26 Sep Toolbox Exercise ? External Factor Evaluation Matrix (EFE) NOTE REGARDING TOOLBOX EXERCISES – These exercises are meant to be cumulative in nature. Each week we will perform an exe

Strategic Management – Week 4 Assignment

Toolbox Exercise – External Factor Evaluation Matrix (EFE)

NOTE REGARDING TOOLBOX EXERCISES – These exercises are meant to be cumulative in nature. Each week we will perform an exercise that will serve as the foundation for your Strategic Plan and Final Presentation. Your frame of reference for these exercises should be the shoe company you manage on the Business Simulation Game.

Your electronic textbook has some excellent resources that will help you analyze the external factors that may impact your organization. For this toolbox exercise, I need you to come together as a team and determine what these factors are, how likely they are to have an impact, and how significant that impact may be. Oftentimes an evaluation of this sort is collected in a matrix. This is what I will require for this assignment. I've outline a few steps that you may want to make a provided a quick visual representation of what this matrix may look like. All that said, feel free to work outside these constraints. All I'm looking for is a comprehensive and realistic evaluation of your organization's external factors.

·         Transfer the Opportunities and Threats from the SWOT list previously completed to a matrix like the one seen below. Number each item as O1, O2, O3, etc., and T1, T2, T3, etc.

·         As a team, determine which items are most important and vote accordingly.

·         If the list is rather lengthy, you may eliminate the less important items and repeat the exercise. For example, eliminate the bottom 20-30% of the items which got no or few votes.

·         Calculate an average score for each item. This will become the "weight" to be used in the next step. The total should be 100%. The higher the percentage, the more important the factor is. If you need to make minor adjustments to the score to equal 100%, do so.

·         Now that the group has determined the most important opportunities and threats, and has weighted them according to their importance, each item should be scored on a scale of 1 to 4, with 1 = "not very well" to 4 = "very well." For each opportunity, ask the question, "How well do the organization's current strategies take advantage of this opportunity?" and grade with the 1 to 4 scale. Repeat for the threats asking, "How well does the organization's current strategies prepare for or avoid this threat?"

·         Computer and note the weighted score for each item by multiplying the weight times the grade.

o   For example, an item with a weight of 25% and a score of 2, the weighted score would be 50%.

·         Add all the scores to get a total score for the EFE matrix.

·         A Total Weighted Score of 250% would indicate that the organization is doing an average job of using their current strategies to take advantage of opportunities and avoiding threats. A >250% score indicates they are doing a better than average job; <250% a below average job. Look not just at the total score, but at the individual items; which ones pulled the score up; which ones pulled the score down. These may indicate areas where they want to continue current strategies, to modify or to develop completely new strategies to improve the overall EFE score.

·         Have your group facilitator submit your completed assignment in this dropbox.