Question

Assuming that you, as a strategy officer, have been asked to join a strategic planning taskforce in a firm (or any public or nonprofit organization) and your role is to design both an External Factor Evaluation Matrix and a Competitive Profile Matrix. Explain the technical process of developing each of these tools, focusing on 5 to 7 criteria of success factors for the chosen organization and the challenges expected in designing these tools.

Answer 1

SOLUTION:-

* External Factor Evaluation (EFE) Matrix is a strategic-management tool used for the assessment of current business conditions. The EFE matrix is a good tool to visualize and prioritize the opportunities and threats that a business is facing.

* In order to develop an EFE matrix, the first step is to analyze the organisation's external factors and to list all the external factors elements.

* The next step is to identify the opportunities and challenges of the enterprise by various elements of external factors. After identifying the opportunities and risks, every item defined by its value must be assigned weight.

* Assign 0 to the unimportant element and 1 to the highly important element and the organization's top priority. Assign ratings of 1 to 4 for each element.

* The assessment of the item demonstrates how organization responds to increasing opportunity and danger in an effective way. Increase weight to get a weighted score with the element ratings. Add all weighted ratings.

* Competitive profile matrix (CPM) is used to analyze the Company's position in the sector in relation to competition in the industry. The CPM tool allows business owners, stockholders and other stakeholders to assess the strengths and weaknesses of all the company's main competitors and to compare the firm's strength and weakness with that of the competitor.

* To build a matrix of CPM, the first step is to analyze the internal factors and the competing organizations to which the company wishes to make a comparison and list all the internal factors of all the organizations, by producing a column for each competing company.

* The next step is to divide into strengths and weaknesses for each organization the various elements of internal factors. After defining strengths and weaknesses, each of the characterized elements needs to be weighed according to their importance.

* Assign 0 to the non-essential element, and 1 to the highly important element that has the greatest priority for a particular organisation. Assign ratings of 1 to 4 for each element.

* The item rating indicates the success of companies in a particular field. Increase weight to get a weighted score with the element ratings. Add all weighted ratings.

* The biggest challenge in designing such instruments is to access all the organizations' correct data. Incomplete data or biased data may be created in the firm developing CPM matrix, which could lead to ineffective CPM matrix development.

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