table, discuss the pros and cons and applications for use of this analytical tool for the organization. In addition, propose strategies that address the following. You may record the written portion of the assessment in the template, or you may create a separate document.
- What do you think would allow the organization to capitalize on its strengths?
- What do you think would allow the organization to improve upon its weaknesses?
- What are potential issues for stakeholders in their functional areas?
- Written communication: Written communication is free of errors that detract from the overall message.
- APA formatting: If you use sources, ensure that resources and citations are formatted according to APA (6th edition) style and formatting.
- Font and font size: Times New Roman, 12 point.