What is EFE Matrix?
An External Factor Evaluation (EFE) Matrix is a strategic tool used by businesses
to evaluate their current strategies. It does this by considering the key external factors in a
company´s environment that may affect its performance. EFE Matrix indicates whether the
firm is able to effectively take advantage of existing opportunities along with minimizing the
external threats. Similarly, it will help the strategists to formulate new strategies and policies
on the basis of existing position of the company.
What is the Importance of EFE Matrix?
Easy to understand. The input factors have a clear meaning to everyone inside or outside
the company. There’s no confusion over the terms used or the implications of the
matrices.
Easy to use. The matrices do not require extensive expertise, many personnel or lots of
time to build.
