Economics MCQs Sample Assignment

What do you mean by EFE Matrix?

EFE Matrix is a systematic procedure for assessment of the external position of the association or its vital goals. EFE Matrix is a system identified with the SWOT analysis. EFE is an acronym for the External Factor Evaluation. EFE Matrix assesses the outside position of the association or its strategic aims. As such, The EFE matrix is the vital device used to assess firm's existing systems, EFE matrix can be characterized as the vital tool to assess outside condition or large-scale condition of the firm incorporate financial, social, innovative, government, political, lawful and focused data.

The EFE matrix is like IFE matrix the main contrast is that IFE matrix assesses the interior components of the organization and EFE matrix assess the outside variables. The significant contrast between the EFE matrix and the IFE matrix is the sort of elements that are incorporated into the model. While the IFE matrix manages inside variables, the EFE matrix is concerned exclusively with external factors. External factors evaluated in the EFE matrix are the ones that are subjected to the will of social, monetary, political, legitimate, and other outer powers.

The EFE matrix comprises of following traits specified beneath.

External Factors

External factors are removed after a profound investigation of outer environment. Clearly, there are some great and some awful for the organization in the external condition. When utilizing the EFE matrix we distinguish the key outer open doors and dangers that are influencing or may influence an organization. Where do we get these variables from? Essentially by breaking down the outer condition with the apparatuses of PEST investigation, Porter's Five Forces or Competitive Profile Matrix. That is the reason external factors are partitioned into two classifications opportunities and dangers.


Opportunities are the odds exist in the external condition, it depends firm whether the firm will misuse the open doors or might be they overlook the open doors because of the absence of assets.


Threats are constantly malicious for the firm, least no of threats in the outside condition open numerous entryways for the firm. The greatest number of threats for the firm lessen their energy in the business.


Rating in EFE matrix speaks to the reaction of firm toward the opportunities and threats. Most noteworthy the rating better the reaction of the firm to misuse openings and protect the dangers. Rating range from 1.0 to 4.0 and can be connected to any factor whether it goes under circumstances or threats. There is some essential guide related to rating in EFE matrix.

Rating is connected to each factor.

  • The reaction is poorly spoken to by 1.0
  • The reaction is normal is spoken to by 2.
  • The reaction is better than expected spoke to by 3.0
  • The reaction is predominantly spoken to by 4.0


Weight trait in EFE matrix shows the relative significance of factor to be effective in the association's business. The weight territory from 0.0 means not essential and 1.0 means vital, a total of all appointed weight to factors must be equivalent to 1.0 generally the computation would not be considering redress.

Weighted Score

Weighted score esteem is the outcome accomplished subsequent to duplicating each factor rating with the weight.

Total Weighted Score

The entirety of all weighted score is equivalent to the aggregate weighted score, the last estimation of aggregate weighted score ought to be between going 1.0 (low) to 4.0(high). The normal weighted score for EFE network is 2.5 any organization adds up to weighted score fall beneath 2.5 consider as powerless. The organization adds up to weighted score higher than 2.5 is considered as solid in position.s

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Steps in developing the EFE matrix:

  1. Identify a rundown of KEY external elements (basic achievement factors).
  2. Assign a weight to each factor, extending from 0 (not imperative) to 1.0 (critical).
  3. Assign a 1-4 rating to each basic achievement factor to show how successfully the association's present procedures react to the factor. (1 = reaction is poor, 4 = reaction is to a great degree great)
  4. Multiply each factor's weight by its rating to decide a weighted score.
  5. Sum the weighted scores.

Examples of EFE Matrix:

The following is the case of EFE matrix for Nextel Communication. Nextel Communications Inc. is a supplier of interchanges administrations with three working portions:

Advanced Cellular

Clients get perfectly clear calls and ensured message conveyance in a safe situation, inside the Nextel National Network.

Walkie-Talkie Services

Coordinate Connect®, Nationwide Direct Connect™, and International Direct Connect™ administrations enable correspondence without dialing a number

Nextel EFE Matrix

As the outcomes demonstrate that Nextel Communication is responding better than expected to the environment for misusing opportunities and to beat threats.


The two matrices have the accompanying advantages:

  • Straightforward. The information factors have an unmistakable importance to everybody inside or outside the organization. There's no disarray over the terms utilized or the ramifications of the frameworks.
  • Simple to utilize. The frameworks don't require broad mastery, numerous workforce or loads of time to fabricate.
  • Concentrates on the key inner and outer elements. Not at all like some different investigations (e.g. esteem chain investigation, which recognizes every one of the exercises in the organization's esteem chain, notwithstanding their significance), the IFE and EFE just feature the key factors that are influencing an organization or its procedure.
  • Multi-reason. The apparatuses can be utilized to manufacture SWOT examination, IE framework, GE-McKinsey lattice or for benchmarking.


  • Effortlessly supplanted. IFE and EFE matrices can be supplanted totally by PEST examination, SWOT investigation, focused profile lattice and somewhat some different examination.
  • Doesn't straightforwardly help in technique arrangement. The two examinations just recognize and assess the elements, however, don't help the organization specifically in deciding the following vital move or the best system. Other methodology apparatuses must be utilized for that.
  • Excessively expansive variables. SWOT matrix has a similar restriction and it implies that a few factors that are not sufficiently particular can be mistaken for each other. A few qualities can be shortcomings also, e.g. mark notoriety, which can be a solid and significant brand notoriety or a poor brand notoriety. A similar circumstance is with circumstances and dangers. In this way, each factor must be as particular as conceivable to maintain a strategic distance from disarray over where the factor ought to be appointed.
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