Develop an external factor evaluation (EFE) matrix, a competitive profile matrix (CPM), 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.
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. Monitoring competitors’ performance is another important part of an external audit. Using an EFE matrix and a CPM 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 EFE matrix, a CPM, and an 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.
The following resources are required to complete the assessment.
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Complete the following:
- Using the , 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 , 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?
Monitoring competitors’ performance is an important part of an external audit. This exercise gives you practice in evaluating the competition and summarizing the information in a competitive profile matrix. Talk to someone in your organization who is familiar with the competition. Determine two competitors and review their websites. Prepare a competitive profile matrix using the that includes the focus organization and two competitors.
Your assessment should also meet the following requirements:
- 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 current APA style and formatting guidelines.
- Font and font size: Times New Roman, 12 point.
By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and scoring guide 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.
- Compare and contrast an organization and two competitors based on identified critical success factors.
- 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.
- Identify critical success factors for an organization.
- Describe an organization and two competitors’ associated weight, rating, and weighted score relative to affecting or supporting competitive advantage.
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