Telecom Industry
Stage-1 (Formulation Framework)
Industry Analysis: The External Factor Evaluation (EFE) Matrix
An External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information. The EFE matrix consists of five steps process.
Five-Step process:
• List key external factors (10-20)
Opportunities & threats. You have to prepare a list of all external factors which will affect the EFE matrix. These factors should be two points to be kept in mind these are opportunities and threats
• Assign weight to each (0 to 1.0)
Sum of all weights = 1.0
Now you have to arrange them according to their weight age that which factor is most important. It should be weight age in % ages. The sum of the total of all the factors should always be one.
• Assign 1-4 rating to each factor
Firm’s current strategies response to the factor: how well firms response to these factors.
• Multiply each factor’s weight by its rating
Produces a weighted score
How the firm will respond to these factors external factors. Such criteria are known as rating.
• Sum the weighted scores for each
Determines the total weighted score for the organization.
Highest possible weighted score for the organization is 4.0; the lowest, 1.0. Average = 2.5
EXTERNAL FACTOR EVALUATION (EFE) MATRIX
EXTERNAL FACTOR EVALUATION (EFE) MATRIX
Key External Factors Weight Rating Weighted Score
Opportunities
1 Globalization 0.10 3 0.30
2 Marketing 0.15 4 0.60
3 Acquisition 0.08 2 0.16
4 New Product Development 0.07 3 0.21
5 Northern Areas 0.10 3 0.30
6 Pak China Borders 0.13 3 0.39
Threats
1 Old Stable Companies 0.12 4 0.48
2 Attractive Packages By Others 0.10 3 0.30
3 Price War 0.06 3 0.18
4 Government Interference 0.09 3 0.27
TOTAL 1.00 3.19
Total weighted score for the ZONG external factor is 3.19 which is above average
Industry Analysis: The External Factor Evaluation (EFE) Matrix
An External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information. The EFE matrix consists of five steps process.
Five-Step process:
• List key external factors (10-20)
Opportunities & threats. You have to prepare a list of all external factors which will affect the EFE matrix. These factors should be two points to be kept in mind these are opportunities and threats
• Assign weight to each (0 to 1.0)
Sum of all weights = 1.0
Now you have to arrange them according to their weight age that which factor is most important. It should be weight age in % ages. The sum of the total of all the factors should always be one.
• Assign 1-4 rating to each factor
Firm’s current strategies response to the factor: how well firms response to these factors.
• Multiply each factor’s weight by its rating
Produces a weighted score
How the firm will respond to these factors external factors. Such criteria are known as rating.
• Sum the weighted scores for each
Determines the total weighted score for the organization.
Highest possible weighted score for the organization is 4.0; the lowest, 1.0. Average = 2.5
EXTERNAL FACTOR EVALUATION (EFE) MATRIX
EXTERNAL FACTOR EVALUATION (EFE) MATRIX
Key External Factors Weight Rating Weighted Score
Opportunities
1 Globalization 0.10 3 0.30
2 Marketing 0.15 4 0.60
3 Acquisition 0.08 2 0.16
4 New Product Development 0.07 3 0.21
5 Northern Areas 0.10 3 0.30
6 Pak China Borders 0.13 3 0.39
Threats
1 Old Stable Companies 0.12 4 0.48
2 Attractive Packages By Others 0.10 3 0.30
3 Price War 0.06 3 0.18
4 Government Interference 0.09 3 0.27
TOTAL 1.00 3.19
Total weighted score for the ZONG external factor is 3.19 which is above average